Question 1

Identify which of the following items would be reported as additions (A) or deductions (D) in a Retained Earnings Statement.
1. Net Income
2. Net Loss
3. Cash Dividends
4. Stock Dividends

Accepted Answer

The answer of Identify which of the following items would...

Question 2

Saint, Inc. declares a 15% common stock dividend when it has 30,000 shares of $10 par value common stock outstanding. If the market value of $24 per share is used, the amounts debited to Stock Dividends and credited to Paid-in Capital in Excess of Par are:

Accepted Answer

The answer of Saint, Inc. declares a 15% common stock...

Question 3

Dividends Payable is classified as a

Accepted Answer

A)  long-term liability. 
B)  contra stockholders' equity account to Retained Earnings. 
C)  current liability. 
D)  stockholders' equity account.

Question 4

Retained earnings that are restricted are unavailable for dividends.

Accepted Answer

A) True 
 B)False

Question 5

On January 1, 2018, Magnus Corporation had 60,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred:
Mar. 1 Issued 35,000 shares of common stock for $550,000.
June 1 Declared a cash dividend of $2.00 per share to stockholders of record on June 15.
June 30 Paid the $2.00 cash dividend.
Dec. 1 Purchased 5,000 shares of common stock for the treasury for $22 per share.
Dec. 15 Declared a cash dividend on outstanding shares of $2.20 per share to stockholders of record on December 31.
Instructions
Prepare journal entries to record the above transactions.

Accepted Answer

The answer of On January 1, 2018, Magnus Corporation had...

Question 6

Which of the following statements about retained earnings restrictions is incorrect?

Accepted Answer

A)  Many states require a corporation to restrict retained earnings for the cost of treasury stock purchased. 
B)  Long-term debt contracts may impose a restriction on retained earnings as a condition for the loan. 
C)  The board of directors of a corporation may voluntarily create retained earnings restrictions for specific purposes. 
D)  Retained earnings restrictions are generally disclosed through a journal entry on the books of a company.

Question 7

Common Stock Dividends Distributable is reported as additional paid-in capital in the stockholders' equity section.

Accepted Answer

A) True 
 B)False

Question 8

The paid-in capital section of the balance sheet consists of two classifications: ______________________ and ______________________.

Accepted Answer

The answer of The paid-in capital section of the balance...

Question 9

Land Inc. has retained earnings of $800,000 and total stockholders' equity of $2,000,000. It has 300,000 shares of $5 par value common stock outstanding, which is currently selling for $30 per share. If Land declares a 10% stock dividend on its common stock:

Accepted Answer

A)  net income will decrease by $150,000. 
B)  retained earnings will decrease by $150,000 and total stockholders' equity will increase by $150,000. 
C)  retained earnings will decrease by $900,000 and total stockholders' equity will increase by $900,000. 
D)  retained earnings will decrease by $900,000 and total paid-in capital will increase by $900,000.

Question 10

Retained earnings are occasionally restricted

Accepted Answer

A)  to set aside cash for dividends. 
B)  to keep the legal capital associated with paid-in capital intact. 
C)  due to contractual loan restrictions. 
D)  if preferred dividends are in arrears.

Question 11

Crawl Inc., has 1,000 shares of 6%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2017, and December 31, 2018. The board of directors declared and paid a $2,000 dividend in 2017. In 2018, $10,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2018?

Accepted Answer

A)  $6,000 
B)  $5,000 
C)  $4,000 
D)  $3,000

Question 12

If a corporation's stock is traded on the major stock exchanges, the corporation must generally report periodically to a federal agency known as the ____________________.

Accepted Answer

The answer of If a corporation's stock is traded on...

Question 13

The acquisition of treasury stock by a corporation

Accepted Answer

A)  increases its total assets and total stockholders' equity. 
B)  decreases its total assets and total stockholders' equity. 
C)  has no effect on total assets and total stockholders' equity. 
D)  requires that a gain or loss be recognized on the income statement.

Question 14

Ralston Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Ralston issues 9,000 shares of common stock to pay its recent attorney's bill of $37,500 for legal services on a land access dispute, which of the following would be the journal entry for Ralston to record?

Accepted Answer

The answer of Ralston Company is authorized to issue 10,000...

Question 15

On January 1, Soft Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 10% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The stock was distributed on June 30. The entry to record the transaction of June 30 would include a

Accepted Answer

A)  credit to Common Stock for $80,000. 
B)  debit to Common Stock Dividends Distributable for $120,000. 
C)  credit to Paid-in Capital in Excess of Par for $40,000. 
D)  debit to Stock Dividends for $40,000.

Question 16

Barr, Inc. reports $4,000,000 of common stock, and $6,000,000 of additional paid-in capital on its balance sheet. The number of common shares issued and outstanding is 500,000 shares. The book value per share is

Accepted Answer

A)  $20. 
B)  $12. 
C)  $8. 
D)  not determinable.

Question 17

The concept of an "artificial being" refers to which form of business organization?

Accepted Answer

A)  Partnership 
B)  Sole proprietorship 
C)  Corporation 
D)  Limited partnership

Question 18

Trane Corporation has the following stockholders' equity accounts:
Preferred Stock
Paid-in Capital in Excess of Par-Preferred Stock
Common Stock
Paid-in Capital in Excess of Stated Value-Common Stock
Paid-in Capital from Treasury Stock-Common
Retained Earnings
Treasury Stock-Common
Instructions
Classify each account using the following tabular alignment.

Accepted Answer

The answer of Trane Corporation has the following stockholders' equity...

Question 19

Library, Inc. has 2,500 shares of 4%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2017, and December 31, 2018. The board of directors declared and paid a $3,000 dividend in 2017. In 2018, $18,000 of dividends are declared and paid. What are the dividends received by the preferred and common shareholders in 2018?

Accepted Answer

The answer of Library, Inc. has 2,500 shares of 4%,...

Question 20

A corporation has a separate __________________________ apart from its owners.

Accepted Answer

The answer of A corporation has a separate __________________________ apart...

Exam 11: Corporations: Organization, Stock Transactions

Identify which of the following items would be reported as additions (A) or deductions (D) in a Retained Earnings Statement. 1. Net Income 2. Net Loss 3. Cash Dividends 4. Stock Dividends