Question 1

Treasury stock should be reported in the financial statements of a corporation as an)

Accepted Answer

A)  investment 
B)  liability 
C)  current asset 
D)  deduction from stockholders' equity 
A)  investment 
B)  liability 
C)  current asset 
D)  deduction from stockholders' equity

Question 2

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

Accepted Answer

A)  $3,200 
B)  $6,400 
C)  $4,800 
D)  $8,800 
A)  $3,200 
B)  $6,400 
C)  $4,800 
D)  $8,800

Question 3

The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

Accepted Answer

A) True 
 B)False

Question 4

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

Question 5

Which of the following is not a prerequisite to paying a cash dividend?

Accepted Answer

A)  formal action by the board of directors 
B)  market value in excess of par value per share 
C)  sufficient cash 
D)  sufficient retained earnings 
A)  formal action by the board of directors 
B)  market value in excess of par value per share 
C)  sufficient cash 
D)  sufficient retained earnings

Question 6

Retained earnings

Accepted Answer

A)  is the same as contributed capital 
B)  cannot have a debit balance 
C)  changes are summarized in the retained earnings statement 
D)  is equal to cash on hand 
A)  is the same as contributed capital 
B)  cannot have a debit balance 
C)  changes are summarized in the retained earnings statement 
D)  is equal to cash on hand

Question 7

On June 5, Belen Corporation reacquired 3,300 shares of its own common stock at $45 per share. On July 15, Belen sold 2,000 of the reacquired shares at $48 per share. On August 30, Belen sold the remaining shares at $42 per share.
Journalize the transactions of June 5, July 15, and August 30.

Accepted Answer

June 5
Treasury Stock 3,300 × $45)148,50

Question 8

For the current year ended, ABC had the following transactions:
- Issued 10,000 shares of $2.00 par value common stock for $12.00 per share.
- Issued 3,000 shares of $50 par value 6% preferred stock for $70 per share.
- Purchased 1,000 shares of previously issued common stock for $15.00 per share.
- Reported net income of $200,000.
- Declared and paid a total dividend of $40,000.
Assume that retained earnings had a beginning balance of $75,000.

-$235,000

Accepted Answer

A)  Treasury stock 
B)  Retained earnings 
C)  Preferred stock 
D)  Excess of issue price over par preferred) 
E) Common stock
F) Total paid-in capital
G) Excess of issue price over par common)h. Total stockholders' equity 
A)  Treasury stock 
B)  Retained earnings 
C)  Preferred stock 
D)  Excess of issue price over par preferred) 
E) Common stock
F) Total paid-in capital
G) Excess of issue price over par common)h. Total stockholders' equity

Question 9

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 
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 10

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 
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

Question 11

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

Accepted Answer

A)  $60,000 
B)  $20,000 
C)  $120,000 
D)  $100,000 
A)  $60,000 
B)  $20,000 
C)  $120,000 
D)  $100,000

Question 12

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

Accepted Answer

A) True 
 B)False

Question 13

Match each of the following stockholders' equity concepts to the appropriate term a-h).
-Corporate income distributed to stockholders

Accepted Answer

A) articles of incorporation 
B) limited liability 
C) bylaws 
D) corporation 
E) public corporation
F)board of directors
G)private corporation
H)dividends 
A) articles of incorporation 
B) limited liability 
C) bylaws 
D) corporation 
E) public corporation
F)board of directors
G)private corporation
H)dividends

Question 14

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:
Year 1:
$10,000
Year 2:
15,000
Year 3:
90,000
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 15

The day on which the board of directors of the corporation distributes a dividend is called the declaration date.

Accepted Answer

A) True 
 B)False

Question 16

If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 17

When a corporation issues stock at a premium, it reports the premium as an other income item on the income statement.

Accepted Answer

A) True 
 B)False

Question 18

Match the following stockholders' equity concepts to the appropriate term a-h).
-Shares of common stock that were issued and then reacquired by a company

Accepted Answer

A) cash dividend 
B) date of record 
C) Stock Dividends Distributable 
D) date of declaration 
E) treasury stock
F)preferred stock
G)date of payment
H)Paid-In Capital in Excess of Par 
A) cash dividend 
B) date of record 
C) Stock Dividends Distributable 
D) date of declaration 
E) treasury stock
F)preferred stock
G)date of payment
H)Paid-In Capital in Excess of Par

Question 19

A stock split results in a transfer at market value from retained earnings to paid-in capital.

Accepted Answer

A) True 
 B)False

Question 20

If the dividend amount of preferred stock, $50 par value, is quoted as 8%, then the dividends per share would be $4.

Accepted Answer

A) True 
 B)False

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

Treasury stock should be reported in the financial statements of a corporation as an)

The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

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

Which of the following is not a prerequisite to paying a cash dividend?

Retained earnings

On June 5, Belen Corporation reacquired 3,300 shares of its own common stock at $45 per share. On July 15, Belen sold 2,000 of the reacquired shares at $48 per share. On August 30, Belen sold the remaining shares at $42 per share. Journalize the transactions of June 5, July 15, and August 30.

Earnings per share

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

Match each of the following stockholders' equity concepts to the appropriate term a-h). -Corporate income distributed to stockholders

The day on which the board of directors of the corporation distributes a dividend is called the declaration date.

If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported on the income statement.

When a corporation issues stock at a premium, it reports the premium as an other income item on the income statement.

Match the following stockholders' equity concepts to the appropriate term a-h). -Shares of common stock that were issued and then reacquired by a company

A stock split results in a transfer at market value from retained earnings to paid-in capital.

If the dividend amount of preferred stock, $50 par value, is quoted as 8%, then the dividends per share would be $4.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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