Exam 11: Corporations: Organization, Stock Transactions, and Dividends

Merritt Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $18 per share. At what amount should the building be recorded by Merritt Company?

Under the cost method, when treasury stock is purchased by the corporation, the par value and the price at which the stock was originally issued are important.

Under the Internal Revenue Code, corporations are required to pay federal income taxes.

Morocco Inc. reported the following results for the year ending April 30, 2014: Prepare a retained earnings statement for the fiscal year ended April 30, 2014.

A large public corporation normally uses registrars and transfer agents to maintain records of the stockholders.

How is treasury stock shown on the balance sheet?

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

A stock split results in a transfer at market value from retained earnings to paid-in capital.

The date on which a cash dividend becomes a binding legal obligation is on the

One of the main disadvantages of the corporate form is the

Journalize the following selected transactions completed during the current fiscal year:

A deficit in Retained Earnings is reported in the stockholders' equity section of the balance sheet.

Paid-in capital may originate from real estate donated to the corporation.

On June 5, Belen Corporation reacquired 3,300 shares of its common stock at $45 per share. On July 15, Belen sold 2,000 of the reacquired shares at $48 per share. On August 30, Belen sold the remaining shares at $42 per share. Journalize the transactions of June 5, July 15, and August 30.

Alma Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:

The Torre Company has the following balances in stockholders equity on December 31st. Answer the following questions: 1. How many shares of treasury stock are owned? 2. What was the average market price per share at which common stock was issued? 3. What was the average market price per share at which preferred stock was issued? 4. What is the total value of the Paid in Capital portion of stockholders equity? 5. What is the total value of stockholders equity? 6. How many shares of common stock are outstanding? 7. If net income for the year was $75,000 and a preferred stock dividend of $20,000 was paid, what was the beginning value of retained earnings? How much is earnings per share for the year?

At December 31st, the Jeter Company had the following ending balances; Retained Earnings - $100,000 Preferred Stock ($100 par, 7% cumulative, 10,000 authorized, 5,000 issued and outstanding) - 500,000 Treasury stock - $35,000 Additional paid in capital - common stock - 400,000 Additional paid in capital - preferred stock - 50,000 Common stock ($5.00 par value, 100,000 shares authorized, 60,000 issued) - 300,000 Prepare the stockholders equity section of the balance sheet in good form with all of the required disclosures. .

If a corporation is liquidated, preferred stockholders are paid before the creditors and before the common stockholders.

In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported?

If 50,000 shares are authorized, 41,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 43,000.