Question 1

Stated value stock is no-par stock that has been assigned an amount similar to par value.

Accepted Answer

A) True 
 B)False

Question 2

A corporation originally issued $5 par value common stock for $6 per share. Which of the following would be included in the entry to record the purchase of 300 shares of treasury stock for $10 per share?

Accepted Answer

A) Treasury Stock-Common would be debited for $3,000. 
B) Treasury Stock-Common would be credited for $1,800. 
C) Retained Earnings would be debited for $1,500. 
D) Treasury Stock-Common would be debited for $1,500. 
A) Treasury Stock-Common would be debited for $3,000. 
B) Treasury Stock-Common would be credited for $1,800. 
C) Retained Earnings would be debited for $1,500. 
D) Treasury Stock-Common would be debited for $1,500.

Question 3

A corporation has 15,000 shares of 10%, $50 par cumulative preferred stock outstanding and 25,000 shares of no-par common stock outstanding. Dividends of $37,500 are in arrears. At the end of the current year, the corporation declares a dividend of $120,000. What is the dividend per share for preferred shares and for common shares?

Accepted Answer

A) The dividend per share is $5.00 to preferred shares and $4.60 per share to common shares. 
B) The dividend per share is $8.00 to preferred shares and $0 per share to common shares. 
C) The dividend per share is $7.50 to preferred shares and $0.30 per share to common shares. 
D) The dividend per share is $8.00 to preferred shares and $0.30 per share to common shares. 
A) The dividend per share is $5.00 to preferred shares and $4.60 per share to common shares. 
B) The dividend per share is $8.00 to preferred shares and $0 per share to common shares. 
C) The dividend per share is $7.50 to preferred shares and $0.30 per share to common shares. 
D) The dividend per share is $8.00 to preferred shares and $0.30 per share to common shares.

Question 4

Retained earnings represents amounts received from stockholders of a corporation in exchange for stock.

Accepted Answer

A) True 
 B)False

Question 5

Gordon Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $11.50 per share.   What would be the balance in the Common Stock account after the issuance of a 10% stock dividend?

Accepted Answer

A) $300,000 
B) $288,000 
C) $352,000 
D) $320,000 
A) $300,000 
B) $288,000 
C) $352,000 
D) $320,000

Question 6

The declaration of a stock dividend creates a liability for the corporation.

Accepted Answer

A) True 
 B)False

Question 7

A corporation has 15,000 shares of 10%, $50 par cumulative preferred stock outstanding and 25,000 shares of no-par common stock outstanding. Dividends of $37,500 are in arrears. At the end of the current year, the corporation declares a dividend of $120,000. How is the dividend allocated between preferred and common shareholders?

Accepted Answer

A) The dividend is allocated $7,500 to preferred shareholders and $112,500 to common shareholders. 
B) The dividend is allocated $112,500 to preferred shareholders and $7,500 to common shareholders. 
C) The dividend is allocated $120,000 to preferred shareholders and no dividend is paid to common shareholders. 
D) The dividend is allocated $75,000 to preferred shareholders and $45,000 to common shareholders. 
A) The dividend is allocated $7,500 to preferred shareholders and $112,500 to common shareholders. 
B) The dividend is allocated $112,500 to preferred shareholders and $7,500 to common shareholders. 
C) The dividend is allocated $120,000 to preferred shareholders and no dividend is paid to common shareholders. 
D) The dividend is allocated $75,000 to preferred shareholders and $45,000 to common shareholders.

Question 8

From its inception through the year of 2014, Quicksales Company was profitable and made strong dividend payments each year. In the year 2015, Quicksales had major losses and paid no dividends. In 2016, the company started making large profits again, and they were able to pay dividends to all shareholders-both common and preferred. There are 1,500 shares of cumulative, 7% preferred stock outstanding. The preferred stock has a par value of $100. What is the total amount of dividends that should be paid to the preferred shareholders in December, 2016?

Accepted Answer

A) $33,500 
B) $22,000 
C) $10,500 
D) $21,000 
A) $33,500 
B) $22,000 
C) $10,500 
D) $21,000

Question 9

Occidental Produce Company has 40,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding. The common stock is $0.01 par value; the preferred stock is 4% noncumulative, with $100 par value. On October 15, 2015, the company declares a total dividend payment of $40,000. How much dividend will be paid to the preferred shareholders?

Accepted Answer

A) $40,000 
B) $2,000 
C) $8,000 
D) $4,500 
A) $40,000 
B) $2,000 
C) $8,000 
D) $4,500

Question 10

A corporation is a separate legal entity and is organized independently of its owners.

