Exam 18: Corporations: Organizations and Stock

A company would rarely sell its stock for below par value.

Most preferred stock currently being issued is participating,while it is very unusual to find cumulative preferred stock.

To calculate dividends on par-value preferred stock:

The par value of stock represents the legal capital of the corporation.

Cumulative preferred stock means that the preferred stockholders have a right to a certain dividend every year.

A corporation is not required to pay dividends.

The stockholders of a corporation have mutual agency.

Jane Kathryn has 30,000 shares outstanding of $10 par value,10% preferred stock and 100,000 shares outstanding $5 par value common stock.In the first 3 years of operations,the company paid dividends in Year 1,$0; Year 2,$40,000; Year 3,$100,000.Calculate the dividend paid to preferred and common stockholders under the following independent situations: a)Preferred is non-cumulative and nonparticipating. 1 2 3 b)Preferred is cumulative and nonparticipating. 1 2 3 c)Preferred is cumulative and participating. 1 2 3

Using the following accounts: [1] Cash [2] Subscription receivable common stock [3] Machinery [4] Building [5] Land [6] Organization costs [7] Preferred stock [8] Common stock [9] Paid in capital in excess of par preferred stock [10] Paid in capital in excess of par common stock [11] Common stock subscribed [12] Discount on common stock [13] Amortization expense organization costs Indicate the account(s) to be debited and credited to record the following transactions. -Purchased machinery for cash. Debit ________ & ________ & ________ Credit ________ & ________ & ________

When a stock subscription is received,Common Stock subscribed is credited for the total par value.

Which of the following would normally not appear in the Stockholders' Equity section of the balance sheet?

Using the following accounts: [1] Cash [2] Subscription receivable common stock [3] Machinery [4] Building [5] Land [6] Organization costs [7] Preferred stock [8] Common stock [9] Paid in capital in excess of par preferred stock [10] Paid in capital in excess of par common stock [11] Common stock subscribed [12] Discount on common stock [13] Amortization expense organization costs Indicate the account(s) to be debited and credited to record the following transactions. -Exchanged common stock for machinery when the stock was selling at a premium. Debit ________& ________ & ________ Credit ________ & ________ & ________

Double taxation is said to be a disadvantage of a corporation.

Alpha-Omega Industries has 30,000 shares of $12 par common stock and 15,000 shares of $50 par,5% preferred stock outstanding.Total dividends available are $162,000.Compute the dividends to be distributed to preferred and common stockholders under the following condition. The preferred stock is participating and cumulative with no dividends distributed last year.

Five hundred shares of $25 par common stock was exchanged for a piece of equipment with a fair market value of $13,500.The journal entry to record the transaction would include a credit to:

The journal entry for the receipt of a cash payment on common stock subscriptions would include:

Common stockholders have all the following rights except:

R.Red formed a corporation with an authorization of 20,000 shares of $50 par,6% non-cumulative preferred stock and 100,000 shares of $10 par common stock.The following selected transactions were completed during the first year of operations.Journalize the transactions omitting explanations. $\text {Jan 10}$ $\quad$ $\text {Issued 20,000 shares of common stock at par for cash.}$ $\quad$ $\quad$ $\quad$ $\text {31}$$\text { Issued 20,000 shares of common stock in exchange for land, buildings, and}$ $\quad$ $\quad$ $\quad$ $\text {Equipment with fair market prices of \$ 52,000 , \$ 125,000, and \(\$ 48,000\), respectively.}$ $\text {Feb 24}$ $\quad$$\text {Issued 2,000 shares of preferred stock at \$ 54 for cash.}$

Nature's Honey Corporation received the final installment of $1,000 on a stock subscription for 20 shares of $100 par value common stock.After recording the cash receipt,the entry to issue the stock would include a:

The two main sources of stockholders' equity are investments by stockholders and net income retained in the corporation.