Exam 11: Corporations: Organization, Stock Transactions, and Stockholders Equity

Vega Corporation's December 31, 2018 balance sheet showed the following: 8% preferred stock, $20 par value, cumulative, 10,000 shares Vega's total stockholders' equity was

Record the following transactions for Quik Corporation on the dates indicated. 1. On March 31, 2018, Quik Corporation discovered that Depreciation Expense on equipment for the year ended December 31, 2017, had been recorded twice, for a total amount of $84,000 instead of the correct amount of $42,000. 2. On June 30, 2018, the company's internal auditors discovered that the April 2018 telephone bill for $2,400 had erroneously been charged to the Interest Expense account. 3. On August 14, 2018, cash dividends on preferred stock of $150,000 declared on July 1, 2018, were paid.

Treasury stock is generally accounted for by the

On May 1, Howard Corporation purchased 2,000 shares of its $10 par value common stock at a cash price of $15/share. On July 15, 900 shares of the treasury stock were sold for cash at $17/share. Instructions Journalize the two transactions.

The corporate charter of Martin Corporation allows the issuance of a maximum of 4,000,000 shares of $1 par value common stock. During its first three years of operation, Martin issued 3,200,000 shares at $15 per share. It later acquired 30,000 of these shares as treasury stock for $25 per share. Instructions Based on the above information, answer the following questions: (a) How many shares were authorized? (b) How many shares were issued? (c) How many shares are outstanding? (d) What is the balance of the Common Stock account? (e) What is the balance of the Treasury Stock account?

Carson Packaging Corporation began business in 2018 by issuing 30,000 shares of $3 par common stock for $8 per share and 12,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $12. On its December 31, 2018 balance sheet, Carson Packaging would report

On November 27, the board of directors of Armstrong Company declared a $.50 per share dividend. The dividend is payable to shareholders of record on December 7 on December 24. Armstrong has 25,500 shares of $1 par common stock outstanding at November 27. Journalize the entries needed on the declaration and payment dates.

A corporation is not an entity which is separate and distinct from its owners.

In the financial statements, organization costs appears

The return on ________________ shows how many dollars of net income were earned for each dollar invested by owners.

When the selling price of treasury stock is greater than its cost, the company credits the difference to

Name at least three factors that influence the market value of stock. 2. Corporations acquire treasury stock for a variety of purposes. Name three reasons why treasury stock may be acquired by a corporation.

A stock dividend results in an increase in paid-in capital in the accounts.

The par value of common stock must always be equal to its market value on the date the stock is issued.

Three important dates associated with dividends are the: (1)__________________, (2)__________________, and (3)__________________.

Match the items below by entering the appropriate code letter in the space provided. A. Limited liability B. Capital stock C. Board of directors D. Paid-in capital E. Retained earnings F. Preemptive right G. Par value H. Legal capital I. Treasury stock J. Cumulative feature K. Deficit L. Liquidating dividend M. Earnings per share N. Return on common stockholders' equity O. Cash dividend P. Declaration date Q. Stock dividend R. Stock split ____ 1. Net income retained in the corporation. ____ 2. The amount that must be retained in the business for the protection of creditors. ____ 3. Preferred stockholders have a right to receive current and unpaid prior-year dividends before common stockholders receive any dividends. ____ 4. Creditors only have corporate assets to satisfy their claims. ____ 5. Responsible to stockholders for corporate activity. ____ 6. The amount assigned to each share of stock in the corporate charter. ____ 7. Unit of ownership in a corporation. ____ 8. Enables stockholders to maintain their same percentage ownership when new shares are issued. ____ 9. Corporation's own stock that has been reacquired by the corporation but not retired. ____ 10. Total amount paid-in on capital stock. ____ 11. A dividend declared out of paid-in capital. ____ 12. A pro rata distribution of cash to stockholders. ____ 13. A debit balance in retained earnings. ____ 14. A pro rata distribution of the corporation's own stock to stockholders. ____ 15. Shows how many dollars of net income were earned for each dollar invested by the owners. ____ 16. The date the board of directors formally declares the dividend and announces it to stockholders. ____ 17. The issuance of additional shares of stock to stockholders accompanied by a reduction in the par or stated value per share. ____ 18. Widely used by stockholders and potential investors in evaluating the profitability of a company.

An inexperienced accountant for Olsen Corporation made the following entries. Instructions (a) On the basis of the explanation for each entry, prepare the entry that should have been made for the transactions. (Omit explanations.) (b) Prepare the correcting entries that should be made to correct the accounts of Olsen Corporation. (Do not reverse the original entry.)

In the stockholders' equity section, paid-in capital and retained earnings are reported and the specific sources of paid-in capital are identified.

If a stockholder receives a dividend that reduces retained earnings by the fair value of the stock, the stockholder has received a