Accepted Answer

A) True 
 B)False

Question 11

On June 30, 2015, Roger Company showed the following data on the equity section of their balance sheet:   On July 1, 2015, Roger declared and distributed a 5% stock dividend. The market value of the stock at that time was $13 per share. Following this transaction, what would the new balance in Retained Earnings be?

Accepted Answer

A) $916,000 
B) $942,000 
C) $966,000 
D) $849,000 
A) $916,000 
B) $942,000 
C) $966,000 
D) $849,000

Question 12

The statement of retained earnings reports how the company's retained earnings balance changed from the beginning of the period to the end of the period.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following corporate characteristics is a disadvantage of a corporation?

Accepted Answer

A) Stockholders of a corporation have limited liability. 
B) A corporation has a continuous life. 
C) There is no mutual agency among the stockholders and the corporation. 
D) Earnings of a corporation are taxed twice. 
A) Stockholders of a corporation have limited liability. 
B) A corporation has a continuous life. 
C) There is no mutual agency among the stockholders and the corporation. 
D) Earnings of a corporation are taxed twice.

Question 14

On July 31, 2015, the Archer Company reported the following information in the equity section of their balance sheet:   Assume that Archer carries out a 3-for-1 stock split. Please prepare a similar equity section showing the effects of the stock split. (Please round all numbers to the nearest cent.)

Accepted Answer

The answer of On July 31, 2015, the Archer Company...

Question 15

Stock dividends are distributed to stockholders in proportion to the number of shares each stockholder already owns.

Accepted Answer

A) True 
 B)False

Question 16

On December 2, 2014, Ewell Company purchases a piece of land from the original owner. In exchange for the land, Ewell Company issues 8,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of $400,000. Provide the journal entry for this transaction.

Accepted Answer

The answer of On December 2, 2014, Ewell Company purchases...

Question 17

Which of the following is true of the distribution of stock dividends?

Accepted Answer

A) It decreases both assets and liabilities. 
B) It decreases assets and increase liabilities. 
C) It affects only stockholder's equity accounts. 
D) It increases both dividends payable and cash. 
A) It decreases both assets and liabilities. 
B) It decreases assets and increase liabilities. 
C) It affects only stockholder's equity accounts. 
D) It increases both dividends payable and cash.

Question 18

When a company has issued both preferred and common stock, the common stockholders are allocated their dividends first.

Accepted Answer

A) True 
 B)False

Question 19

On March 31, 2015, the Park Place Company shows the following data on their balance sheet:   Assume that Park Place sells 900 shares of treasury stock at $32 per share. What will the total stockholders' equity be after this transaction?

Accepted Answer

A) $7,751,200 
B) $7,028,800 
C) $7,080,900 
D) $7,030,000 
A) $7,751,200 
B) $7,028,800 
C) $7,080,900 
D) $7,030,000

Question 20

The statement of retained earnings has more information than the statement of stockholders' equity.

Accepted Answer

A) True 
 B)False

Exam 13: Corporations

Stated value stock is no-par stock that has been assigned an amount similar to par value.

A corporation originally issued $5 par value common stock for $6 per share. Which of the following would be included in the entry to record the purchase of 300 shares of treasury stock for $10 per share?

Retained earnings represents amounts received from stockholders of a corporation in exchange for stock.

Gordon Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $11.50 per share. What would be the balance in the Common Stock account after the issuance of a 10% stock dividend?

The declaration of a stock dividend creates a liability for the corporation.

A corporation is a separate legal entity and is organized independently of its owners.

The statement of retained earnings reports how the company's retained earnings balance changed from the beginning of the period to the end of the period.

Which of the following corporate characteristics is a disadvantage of a corporation?

On July 31, 2015, the Archer Company reported the following information in the equity section of their balance sheet: Assume that Archer carries out a 3-for-1 stock split. Please prepare a similar equity section showing the effects of the stock split. (Please round all numbers to the nearest cent.)

Stock dividends are distributed to stockholders in proportion to the number of shares each stockholder already owns.

On December 2, 2014, Ewell Company purchases a piece of land from the original owner. In exchange for the land, Ewell Company issues 8,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of $400,000. Provide the journal entry for this transaction.

Which of the following is true of the distribution of stock dividends?

When a company has issued both preferred and common stock, the common stockholders are allocated their dividends first.

On March 31, 2015, the Park Place Company shows the following data on their balance sheet: Assume that Park Place sells 900 shares of treasury stock at $32 per share. What will the total stockholders' equity be after this transaction?

The statement of retained earnings has more information than the statement of stockholders' equity.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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