Question 1

The following selected transactions pertain to Nesley Corporation:
Jan. 3 Issued 100,000 shares, $10 par value, common stock for $22 per share.
Feb. 10 Issued 6,000 shares, $10 par value, common stock in exchange for special purpose equipment. Nesley Corporation's common stock has been actively traded on the stock exchange at $25 per share.
Instructions
Journalize the transactions.

Accepted Answer

The answer of The following selected transactions pertain to Nesley...

Question 2

Which of the following factors does not affect the initial market price of a stock?

Accepted Answer

A)  The company's anticipated future earnings 
B)  The par value of the stock 
C)  The current state of the economy 
D)  The expected dividend rate per share

Question 3

The number of common shares outstanding can never be greater than the number of shares issued.

Accepted Answer

A) True 
 B)False

Question 4

On January 1, 2010, Fairly Company issued 30,000 shares of $2 par value common stock for $150,000. On March 1, 2010, the company purchased 6,000 shares of its common stock for $8 per share for the treasury. On June 1, 2010, 1,500 of the treasury shares are sold for $10 per share. On September 1, 2010, 3,000 treasury shares are sold at $6 per share.
Instructions
Journalize the stock transactions of Fairly Company in 2010.

Accepted Answer

The answer of On January 1, 2010, Fairly Company issued...

Question 5

Legal capital per share cannot be equal to the

Accepted Answer

A)  par value per share of par value stock. 
B)  total proceeds from the sale of par value stock above par value. 
C)  stated value per share of no-par value stock. 
D)  total proceeds from the sale of no-par value stock.

Question 6

If a corporation has only one class of stock, it is referred to as

Accepted Answer

A)  classless stock. 
B)  preferred stock. 
C)  solitary stock. 
D)  common stock.

Question 7

Burgess Corporation began business by issuing 200,000 shares of $5 par value common stock for $24 per share. During its first year, the corporation sustained a net loss of $20,000. The year-end balance sheet would show

Accepted Answer

A)  Common stock of $1,000,000. 
B)  Common stock of $4,800,000. 
C)  Total paid-in capital of $4,780,000. 
D)  Total paid-in capital of $3,800,000.

Question 8

Which one of the following is a privately held corporation?

Accepted Answer

A)  Intel 
B)  General Electric 
C)  Caterpillar Inc. 
D)  Cargill Inc.

Question 9

On July 6, XOT Corporation issued 2,000 shares of its $1.50 par common stock. The market price of the stock on that date was $17 per share. Journalize the issuance of the stock.

Accepted Answer

The answer of On July 6, XOT Corporation issued 2,000...

Question 10

A corporation's own stock that has been reacquired by the corporation but not canceled is called ___________________ and is deducted from total _______________________ on the balance sheet.

Accepted Answer

The answer of A corporation's own stock that has been...

Question 11

The following data is available for BOX Corporation at December 31, 2010:
Common stock, par $10 (authorized 15,000 shares} $100,000
Treasury Stock (at cost $15 per share) 600
Based on the data, how many shares of common stock are outstanding?

Accepted Answer

A)  15,000 
B)  10,000 
C)  14,960 
D)  9,960

Question 12

The term residual claim refers to a stockholders' right to

Accepted Answer

A)  receive dividends. 
B)  share in assets upon liquidation. 
C)  acquire additional shares when offered. 
D)  exercise a proxy vote.

Question 13

The major advantages of the corporate form of organization include (1) limited _________________ of owners, (2) continuous ____________________ and (3) ease of transferring ___________________.

Accepted Answer

The answer of The major advantages of the corporate form...

Question 14

Dailey Company is a publicly held corporation whose $1 par value stock is actively traded at $22 per share. The company issued 2,000 shares of stock to acquire land recently advertised at $55,000. When recording this transaction, Dailey Company will

Accepted Answer

A)  debit Land for $55,000. 
B)  credit Common Stock for $44,000. 
C)  debit Land for $44,000. 
D)  credit Paid-In Capital in Excess of Par Value for $53,000.

Question 15

In the stockholders' equity section of the balance sheet, the classification of capital stock consists of

Accepted Answer

A)  additional paid-in capital and common stock. 
B)  common stock and treasury stock. 
C)  common stock, preferred stock, and treasury stock. 
D)  common stock and preferred stock.

Exam 13: Corporations: Organization and Capital Stock Transactions