Question 1

A corporation,which had 18,000 shares of common stock outstanding,declared a 3-for-1 stock split.
a- What will be the number of shares outstanding after the split?
b- If the common stock had a market price of $240 per share before the stock split,what would be an approximate market price per share after the split?
c- Journalize the entry to record the stock split.

Accepted Answer

The answer of A corporation,which had 18,000 shares of common...

Question 2

Which of the following amounts should be disclosed in the stockholders' equity section of the balance sheet?

Accepted Answer

A) the number of shares of common stock outstanding 
B) the number of shares of common stock issued 
C) the number of shares of common stock authorized 
D) all of these

Question 3

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired.What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

Accepted Answer

A) $80,000 
B) $10,000 
C) $90,000 
D) $100,00

Question 4

Sabas Company has 20,000 shares of $100 par,1% noncumulative preferred stock and 100,000 shares of $50 par common stock.The following amounts were distributed as dividends:

$\begin{array}{ll}
\text { Year 1: } & \$ 10,000 \
\text { Year 2: } & 15,000 \
\text { Year 3: } & 90,000
\end{array}$ 
Determine the dividends per share for preferred and common stock for each year.

Accepted Answer

The answer of Sabas Company has 20,000 shares of $100...

Question 5

The retained earnings statement may be combined with the income statement.

Accepted Answer

A) True 
 B)False

Question 6

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

Accepted Answer

A) True 
 B)False

Question 7

The par value of stock is an assigned per share amount defined in many states as legal capital.

Accepted Answer

A) True 
 B)False

Question 8

Wonder Sales is authorized to issue 100,000 shares of 2%,$100 par preferred stock and 1,000,000 shares of $10 par common stock.Journalize the following transactions.
a-On January 2,Wonder Sales issues 5,000 shares of preferred stock for $110 per share and 65,000 shares of common stock at $10 per share.
b- On January 25,Wonder Sales issued 250 shares of preferred stock to a Morton Law Firm for settlement of a $36,000 invoice for incorporation services.
c -On January 31,Wonder Sales issues 500 shares of common stock to Setup Inc.for fixtures that have a fair market value of $8,500.

Accepted Answer

The answer of Wonder Sales is authorized to issue 100,000...

Question 9

Which of the following is not a characteristic of a corporation?

Accepted Answer

A) The financial loss that a stockholder may suffer from owning stock in a public company is limited. 
B) Cash dividends paid by a corporation are deductible as expenses by the corporation. 
C) A corporation can own property in its name. 
D) Corporations are required to file federal income tax returns.

Question 10

Which of the following statements concerning taxation is accurate?

Accepted Answer

A) Corporations pay federal income taxes but not state income taxes. 
B) Corporations pay federal and state income taxes. 
C) Only the owners must pay taxes on corporate income. 
D) Corporations pay income taxes but their owners do not.

Question 11

The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?

Accepted Answer

A) Retained Earnings 
B) Treasury Stock 
C) Organizational Expenses 
D) Common Stock

Question 12

The initial stockholders of a newly formed corporation are called directors.

Accepted Answer

A) True 
 B)False

Question 13

Sabas Company has 40,000 shares of $100 par,1% preferred stock and 100,000 shares of $50 par common stock.The following amounts were distributed as dividends:

$\begin{array}{lr}
\text { Year 1: } & \$ 50,000 \
\text { Year 2: } & 90,000 \
\text { Year 3: } & 130,000
\end{array}$
 Determine the dividends per share for preferred and common stock for each year.

Accepted Answer

The answer of Sabas Company has 40,000 shares of $100...

Question 14

Oregon,Inc.reported net income of $105,000.During the current year,the company had 5,000 shares of $100 par,5% preferred stock and 10,000 of $5 par common stock outstanding.Oregon's earnings per share is

Accepted Answer

A) $8.00 
B) $18.00 
C) $5.08 
D) $5.00

Question 15

The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to

Accepted Answer

A) Organizational Expenses 
B) Goodwill 
C) Common Stock 
D) Cash

Question 16

Stockholders' equity

Accepted Answer

A) is usually equal to cash on hand 
B) includes paid-in capital and liabilities 
C) includes retained earnings and paid-in capital 
D) is shown on the income statement

Question 17

Cash dividends become a liability to a corporation on the date of record.

Accepted Answer

A) True 
 B)False

Question 18

Nebraska Inc.issues 3,000 shares of common stock for $45,000.The stock has a stated value of $10 per share.The journal entry to record the stock issuance would include a credit to Common Stock for

Accepted Answer

A) $30,000 
B) $45,000 
C) $15,000 
D) $3,000

Question 19

Kansas Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock.The stock is widely traded and selling for $15 per share.At what amount should the building be recorded by Kansas Company?

Accepted Answer

A) $60,000 
B) $180,000 
C) $210,000 
D) $120,000

Question 20

Organizational expenses are classified as intangible assets on the balance sheet.

Accepted Answer

A) True 
 B)False

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

Which of the following amounts should be disclosed in the stockholders' equity section of the balance sheet?

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired.What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

The retained earnings statement may be combined with the income statement.

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

The par value of stock is an assigned per share amount defined in many states as legal capital.

Which of the following is not a characteristic of a corporation?

Which of the following statements concerning taxation is accurate?

The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?

The initial stockholders of a newly formed corporation are called directors.

Oregon,Inc.reported net income of $105,000.During the current year,the company had 5,000 shares of $100 par,5% preferred stock and 10,000 of $5 par common stock outstanding.Oregon's earnings per share is

The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to

Stockholders' equity

Cash dividends become a liability to a corporation on the date of record.

Nebraska Inc.issues 3,000 shares of common stock for $45,000.The stock has a stated value of $10 per share.The journal entry to record the stock issuance would include a credit to Common Stock for

Kansas Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock.The stock is widely traded and selling for $15 per share.At what amount should the building be recorded by Kansas Company?

Organizational expenses are classified as intangible assets on the balance sheet.