Question 1

Peterson Company issued 4,000 shares of preferred stock for $240,000. The stock has a par value of $60 per share. Provide the journal entry for this transaction.

Accepted Answer

The answer of Peterson Company issued 4,000 shares of preferred...

Question 2

A corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $12.00 per share.  Which of the following would be included in the entry to record the distribution of a 15% stock dividend?

Accepted Answer

A)  Common Stock-$5 Par Value would be credited for $37,500.
B)  Retained Earnings would be debited for $35,000.
C)  Paid-In Capital in Excess of Par-Common is debited for $35,000.
D)  Retained Earnings would be credited for $60,000.E) B) and D)
F) A) and B)

Question 3

Treasury stock is a:

Accepted Answer

A)  contra equity account.
B)  contra asset account.
C)  liability account.
D)  contra liability account.E) A) and B)
F) A) and C)

Question 4

The following information is from the balance sheet of Tudor Corporation as of December 31, • 2015.  What was the total paid-in capital as of December 31, 2015?

Accepted Answer

A)  $606,000
B)  $807,900
C)  $729,000
D)  $708,000E) None of the above
F) A) and C)

Question 5

Which of the following is a true statement?

Accepted Answer

A)  Both a stock split and a stock dividend will decrease total assets.
B)  Both a stock split and a stock dividend will increase total liabilities.
C)  A stock split will increase total assets, but a stock dividend will not.
D)  Neither a stock split nor a stock dividend will affect total assets or total liabilities.E) B) and D)
F) B) and C)

Question 6

A corporation declares a dividend of $0.50 per share on 10,000 shares of common stock. Which of the following would be included in the entry to record the declaration?

Accepted Answer

A)  Retained Earnings would be debited for $5,000.
B)  Paid-In Capital in Excess of Par-Common would be credited for $5,000.
C)  Retained Earnings would be credited for $5,000.
D)  Dividends Payable-Common would be debited for $5,000.E) B) and D)
F) C) and D)

Question 7

On June 30, 2015, Roger Company showed the following data on the equity section of their balance sheet:  On July 1, 2015, Roger declared and distributed a 5% stock dividend. The market value of the stock at that time was $13 per share. Following this transaction, what would be the new balance in Paid-In Capital in Excess of Par-Common?

Accepted Answer

A)  $286,000
B)  $284,000
C)  $260,000
D)  $344,000E) B) and C)
F) None of the above

Question 8

Which of the following is the correct description of dividends in arrears, as it applies to cumulative preferred stock?

Accepted Answer

A)  the cumulative amount of dividends that were not paid in previous years
B)  the cumulative amount of dividends that were paid in previous years
C)  the amount of dividends that were paid late
D)  the amount of dividends that will be paid in the coming yearE) C) and D)
F) A) and C)

Question 9

Assume the following information for Petra Sales Company: • Common stock, $1.00 par, 200,000 issued, 180,000 outstanding
• Paid-in capital in excess of Par-Common: $1,600,000
• Retained earnings: $2,440,000
• Treasury stock: 20,000 shares purchased at $12 per share
If Petra Sales purchases an additional 5,000 shares of treasury stock at $14 per share, what number of shares will be shown as issued and outstanding?

Accepted Answer

A)  175,000 issued; 180,000 outstanding
B)  195,000 issued; 180,000 outstanding
C)  200,000 issued; 175,000 outstanding
D)  200,000 issued; 180,000 outstandingE) None of the above
F) A) and C)

Question 10

Which of the following is true of dividends?

Accepted Answer

A)  Dividends are a distribution of cash, stock, or other assets to the stockholders.
B)  Dividends increase assets and decrease total stockholders' equity of a corporation.
C)  Dividend payments decrease paid-in capital.
D)  Dividend payments increase stockholders' equity.E) B) and C)
F) A) and D)

Question 11

Which of the following occurs when the board of directors declares a 3-for-1 stock split on 10,000 outstanding shares of $15 par common stock?

Accepted Answer

A)  The par value of the stock remains the same.
B)  The par value of the stock increases to $30 per share.
C)  The number of outstanding shares remains at 10,000.
D)  The number of outstanding shares increases to 30,000.E) None of the above
F) C) and D)

Question 12

Preferred stock is a stock:

Accepted Answer

A)  that sells for a very high price.
B)  that is distributed to employees of the company as a performance incentive.
C)  that is distributed by corporations to avoid liquidation.
D)  that gives its owners certain benefits over common stock.E) A) and C)
F) All of the above

Question 13

Which of the following explains the term "lack of mutual agency" of a corporation?

Accepted Answer

A)  The liabilities of the corporation cannot be extended to the personal assets of the shareholder.
B)  Shares of stock can be readily bought and sold by investors on the open market.
C)  Shareholders are not authorized to sign contracts or make business commitments on behalf of the corporation.
D)  Corporations pay income tax on corporate earnings, and shareholders pay personal income tax on corporate dividends and gains from sale of stock.E) A) and B)
F) A) and C)

Question 14

If a company retires preferred stock:

Accepted Answer

A)  total stockholders' equity will decrease.
B)  total stockholders' equity will increase.
C)  the company can record a gain or loss on retirement of stock.
D)  the number of outstanding shares will go up.E) A) and C)
F) A) and B)

Question 15

Pearland Company has 50,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding. The common stock is $1.00 par value. The preferred stock has a $100 par value, a 5% dividend rate, and is noncumulative. On October 31, 2015, the company declares dividends of $0.25 per share for common. Provide the journal entry for the declaration of dividends.

Accepted Answer

The answer of Pearland Company has 50,000 shares of common...

Question 16

Outstanding stock refers to the:

Accepted Answer

A)  shares of stock that are held by the stockholders.
B)  shares of stock that have been sold for the highest price.
C)  total amount of stock that has been authorized by state law.
D)  total amount of stock that has not been sold yet.E) A) and C)
F) B) and C)

Question 17

Landess Corporation currently has 120,000 shares outstanding of $1 par value common stock. The stock was originally issued for $12 per share. On March 15, the board of directors declares a 10% stock dividend when the stock is selling for $16 per share. Which of the following is the correct journal entry to record this transaction?

Accepted Answer

A)  Debit Common Stock Dividend Distributable $12,000, debit Paid-In Capital in Excess of Par-Common for $180,000 and credit Retained Earnings $192,000.
B)  Debit Retained Earnings $192,000 and credit Common Stock Dividend Distributable $192,000.
C)  Debit Retained Earnings $192,000, credit Common Stock Dividend Distributable $12,000 and credit Paid-In Capital in Excess of Par-Common $180,000.
D)  Debit Paid-In Capital in Excess of Par-Common $192,000 and credit Retained Earnings $192,000.E) A) and B)
F) All of the above

Question 18

Which of the following is a reason for a company to announce a stock split?

Accepted Answer

A)  to defend against a hostile takeover
B)  to double the par value of the share
C)  to reduce the market price at which the stock is trading
D)  to provide the shareholders with something of value, when the company cannot afford a cash dividendE) A) and B)
F) B) and C)

Question 19

Dividends in arrears are:

Accepted Answer

A)  a liability on the balance sheet.
B)  passed dividends on noncumulative preferred stock.
C)  passed dividends on cumulative preferred stock.
D)  passed dividends on common stock.E) A) and B)
F) None of the above

Question 20

The par value of stock is:

Accepted Answer

A)  the current selling price of stock.
B)  the highest price for which a share can sell.
C)  the price paid if the corporation purchases its own stock back.
D)  the amount assigned by a company to a share of its stock.E) A) and C)
F) B) and C)

Exam 13: Corporations

Which of the following is a true statement?

Correct Answer
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A corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $12.00 per share. Which of the following would be included in the entry to record the distribution of a 15% stock dividend?

Correct Answer
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Correct Answer
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Correct Answer
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Which of the following is true of dividends?

Correct Answer
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Correct Answer
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Dividends in arrears are:

Correct Answer
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Which of the following explains the term "lack of mutual agency" of a corporation?

Correct Answer
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Which of the following is the correct description of dividends in arrears, as it applies to cumulative preferred stock?

Correct Answer
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Which of the following occurs when the board of directors declares a 3-for-1 stock split on 10,000 outstanding shares of $15 par common stock?

Correct Answer
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Peterson Company issued 4,000 shares of preferred stock for $240,000. The stock has a par value of $60 per share. Provide the journal entry for this transaction.

Correct Answer
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Treasury stock is a:

Correct Answer
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Which of the following is a reason for a company to announce a stock split?

Correct Answer
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If a company retires preferred stock:

Correct Answer
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Preferred stock is a stock:

Correct Answer
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A corporation declares a dividend of $0.50 per share on 10,000 shares of common stock. Which of the following would be included in the entry to record the declaration?

Correct Answer
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The following information is from the balance sheet of Tudor Corporation as of December 31, • 2015. What was the total paid-in capital as of December 31, 2015?

Correct Answer
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Outstanding stock refers to the:

Correct Answer
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The par value of stock is:

Correct Answer
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Correct Answer
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Exam 13: Corporations

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

A corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $12.00 per share. Which of the following would be included in the entry to record the distribution of a 15% stock dividend?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is true of dividends?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Dividends in arrears are:

Correct AnswerverifiedShow Answer

Which of the following explains the term "lack of mutual agency" of a corporation?

Correct AnswerverifiedShow Answer

Which of the following is the correct description of dividends in arrears, as it applies to cumulative preferred stock?

Correct AnswerverifiedShow Answer

Which of the following occurs when the board of directors declares a 3-for-1 stock split on 10,000 outstanding shares of $15 par common stock?

Correct AnswerverifiedShow Answer

Peterson Company issued 4,000 shares of preferred stock for $240,000. The stock has a par value of $60 per share. Provide the journal entry for this transaction.

Correct AnswerverifiedShow Answer

Treasury stock is a:

Correct AnswerverifiedShow Answer

Which of the following is a reason for a company to announce a stock split?

Correct AnswerverifiedShow Answer

If a company retires preferred stock:

Correct AnswerverifiedShow Answer

Preferred stock is a stock:

Correct AnswerverifiedShow Answer

A corporation declares a dividend of $0.50 per share on 10,000 shares of common stock. Which of the following would be included in the entry to record the declaration?

Correct AnswerverifiedShow Answer

The following information is from the balance sheet of Tudor Corporation as of December 31, • 2015. What was the total paid-in capital as of December 31, 2015?

Correct AnswerverifiedShow Answer

Outstanding stock refers to the:

Correct AnswerverifiedShow Answer

The par value of stock is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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