Question 1

166.	 The following transactions took place for the XYZ Corporation:

November 12 - Declared a total cash dividend of $45,000 for stockholders of record November 20 payable on December 1. Record the journal entries required by these events.

Briefly describe the significance of November 20.

Accepted Answer

The answer of 166.	 The following transactions took place for...

Question 2

The declaration of a cash dividend decreases a corporation's stockholders equity and decreases its assets.

Accepted Answer

A) True 
 B)False

Question 3

Texas Inc.has 10,000 shares of 6%,$125 par value,cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31.What is the annual dividend on the preferred stock?

Accepted Answer

A) $75 per share 
B) $75,000 in total 
C) $10,000 in total 
D) $0.75 per share

Question 4

The liability for a dividend is recorded on which of the following dates?

Accepted Answer

A) the date of record 
B) the date of payment 
C) the last day of the fiscal year 
D) the date of declaration

Question 5

A reduction of par or stated value of stock results from a

Accepted Answer

A) liquidating dividend 
B) stock split 
C) stock option 
D) preferred dividend

Question 6

Paid-in capital may originate from real estate transactions.

Accepted Answer

A) True 
 B)False

Question 7

A corporation purchased 1,000 shares of its own $5 par common stock at $10 and subsequently sold 500 of the shares at $20.What is the amount of revenue realized from the sale?

Accepted Answer

A) $0 
B) $5,000 
C) $2,500 
D) $10,000

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Sabas Company has 20,000 shares of $100 par,2% cumulative preferred stock and 100,000 shares of $50 par common stock.The following amounts were distributed as dividends:
$\begin{array}{rr}
\text { Year 1: } & \$ 10,000 \
\text { Year 2: } & 45,000 \
\text { Year 3: } & 90,000
\end{array}$
 Determine the dividends in arrears for preferred stock for the second year.

Accepted Answer

A) $25,000 
B) $10,000 
C) $0 
D) $30,000

Question 11

Before a stock dividend can be declared or paid,there must be sufficient cash.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not a right possessed by common stockholders of a corporation?

Accepted Answer

A) the right to vote in the election of the board of directors 
B) the right to receive a minimum amount of dividends 
C) the right to sell their stock to anyone they choose 
D) the right to share in assets upon liquidation

Question 13

For accounting purposes,stated value is treated the same way as par value.

Accepted Answer

A) True 
 B)False

Question 14

The excess of sales price of treasury stock over its cost should be credited to

Accepted Answer

A) Treasury Stock Receivable 
B) Premium on Capital Stock 
C) Paid-In Capital from Sale of Treasury Stock 
D) Income from Sale of Treasury Stock

Question 15

The two main sources of stockholders' equity are

Accepted Answer

A) investments by stockholders and net income retained in the business 
B) investments by stockholders and dividends paid 
C) net income retained in the business and dividends paid 
D) investments by stockholders and purchases of assets

Question 16

A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

Accepted Answer

A) True 
 B)False

Question 17

Earnings per share

Accepted Answer

A) is the net income per common share 
B) must be reported by public company 
C) helps compare companies of different sizes 
D) all of the answers are correct

Question 18

Characteristics of a corporation include

Accepted Answer

A) shareholders who are mutual agents 
B) direct management by the shareholders owners 
C) its inability to own property 
D) shareholders who have limited liability

Question 19

The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 20

On January 1,Vermont Corporation had 40,000 shares of $10 par value common stock issued and outstanding.All 40,000 shares had been issued in a prior period at $20.00 per share.On February 1,Vermont purchased 3,750 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1. The journal entry to record the purchase of the treasury shares on February 1,would include a

Accepted Answer

A) credit to Treasury Stock for $90,000 
B) debit to Treasury Stock for $90,000 
C) debit to a loss account for $112,500 
D) credit to a gain account for $112,500

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

166. The following transactions took place for the XYZ Corporation: November 12 - Declared a total cash dividend of $45,000 for stockholders of record November 20 payable on December 1. Record the journal entries required by these events. Briefly describe the significance of November 20.

The declaration of a cash dividend decreases a corporation's stockholders equity and decreases its assets.

Texas Inc.has 10,000 shares of 6%,$125 par value,cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31.What is the annual dividend on the preferred stock?

The liability for a dividend is recorded on which of the following dates?

A reduction of par or stated value of stock results from a

Paid-in capital may originate from real estate transactions.

A corporation purchased 1,000 shares of its own $5 par common stock at $10 and subsequently sold 500 of the shares at $20.What is the amount of revenue realized from the sale?

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

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

Before a stock dividend can be declared or paid,there must be sufficient cash.

Which of the following is not a right possessed by common stockholders of a corporation?

For accounting purposes,stated value is treated the same way as par value.

The excess of sales price of treasury stock over its cost should be credited to

The two main sources of stockholders' equity are

A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

Earnings per share

Characteristics of a corporation include

The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial statements.