Exam 5: Introduction to Corporations

Profits may be either reinvested in a corporation or distributed to its shareholders as dividends.

Singh, Inc. has 5,000, $ 8, noncumulative preferred shares issued at $ 100, and 20,000 common shares issued at $ 1, at December 31, 2021. There were no dividends declared in 2020. The board of directors declares and pays a $ 60,000 dividend in 2021. What is the amount of dividends received by the common shareholders in 2021?

Corporate tax rates are typically

Solo Corporation issued 1,000, no par value, convertible preferred shares at $ 100 per share. Each share is convertible into 10 common shares. When the market values of the two classes of shares are $ 101 and $ 13, respectively, 150 preferred shares are converted into common shares. Instructions a) Journalize the conversion of the 150 shares. a) assuming that the market values at conversion are $ 103 and $ 20, respectively. b) Repeat

Under the Canada Business Corporations Act, a corporation cannot pay a dividend if it would then be unable to pay its liabilities.

Articles of incorporation form the corporation's "constitution".

Private companies adhering to Canadian GAAP apply which of the following accounting framework(s)?

A dividend is a pro rata distribution of a portion of a corporation's retained earnings to its shareholders.

The impact of the company's shares being sold among investors will

McGregor Corporation is authorized to issue an unlimited number of common shares and 500,000 shares of preferred shares. During 2021, its first year of operation, the company had profit of $ 305,000. The following share transactions occurred: Instructions a) Journalize the transactions for McGregor Corporation assuming the company follows IFRS. b) Prepare the shareholders' equity section of the balance sheet at December 31, 2021.

On January 1, 2021, Hobbs Corporation had 60,000 common shares issued at $ 1 per share. During the year, the following transactions occurred: Mar 1 Issued 40,000 common shares for $ 600,000. Jun 1 Declared a cash dividend of $ 2 per share to shareholders of record on June 15. Jun 30 Paid the $ 2 cash dividend. Profit for 2021 amounted to $ 651,000. Instructions Prepare journal entries to record the above transactions including any appropriate closing entries.

Companies can only be incorporated under the federal government.

Return on equity

The primary consideration for the decision to declare dividends is whether the company made a profit in the current year.

Lee Holdings Ltd. was incorporated on January 2, 2021 and on that date issued 50,000 common shares for cash at $ 1 each. On April 30, Lee issued 1,000 preferred, $ 3 cumulative preferred shares, convertible to common shares at the rate of 6 common shares for one preferred share. The preferred shares were issued for $ 18 each. On October 15, 600 of the preferred shares were converted to common shares. On that date, the market value was $ 1.50 for the common shares and $ 17.50 for the preferred shares. Instructions Journalize the share transactions described.

Which of the following terms represents a situation in which total losses and dividends to date are greater than total profit to date?

All of the following are examples of organization costs EXCEPT

Which one of the following would NOT be considered an advantage of the corporate form of organization?

The amount of dividends paid is reported on the statement of retained earnings.

When shares are issued for services or noncash assets, the shares should be recorded at the fair value of the services or noncash assets.