Question 1

Which of the following dates do NOT require a journal entry?

Accepted Answer

A) Date of payment 
B) Date of record 
C) Date of declaration 
D) All dividend dates require a journal entry.

Question 2

Ironworks, Inc. issued 400 shares of $9 par common stock in exchange for a piece of equipment with a current market value of $5,000. Which of the following is NOT part of the journal entry for this transaction?

Accepted Answer

A) Debiting equipment for $5,000 
B) Crediting Common Stock for $5,000 
C) Crediting paid-in capital in excess of par-common for $1,400 
D) Crediting Common Stock for $3,600

Question 3

The entry to record TLR, Inc. selling 1,200 shares of $6 par common stock at $10 per share would be to:

Accepted Answer

A) debit Cash $12,000; credit Common Stock $7,200; credit Paid-In Capital in Excess of Par-Common Stock $4,800. 
B) debit Cash $7,200; credit Common Stock $7,200. 
C) debit Cash $12,000; debit Paid-In Capital in Excess of Par-Common $4,800; credit Common Stock $16,800. 
D) debit Cash $12,000; credit Common Stock $12,000.

Question 4

The formula needed to compute "additional paid-in capital in excess of par" is:

Accepted Answer

A) number of shares of stock times par value per share of stock. 
B) number of shares of stock times selling price per share of stock. 
C) number of shares of stock times (selling price per share - par value per share). 
D) number of shares of stock times (selling price per share + par value per share).

Question 5

The journal entry to record the distribution of a stock dividend includes a:

Accepted Answer

A) credit to Common Stock. 
B) credit to Dividends Payable. 
C) credit to Cash. 
D) credit to Retained Earnings.

Question 6

Par value is assigned.

Accepted Answer

A) when the corporate charter is filed. 
B) when the company decides to issue the stock. 
C) after the stock has been issued. 
D) at the first meeting of the organizers of the corporation.

Question 7

Evergreen Corp. issues 12,000 shares of $5 par common stock for $8.50 per share. The amount credited to paid-in capital in excess of par is:

Accepted Answer

A) $102,000. 
B) $60,000. 
C) $12,000. 
D) $42,000.

Question 8

A company has 50,000 shares of $1 par, 10% preferred stock. The 10% refers to the stock's:

Accepted Answer

A) market rate. 
B) dividend rate. 
C) paid-in capital rate. 
D) interest rate.

Question 9

On the date of declaration:

Accepted Answer

A) debit Dividends and credit Retained Earnings. 
B) debit Dividends Payable and credit Cash. 
C) debit Retained Earnings and credit Cash. 
D) debit Retained Earnings and credit Dividends Payable.

Question 10

A company's stock that it reacquires is termed treasury stock.

Accepted Answer

A) True 
 B)False

Question 11

The number of shares of stock that a corporation is given the right to sell is called:

Accepted Answer

A) issued stock. 
B) authorized stock. 
C) outstanding stock. 
D) capital stock.

Question 12

Charmed, Inc. has 10,000 shares of treasury stock which it purchased for $10/share. It later resold 3,000 of those shares for $18/share. The amount to be credited to Paid-in Capital-Treasury Stock is:

Accepted Answer

A) $80,000. 
B) $100,000. 
C) $54,000. 
D) $24,000.

Question 13

HiTech Industries reacquired 10,000 shares of its $26-par common stock for $70/share. The debit to Treasury Stock will be:

Accepted Answer

A) based on the last treasury stock transaction. 
B) $440,000. 
C) $260,000. 
D) $700,000.

Question 14

Charmed, Inc. reacquired 7,000 shares of its $16-par common stock for $11/share. The debit to Treasury Stock will be:

Accepted Answer

A) $35,000. 
B) $77,000. 
C) $112,000. 
D) based on the last treasury stock transaction.

Question 15

A company issues 15,000 shares of its $22 par common stock for $32 per share. The amount to be debited to Cash is:

Accepted Answer

A) $330,000. 
B) $480,000. 
C) $150,000. 
D) $810,000.

Question 16

Which of the following is an advantage of a corporation?

Accepted Answer

A) Tax regulations 
B) Continuous life 
C) Unlimited liability 
D) All of the above are advantages

Question 17

In addition to the regular financial statements, a company may issue a separate Statement of Stockholders' Equity.

Accepted Answer

A) True 
 B)False

Question 18

A company issues 25,000 shares of its $25 par common stock for $27 per share. The entry to record this will include a debit to Cash for $675,000.

Accepted Answer

A) True 
 B)False

Question 19

Dental Designs, Inc. Stockholders' Equity section includes the following information: 
Total paid-in capital is:

Accepted Answer

A) $56,000. 
B) $26,000. 
C) $63,000. 
D) $30,000.

Question 20

The entry to record selling 400 shares of $28 stated value common stock for $44 per share would include:

Accepted Answer

A) debiting Common Stock for $17,600. 
B) crediting Cash for $17,600. 
C) crediting Paid-in Capital in Excess of Stated Value for $6,400. 
D) debiting Paid-in Capital in Excess of Stated Value for $6,400.

Exam 10: Corporations: Paid-In Capital and Retained Earnings

Which of the following dates do NOT require a journal entry?

Ironworks, Inc. issued 400 shares of $9 par common stock in exchange for a piece of equipment with a current market value of $5,000. Which of the following is NOT part of the journal entry for this transaction?

The entry to record TLR, Inc. selling 1,200 shares of $6 par common stock at $10 per share would be to:

The formula needed to compute "additional paid-in capital in excess of par" is:

The journal entry to record the distribution of a stock dividend includes a:

Par value is assigned.

Evergreen Corp. issues 12,000 shares of $5 par common stock for $8.50 per share. The amount credited to paid-in capital in excess of par is:

A company has 50,000 shares of $1 par, 10% preferred stock. The 10% refers to the stock's:

On the date of declaration:

A company's stock that it reacquires is termed treasury stock.

The number of shares of stock that a corporation is given the right to sell is called:

Charmed, Inc. has 10,000 shares of treasury stock which it purchased for $10/share. It later resold 3,000 of those shares for $18/share. The amount to be credited to Paid-in Capital-Treasury Stock is:

HiTech Industries reacquired 10,000 shares of its $26-par common stock for $70/share. The debit to Treasury Stock will be:

Charmed, Inc. reacquired 7,000 shares of its $16-par common stock for $11/share. The debit to Treasury Stock will be:

A company issues 15,000 shares of its $22 par common stock for $32 per share. The amount to be debited to Cash is:

Which of the following is an advantage of a corporation?

In addition to the regular financial statements, a company may issue a separate Statement of Stockholders' Equity.

A company issues 25,000 shares of its $25 par common stock for $27 per share. The entry to record this will include a debit to Cash for $675,000.

Dental Designs, Inc. Stockholders' Equity section includes the following information: Total paid-in capital is:

The entry to record selling 400 shares of $28 stated value common stock for $44 per share would include: