Exam 12: Contributed Capital

Use the following information to answer the question below. On January 1, 2010, Falcon Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $17 per share. On February 1, 2010, Falcon purchased 1,000 shares of treasury stock for $19 per share and later sold the treasury shares for $26 per share on March 2, 2010. The entry to record the sale of the treasury shares on March 2, 2010 is

Beckham Corporation has 3,000 shares of $100 par value, 7 percent cumulative preferred stock, and 10,000 shares of $10 par value common stock outstanding during its first five years of operation. Beckham Corporation paid cash dividends as follows: 2006, $16,500; 2007, $0; 2008, $65,000; 2009, $30,000; 2010, $15,000. The amount of dividends received by the preferred stockholders during 2008 was

Legal capital is a descriptive phrase for

No rights or privileges are associated with unissued stock.

Margil Industries has 40,000 shares of 9 percent cumulative preferred stock and 30,000 shares of common stock outstanding. Par value for each is $50. The company has paid no dividends for the past two years. This year, a $620,000 dividend is paid. How much of the $620,000 is paid to the common shareholders?

Holders of preferred stock normally do not have

A corporation is a separate entity for legal purposes.

The death of a stockholder results in the dissolution of the corporation.

Financing a business with common stock is less risky than financing it with bonds.

The concept of legal capital exists to protect the corporation's assets for the stockholders of the corporation.

Dividends in arrears pertain to noncumulative preferred stock.

If the entry to record the retirement of treasury stock contains a credit to a Paid-in Capital, Retirement of Stock account, it is apparent that the

When no-par common stock without a stated value is issued for cash, the Common Stock account is credited for an amount equal to the cash proceeds.

Stock options often are granted by a corporation to management personnel as a means of additional compensation and motivation of these employees.

A liquidating dividend is

Prepare the entries in journal form necessary to record the following stock transactions of Fitzgerald Corporation. These transactions represent all treasury stock transactions entered into by the company. (Omit explanations.) June 1 Purchased 2,000 shares of its own $30 par value common stock for $70 per share, the current market price.

A corporation's residual equity is its

The contributed capital of a corporation does not include

Why must a corporation have sufficient retained earnings before it may declare cash dividends?

Compensation expense related to employee stock option plans is to be measured by the excess of the