Question 1

In respect to corporate debt,stockholders have ____________________ liability.

Accepted Answer

limited

Question 2

A corporation has 4,000 shares of 5 percent,$100 par-value preferred stock and 50,000 shares of $2 par-value common stock outstanding.If the board of the directors decides to distribute dividends totaling $100,000,the common stockholders will receive a dividend of

Accepted Answer

A)   $1.00 a share.
B)   $1.60 a share.
C)   $2.00 a share.
D)   $2.40 a share. B

Question 3

The entry to record the issuance of 1,000 shares of $2 stated-value common stock for $10 a share consists of a debit to Cash for $10,000 and a credit to Common Stock for

Accepted Answer

A)   $10,000.
B)   $2,000 and a credit to Paid-in Capital in Excess of Par Value-Common Stock for $8,000.
C)   $2,000 and a credit to Paid-in Capital in Excess of Stated Value-Common Stock for $8,000.
D)   $2,000 and a credit to Gain On Sale of Common Stock for $8,000. C

Question 4

When the issuing corporation retains the right to repurchase shares of preferred stock at a specified price,the preferred stock is said to be

Accepted Answer

A)   convertible.
B)   callable.
C)   participating.
D)   nonparticipating.

Question 5

Just like No-par-value stock,par value stock can be sold for any price.

Accepted Answer

A) True 
 B)False

Question 6

Stockholders are the ____________________ of a corporation.

Accepted Answer

The answer of Stockholders are the ____________________ of a corporation....

Question 7

If a corporation sells 400 shares of 12 percent,$100 par-value preferred stock for $105 a share,the entry to record the transaction will include a credit of ____________________ to the Preferred Stock account.

Accepted Answer

The answer of If a corporation sells 400 shares of...

Question 8

Callable preferred stock gives the shareholder the right to exchange preferred shares of stock for common shares based on the conversion ratio printed on the stock certificate.

Accepted Answer

A) True 
 B)False

Question 9

The stockholders' ledger for a class of stock is a subsidiary ledger,and the total shares shown must agree with the number of shares in the capital stock account for that class.

Accepted Answer

A) True 
 B)False

Question 10

Before dividends can be paid,they must be declared and voted upon by the shareholders.

Accepted Answer

A) True 
 B)False

Question 11

The Preferred Stock account is shown in the

Accepted Answer

A)   Assets section of the balance sheet.
B)   Current Liabilities section of the balance sheet.
C)   Long-Term Liabilities section of the balance sheet.
D)   Stockholders' Equity section of the balance sheet.

Question 12

If preferred stock is ____________________,its owners must receive the stated dividends for both the current year and any prior years in which the stated dividend was not paid before the common stockholders can receive any dividend.

Accepted Answer

The answer of If preferred stock is ____________________,its owners must...

Question 13

The stockholders of a corporation are agents of the corporation empowered to act for the firm.

Accepted Answer

A) True 
 B)False

Question 14

The entry to record a subscription for 100 shares of common stock at par value would consist of a debit to Subscriptions Receivable-Common and a credit to Common Stock.

Accepted Answer

A) True 
 B)False

Question 15

The amount received in excess of the par value of preferred stock issued is recorded in an account called Paid-in Capital in Excess of Par Value-Preferred Stock.

Accepted Answer

A) True 
 B)False

Question 16

Andrews Corporation has 25,000 common shares authorized and 20,000 shares were issued and outstanding at year end.During the year,the corporation's net income after taxes was $50,000.The policy of the corporation has been to declare dividends equal to 15% of its net income.What is the per share amount to be distributed to the common stock holders?

Accepted Answer

A)   $0.30 a share.
B)   $0.375 a share.
C)   $3.00 a share.
D)   $3.75 a share.

Question 17

The entry to record the issuance of 1,000 shares of $10 par-value common stock for $14 a share consists of a debit to Cash for $14,000 and a credit to Common Stock for

Accepted Answer

A)   $14,000.
B)   $10,000 and a credit to Gain on Sale of Common Stock for $4,000.
C)   $10,000 and a credit to Paid-in Capital in Excess of Par Value-Common Stock for $4,000.
D)   $10,000 and a credit to Treasury Stock for $4,000.

Question 18

Common stock can be converted to preferred stock at the shareholder's discretion.

Accepted Answer

A) True 
 B)False

Question 19

Santorini Corporation has outstanding 300,000 shares of $70 par-value preferred stock,issued at an average price of $84 a share.The preferred stock is convertible into common stock at the rate of four shares of common stock for each share of preferred stock.Maryann Miller owns 880 shares of the preferred stock.During the current year she decides to convert 220 shares into common stock.How many shares of common stock will she receive?

Accepted Answer

The answer of Santorini Corporation has outstanding 300,000 shares of...

Question 20

Common stockholders will receive a dividend

Accepted Answer

A)   in every year that the corporation is profitable.
B)   in every year that the board of directors declares a dividend.
C)   every year,whether the corporation is profitable or not.
D)   every year that profits exceed a stated amount.

Exam 20: Corporations: Formation and Capital Stock Transactions

In respect to corporate debt,stockholders have ____________________ liability.

A corporation has 4,000 shares of 5 percent,$100 par-value preferred stock and 50,000 shares of $2 par-value common stock outstanding.If the board of the directors decides to distribute dividends totaling $100,000,the common stockholders will receive a dividend of

The entry to record the issuance of 1,000 shares of $2 stated-value common stock for $10 a share consists of a debit to Cash for $10,000 and a credit to Common Stock for

When the issuing corporation retains the right to repurchase shares of preferred stock at a specified price,the preferred stock is said to be

Just like No-par-value stock,par value stock can be sold for any price.

Stockholders are the ____________________ of a corporation.

If a corporation sells 400 shares of 12 percent,$100 par-value preferred stock for $105 a share,the entry to record the transaction will include a credit of ____________________ to the Preferred Stock account.

Callable preferred stock gives the shareholder the right to exchange preferred shares of stock for common shares based on the conversion ratio printed on the stock certificate.

The stockholders' ledger for a class of stock is a subsidiary ledger,and the total shares shown must agree with the number of shares in the capital stock account for that class.

Before dividends can be paid,they must be declared and voted upon by the shareholders.

The Preferred Stock account is shown in the

If preferred stock is ____________________,its owners must receive the stated dividends for both the current year and any prior years in which the stated dividend was not paid before the common stockholders can receive any dividend.

The stockholders of a corporation are agents of the corporation empowered to act for the firm.

The entry to record a subscription for 100 shares of common stock at par value would consist of a debit to Subscriptions Receivable-Common and a credit to Common Stock.

The amount received in excess of the par value of preferred stock issued is recorded in an account called Paid-in Capital in Excess of Par Value-Preferred Stock.

The entry to record the issuance of 1,000 shares of $10 par-value common stock for $14 a share consists of a debit to Cash for $14,000 and a credit to Common Stock for

Common stock can be converted to preferred stock at the shareholder's discretion.

Common stockholders will receive a dividend