Question 1

A corporation had the following stock outstanding when the company's board of directors declared a
$55,000 cash dividend during the current year:

Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is cumulative and nonparticipating and dividends are one year in arrears.

Accepted Answer

The answer of A corporation had the following stock outstanding...

Question 2

Cactus Joe Corporation reported stockholders' equity on January 1 of the current year as follows: Common Stock, $5 par value, 1,000,000 shares authorized, 600,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $1,025,000; Retained Earnings, $1,850,000. Prepare journal entries to record the following transactions:
May 1 A cash dividend of $1.05 per common share was declared by the board of directors to stockholders of record on May 20, payable June 1.
May 20 The date of record. June 1 Paid the cash dividend.

Accepted Answer

The answer of Cactus Joe Corporation reported stockholders' equity on...

Question 3

Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.  $\begin{array}{lc}
&\text { Dividend Declared }\
\text { Year 1 } & \$  0 \
\text { Year 2 } & \$ 6,000 \
\text { Year 3 } & \$ 32,000
\end{array}$
The amount of dividends paid to preferred and common shareholders in Year 2 is:

Accepted Answer

A)  $3,000 preferred; $3,000 common. 
B)  $3,500 preferred; $2,500 common. 
C)  $0 preferred; $6,000 common. 
D)  $4,200 preferred; $1,800 common. 
E)  $6,000 preferred; $0 common.

Question 4

________ is the stockholders' equity applicable to common shares divided by the number of common shares outstanding.

Accepted Answer

The answer of ________ is the stockholders' equity applicable to...

Question 5

A corporation had the following stock outstanding when the company's board of directors declared a
$75,000 cash dividend in the current year:
 $$\begin{array} { l | l } 
\text { Preferred stock, \$40 par, 6\%, 12,500 shares issued } & \$ 500,000 \
\hline \text { Common stock, \$10 par, 70,000 shares issued } \ldots \ldots \ldots \ldots \ldots & 700,000 \
\hline \text { Total } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & \$ 1,200,000 \
\hline
\end{array}$$ Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is noncumulative and nonparticipating.

Accepted Answer

The answer of A corporation had the following stock outstanding...

Question 6

A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation.

Accepted Answer

A) True 
 B)False

Question 7

Stockholders' equity consists of paid-in capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 8

A corporation may be authorized to issue both common and preferred stock.

Accepted Answer

A) True 
 B)False

Question 9

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

Accepted Answer

A) True 
 B)False

Question 10

When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends, the unpaid amount is called ________.

Accepted Answer

The answer of When preferred stock is cumulative and the...

Question 11

A corporation's minimum legal capital is established by recording the par or stated value of the number of shares:

Accepted Answer

A)  Authorized. 
B)  Subscribed. 
C)  Outstanding. 
D)  Issued. 
E)  In treasury.

Question 12

Dynasty Corporation had stockholders' equity on January 1 as follows: Common Stock, $5 par value, 1,000,000 shares authorized, 400,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $800,000; Retained Earnings, $3,600,000. Prepare journal entries to record the following transactions:
Feb. 15 The board of directors declared a 5% stock dividend to stockholders of record on
March 1, to be issued on March 20. The stock was trading at $7 per share prior to the dividend
Mar. 1 The date of record.
Mar. 20 Issued the stock dividend.

Accepted Answer

The answer of Dynasty Corporation had stockholders' equity on January...

Question 13

Dividend yield is computed by dividing earnings per share by the market value per share.

Accepted Answer

A) True 
 B)False

Question 14

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the declaration of the cash dividend is:

Accepted Answer

A)  Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
B)  Debit Dividend Expense $12,000; credit Cash $12,000. 
C)  Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
D)  Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000. 
E)  Debit Common Dividend Payable $12,000; credit Cash $12,000.

Question 15

What is a corporation? Identify the key advantages and disadvantages of corporations.

Accepted Answer

The answer of What is a corporation? Identify the key...

Question 16

A debit balance in retained earnings is referred to as an accumulated deficit.

Accepted Answer

A) True 
 B)False

Question 17

Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the balance in the Treasury Stock account on August 2?

Accepted Answer

A)  $100. 
B)  $2,600. 
C)  $1,200. 
D)  $5,050. 
E)  $0.

Question 18

A reverse stock split increases the market value per share and the par value per share of stock.

Accepted Answer

A) True 
 B)False

Question 19

Large stock dividends are recorded at par or stated value.

Accepted Answer

A) True 
 B)False

Question 20

When a corporation has only one class of stock, the stock is called:

Accepted Answer

A)  Preferred stock. 
B)  No-par value stock. 
C)  Common stock. 
D)  Stated value stock. 
E)  Par value stock.

Exam 13: Accounting for Corporations

________ is the stockholders' equity applicable to common shares divided by the number of common shares outstanding.

A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation.

Stockholders' equity consists of paid-in capital and retained earnings.

A corporation may be authorized to issue both common and preferred stock.

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends, the unpaid amount is called ________.

A corporation's minimum legal capital is established by recording the par or stated value of the number of shares:

Dividend yield is computed by dividing earnings per share by the market value per share.

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the declaration of the cash dividend is:

What is a corporation? Identify the key advantages and disadvantages of corporations.

A debit balance in retained earnings is referred to as an accumulated deficit.

A reverse stock split increases the market value per share and the par value per share of stock.

Large stock dividends are recorded at par or stated value.

When a corporation has only one class of stock, the stock is called: