Question 1

Companies can report a negative amount in retained earnings.

Accepted Answer

A) True 
 B)False

Question 2

Colorful,Inc.was incorporated on January 1,2016.Colorful issued 15,000 shares of common stock and 800 shares of preferred stock on that date.The preferred stock is cumulative,$100 par,with a 12% dividend rate.Colorful has not paid any dividends yet.In 2019,Colorful had its first profitable year,and on December 31,2019,Colorful declared a total dividend of $44,000.What is the total amount that will be paid to common stockholders?

Accepted Answer

A)  $9600 
B)  $38,400 
C)  $5600 
D)  $44,000 
A)  $9600 
B)  $38,400 
C)  $5600 
D)  $44,000

Question 3

A company originally issued 14,000 shares of $5 par value common stock at $12 per share.The board of directors declares a 14% stock dividend when the market price of the stock is $25 a share.Which of the following is included in the entry to record the declaration of a stock dividend?

Accepted Answer

A)  Stock Dividends is debited for $24,500. 
B)  Common Stock-$5 Par Value is credited for $47,040. 
C)  Common Stock is credited for $49,000. 
D)  Stock Dividends is debited for $49,000. 
A)  Stock Dividends is debited for $24,500. 
B)  Common Stock-$5 Par Value is credited for $47,040. 
C)  Common Stock is credited for $49,000. 
D)  Stock Dividends is debited for $49,000.

Question 4

August,Inc.had the following transactions in 2018,its first year of operations: • Issued 22,000 shares of common stock.The stock has a par value of $3.00 per share and was issued at $16.00 per share.
• Issued 1800 shares of $160 par value preferred stock at par.
• Earned net income of $37,000.
• Paid no dividends.
At the end of 2018,what is total stockholders' equity?

Accepted Answer

A)  $677,000 
B)  $354,000 
C)  $286,000 
D)  $640,000 
A)  $677,000 
B)  $354,000 
C)  $286,000 
D)  $640,000

Question 5

When a 5% stock dividend is declared,which account is debited?

Accepted Answer

A)  Common Stock-Par Value 
B)  Common Stock Dividend Distributable 
C)  Stock Dividends 
D)  Paid-In Capital in Excess of Par-Common 
A)  Common Stock-Par Value 
B)  Common Stock Dividend Distributable 
C)  Stock Dividends 
D)  Paid-In Capital in Excess of Par-Common

Question 6

On December 1,2018,Garland,Inc.had 200,000 shares of $1 par value common stock issued and outstanding.The next day,Garland declared and distributed a 50% stock dividend.The market value of the stock on December 2,2018 was $9 per share.Prepare the journal entry for the transaction.Omit explanation.

Accepted Answer

(200,000 ×

Question 7

The corporate charter identifies the maximum number of shares of stock the corporation may issue,which is called 'available for issue' stock.

Accepted Answer

A) True 
 B)False

Question 8

Stock issued at amounts in excess of par value results in a gain that is reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 9

Define the following terms:
 $$\begin{array} { | l | l | } 
\hline \text { Term } & \text { Definition } \
\hline \text { Authorized stock } & \
\hline \text { Preferred stock } & \
\hline \text { Stated value stock } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline\te

Question 10

The entry to record the payment of a previously declared dividend of $0.25 per share on 18,500 shares of common stock includes a ________.

Accepted Answer

A)  debit to Cash Dividends for $4625 
B)  debit to Cash $4625 
C)  credit to Cash Dividends for $4625 
D)  debit to Dividends Payable for $4625 
A)  debit to Cash Dividends for $4625 
B)  debit to Cash $4625 
C)  credit to Cash Dividends for $4625 
D)  debit to Dividends Payable for $4625

Question 11

The stock of public corporations cannot be purchased on a stock exchange.

Accepted Answer

A) True 
 B)False

Question 12

When stock is issued for assets other than cash,the transaction is recorded at the market value of the stock issued or the market value of the assets received,whichever is more clearly determinable.

Accepted Answer

A) True 
 B)False

Question 13

Paid-in capital in excess of par is recorded when no-par stock is issued.

Accepted Answer

A) True 
 B)False

Question 14

On November 1,2019,Juno,Inc.declared a dividend of $3.00 per share on common stock.Juno,Inc.has 10,000 shares of common stock outstanding and 20,000 shares of preferred stock.The date of record is November 15,and the payment date is November 30,2019.Regarding the date of record,which of the following statements is TRUE?

Accepted Answer

A)  No journal entry is made on the date of record. 
B)  The liability must be recorded on the date of record. 
C)  Cash is disbursed to shareholders on the date of record. 
D)  The company transfers cash to a brokerage firm on the date of record. 
A)  No journal entry is made on the date of record. 
B)  The liability must be recorded on the date of record. 
C)  Cash is disbursed to shareholders on the date of record. 
D)  The company transfers cash to a brokerage firm on the date of record.

