Exam 15: Contributed Capital

The following information is provided from the Forza Corporation's accounting records. 1) Issued 2,500 shares of $1 par common stock at $23 a share. 2) Issued 7,500 shares of $1 par common stock in exchange for land valued at $65,000. 3) In order to prevent a hostile takeover the company reacquired the 7,500 shares for $20 per share as treasury stock. 4) The hostile takeover did not succeed, and the company reissued 5,500 of the treasury shares of $21 per share. 5) The remaining treasury shares were reissued for $22 per share and an additional 2,000 shares were issued at the same price. Required: Prepare the journal entries for the stock transactions, using the cost method assumption to account for the treasury stock.

When existing corporations issue stock, costs such as legal fees and underwriter's fees are usually accounted for as

Treasury stock does not vote, has no preemptive rights, cannot participate in dividends, and has no liquidation rights.

Righty, Inc., entered into a stock subscription contract that called for the purchase by investors of 15,000 shares of $12 par common stock at a price of $33 per share. The contract required a down payment of $15 per share, with the remaining $18 per share collectible at the end of three months. Required: a. Prepare the journal entry to record the stock subscription and down payment. b. The subscribers paid the remainder at the end of three months. Prepare the journal entryies) to record the final payment and the issuance of the shares of stock.

On January 1, 2016, Watchtower Corporation granted Emma Freegross, its president, a compensatory stock option plan to purchase 8,000 shares of Watchtower's $10 par common stock. The option price is $25 per share and the option has a fair value of $7 per option. The option is exercisable on January 1, 2020, after four years of service. How much compensation expense should Watchtower recognize on December 31, 2016?

Below is the partial trial balance dated December 31, 2016, for James River Corporation. Required: Prepare the shareholder's equity portion of the balance sheet dated December 31, 2016.

A company is exchanging its common stock for land in a nonmonetary exchange. This transaction should be valued based upon the

When common stock is issued at an amount greater than par value, the difference between the par value and the proceeds from the sale is recorded by

What rights is a shareholder of capital stock entitled to?

Noncumulative preferred stock is entitled to all dividends, even if they are in the arrears.

For a noncompensatory employee stock option plan, a formal journal entry or entries would be required for which of the following events?

The following information is provided for Miller Corporation: What is the amount of contributed capital for Miller Corporation?

Which of the following statements is true regarding dividends on preferred stock?

On January 1, Maxine Corp. entered into a subscription contract for 100 shares of its $20 par common stock at a price of $50 per share. The contract required each subscriber to make an immediate down payment of $10 and two $20 payments on February 1 and March 1. All the down payments were received on January 1 and all the installments due on February 1 were received on February 1. On March 1, the rest of the payments were received except the payment from one subscriber of ten shares, who defaulted. These shares were later sold for $40 per share. An amount necessary to bring the proceeds up to the total subscription price was retained and the balance of the payments received from the defaulted subscriber was returned. Required: a. List the two shareholders' equity credits in the January 1 journal entry. b. Prepare the journal entries for the receipt of cash and the issuance of stock on March 1. c. Prepare the journal entry completing the transaction with the defaulted subscriber, after the defaulted shares were sold.

All of the following are true statements about a corporation except that it

List four components that comprise a corporation's contributed capital.

Baltimore Bike had outstanding 12,000 shares of $50 par callable preferred stock. The corporation called 35% of the shares originally issued at $75 per share) at a call price of $80 per share. Required: Record the journal entry for the call of this preferred stock.

For share appreciation rights SARs) compensation plans where the employee is expected to receive cash on the exercise date, the account that is credited in the year-end adjusting journal entry to recognize the compensation expense is

A noncompensatory share purchase plan is designed to