Exam 13: Corporations

Moretown Company had the following transactions in 2015, its first year of operations. • Issued 30,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $18.00 per share. • Earned net income of $70,000. • Paid no dividends. At the end of 2015, what is the total amount of stockholders' equity?

Declaring and paying dividends causes an increase in both assets and stockholders' equity for the corporation.

Most corporations set par value low and issue common stock for a price above par called a premium.

Companies can report a negative amount in retained earnings.

Which of the following statements is true of a corporation?

Which of the following is a true statement?

On November 1, 2014, Oster Company declared a dividend of $3.00 per share. Oster Company has 20,000 shares of common stock outstanding and no preferred stock. The date of record is November 15, and the payment date is November 30, 2014. Provide the journal entry needed on November 30.

If preferred stock is noncumulative, then the company needs to pay dividends that were passed in previous years.

On the date of record of dividends, the company:

Rick Co. purchases 7,000 shares of its own $2 par value common stock for $160 per share. Which of the following is the correct journal entry to record this transaction?

A stock split, like any other stock issuance, cannot involve issuing more shares of stock than authorized in the corporate charter.

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. What is the amount of dividend that will be paid for each share of common stock?

Overton Company had the following transactions in 2012, its first year of operations. • Issued 5,000 shares of common stock. Stock has par value of $0.01 per share and was issued at $30.00 per share. • Earned net income of $200,000. • Paid dividends of $5.00 per share. At the end of 2012, how much is the total stockholders' equity?

Which of the following occurs when a cash dividend is declared?

Stockholders of a corporation are not personally liable for the corporation's debt.

A 3-for-1 stock split of a $3 par value share will result in three shares of $1 par value.

Prior period adjustments:

When a corporation sells 10,000 shares of $10 par value common stock for $120,000, the Common Stock account is credited for $100,000.

Restrictions on retained earnings:

On December 1, 2015, Arther Company had 200,000 shares of $1 par value common stock issued and outstanding. The next day they declared and distributed a 50% stock dividend. The market value of the stock on that date was $9 per share. Provide the journal entry for the transaction.