Exam 13: Introduction to Corporations

Dividends in a corporation are the equivalent of drawings in a proprietorship.

The shareholders of a corporation pay tax on corporate profit on an individual basis.

The dominant form of business organization in Canada is

A credit balance in retained earnings represents

The authorization of share capital does not result in a formal accounting entry.

Shares can be issued only in exchange for cash.

Norton Corporation has the following shareholders equity on September 30, 2014: On September 15, 2014, Norton Corporation declared a $170,000 dividend to be paid on October 15 to shareholders of record on September 30. -Assuming that the preferred dividends have not been paid since 2011, the amount of dividends per common share for 2014 would be

A corporate board of directors generally

Trainor Corporation was organized on January 1, 2014. During its first year, the corporation issued 20,000 preferred shares with a $0.30 dividend entitlement and 200,000 common shares, both at $1 per share. At December 31, the corporation's year end, Trainor declared the following cash dividends: Instructions a. Calculate the total dividends and the amount paid to each class of shares, assuming the preferred dividend is not cumulative. b. b. Calculate the total dividends and the amount paid to each class of shares, assuming the preferred dividend is cumulative. c. Journalize the declaration of the cash dividend at December 31, 2015 using the assumption of part

Dividends Payable is classified as a

Allen Barron has invested $800,000 in a privately held family corporation. The corporation does not do well and must declare bankruptcy. What amount does Barron stand to lose?

Kis Corp. declared $35,000 in dividends in 2014. Share capital consists of 1,100 common shares and 3,700, $2 preferred shares. Dividends have not been paid on the preferred shares since 2011. Instructions Determine the dividends to be paid on preferred shares assuming: a. the preferred shares are cumulative. b. the preferred shares are non-cumulative.

Which of the following statements reflects the transferability of ownership rights in a corporation?

If a corporation has only one class of shares, they are referred to as

There is no obligation to pay dividends until a dividend is declared by the Board of Directors.

Organization costs are normally capitalized by public companies.

At December 31, 2013, Cabot Corporation reports revenue of $3,500,000 and expenses of $2,300,000. During the year, the company declared and paid dividends of $400,000. The company had $1,500,000 in retained earnings at the beginning of 2013. Instructions a. Prepare the closing entries for 2013. b. Prepare a statement of retained earnings for December 31, 2013.

No par value shares are shares that have not been assigned any specific value.

Tam Corporation has 5,000 preferred shares that have been issued at $50 per share. Each share is convertible into one common share. When the market values of preferred shares are $55 and common shares are $75, respectively, the 5,000 shares are converted into common shares. The journal entry to record the conversion of the shares is