Question 15

Legal capital refers to the portion of stockholders' equity that cannot be used for dividends.

Accepted Answer

A) True 
 B)False

Question 16

On June 30,2018,Ginger,Inc.showed the following data on the equity section of their balance sheet: $$\begin{array} { | l | r | } 
\hline \text { Stockholders' Equity } & \
\hline \text { Common Stock, } \$ 1 \text { par; 202,000 shares authorized, } & \
150,000 \text { shares issued and outstanding } & \$ 150,000 \
\hline \text { Paid-In Capital in Excess of Par-Common } & \$ 260,000 \
\hline \text { Retained Earnings } & \$ 946,000 \
\hline \text { Total Stockholder's Equity } & \$ 1,356,000 \
\hline
\end{array}$$ On July 1,2018,the company declared and distributed a 9% stock dividend.The market value of the stock at that time was $20 per share.Following this transaction,what is the balance of Common Stock?

Accepted Answer

A)  $163,500 
B)  $57,180 
C)  $285,540 
D)  $357,180 
A)  $163,500 
B)  $57,180 
C)  $285,540 
D)  $357,180

Question 17

When a previously declared dividend is paid,which of the following occurs?

Accepted Answer

A)  assets increase 
B)  stockholders' equity increases 
C)  liabilities decrease 
D)  assets remain unchanged 
A)  assets increase 
B)  stockholders' equity increases 
C)  liabilities decrease 
D)  assets remain unchanged

Question 18

All City Realty,Inc.issued 7000 shares of $9 stated value common stock for $16 per share.The journal entry to record this transaction includes a credit to ________.

Accepted Answer

A)  Common Stock for $112,000 
B)  Paid-In Capital in Excess of Stated - Common for $63,000 
C)  Common Stock - $9 Stated Value for $49,000 
D)  Paid-In Capital in Excess of Stated - Common for $49,000 
A)  Common Stock for $112,000 
B)  Paid-In Capital in Excess of Stated - Common for $63,000 
C)  Common Stock - $9 Stated Value for $49,000 
D)  Paid-In Capital in Excess of Stated - Common for $49,000

Question 19

Which of the following statements regarding corporations is incorrect?

Accepted Answer

A)  Corporations dominate business activity in the United States. 
B)  Corporations are businesses organized under state law and do not have an existence that is separate from their owners. 
C)  Most well-known corporations tend to be large multinational businesses. 
D)  Corporations are separate legal entities. 
A)  Corporations dominate business activity in the United States. 
B)  Corporations are businesses organized under state law and do not have an existence that is separate from their owners. 
C)  Most well-known corporations tend to be large multinational businesses. 
D)  Corporations are separate legal entities.

Question 20

Manley Corporation issued 2,500 shares of its $50 par,4% preferred stock on March 31,2019,at $80 per share.The amount credited to Paid-In Capital in Excess of Par - Preferred is $200,000.

Accepted Answer

A) True 
 B)False

Exam 13: Corporations

Companies can report a negative amount in retained earnings.

A company originally issued 14,000 shares of $5 par value common stock at $12 per share.The board of directors declares a 14% stock dividend when the market price of the stock is $25 a share.Which of the following is included in the entry to record the declaration of a stock dividend?

When a 5% stock dividend is declared,which account is debited?

On December 1,2018,Garland,Inc.had 200,000 shares of $1 par value common stock issued and outstanding.The next day,Garland declared and distributed a 50% stock dividend.The market value of the stock on December 2,2018 was $9 per share.Prepare the journal entry for the transaction.Omit explanation.

The corporate charter identifies the maximum number of shares of stock the corporation may issue,which is called 'available for issue' stock.

Stock issued at amounts in excess of par value results in a gain that is reported on the income statement.

Define the following terms: Term Definition Authorized stock Preferred stock Stated value stock

The entry to record the payment of a previously declared dividend of $0.25 per share on 18,500 shares of common stock includes a ________.

The stock of public corporations cannot be purchased on a stock exchange.

When stock is issued for assets other than cash,the transaction is recorded at the market value of the stock issued or the market value of the assets received,whichever is more clearly determinable.

Paid-in capital in excess of par is recorded when no-par stock is issued.

Legal capital refers to the portion of stockholders' equity that cannot be used for dividends.

When a previously declared dividend is paid,which of the following occurs?

All City Realty,Inc.issued 7000 shares of $9 stated value common stock for $16 per share.The journal entry to record this transaction includes a credit to ________.

Which of the following statements regarding corporations is incorrect?

Manley Corporation issued 2,500 shares of its $50 par,4% preferred stock on March 31,2019,at $80 per share.The amount credited to Paid-In Capital in Excess of Par - Preferred is $200,000.

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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