Question 1

A 3-for-1 common stock split will increase total stockholders' equity but reduce the par or stated value per share of common stock.

Accepted Answer

A) True 
 B)False

Question 2

Restricted retained earnings are available for preferred stock dividends but unavailable for common stock dividends.

Accepted Answer

A) True 
 B)False

Question 3

On January 1, 2014, Wooden Company issued 16,000 shares of $2 par value common stock for $120,000. On March 1, 2014, the company purchased 2,000 shares of its common stock for $15 per share for the treasury.
Instructions
Journalize the stock transactions of Wooden Company in 2014.

Accepted Answer

The answer of On January 1, 2014, Wooden Company issued...

Question 4

Patrick Corporation is authorized to issue 1,000,000 shares of $1 par value common stock. During 2014, the company has the following stock transactions.
Jan. 15 Issued 700,000 shares of stock at $7 per share.
Sept. 5 Purchased 20,000 shares of common stock for the treasury at $8 per share.
Dec. 6 Declared a $0.50 per share dividend to stockholders of record on December 20, payable January 3, 2015.
Instructions
Journalize the transactions for Patrick Corporation.

Accepted Answer

The answer of Patrick Corporation is authorized to issue 1,000,000...

Question 5

The corporate charter of Torres 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, Torres issued 2,080,000 shares at $15 per share. It later acquired 80,000 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?

Accepted Answer

(a) 4,000,000 shares were authorized.
(b

Question 6

Companies frequently issue both preferred stock and common stock. What are the major differences in the rights of stockholders between these two classes of stock?

Accepted Answer

Common stockholders have the right to vo

Question 7

Name at least three advantages of a corporation.
2. Corporations acquire treasury stock for a variety of purposes. Name three reasons why a corporation may acquire treasury stock.

Accepted Answer

1. Advantages of a corporation:
(a) Sepa

Question 8

Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 5,000 shares of common stock to pay its recent attorney's bill of $25,000 for legal services on a land access dispute, which of the following would be the best journal entry for Retro to record?

Accepted Answer

A)   
B)   
C)   
D)    
A)   
B)   
C)   
D)

Question 9

Treasury stock is a contra stockholders' equity account.

Accepted Answer

A) True 
 B)False

Question 10

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 11

Retained earnings represents the amount of cash available for dividends.

Accepted Answer

A) True 
 B)False

Question 12

The effect of a stock dividend is to

Accepted Answer

A)  decrease total assets and stockholders' equity. 
B)  change the composition of stockholders' equity. 
C)  decrease total assets and total liabilities. 
D)  increase the book value per share of common stock. 
A)  decrease total assets and stockholders' equity. 
B)  change the composition of stockholders' equity. 
C)  decrease total assets and total liabilities. 
D)  increase the book value per share of common stock.

Question 13

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

Accepted Answer

A) True 
 B)False

Question 14

The issuance of common stock affects both paid-in capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 15

Alt Corp. issues 3,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:

Accepted Answer

A)  Common Stock $30,000 and Paid-in Capital in Excess of Stated Value $12,000. 
B)  Common Stock $28,000. 
C)  Common Stock $30,000 and Paid-in Capital in Excess of Par Value $12,000. 
D)  Common Stock $30,000 and Retained Earnings $12,000. 
A)  Common Stock $30,000 and Paid-in Capital in Excess of Stated Value $12,000. 
B)  Common Stock $28,000. 
C)  Common Stock $30,000 and Paid-in Capital in Excess of Par Value $12,000. 
D)  Common Stock $30,000 and Retained Earnings $12,000.

Question 16

Listed below are items typically found in the stockholders' equity section of the balance sheet.   Instructions
Place each of the items listed below in the appropriate subdivision of the stockholders' equity section of a balance sheet.

Accepted Answer

The answer of Listed below are items typically found in...

Question 17

Mann Corporation decided to issue common stock and used the $120,000 proceeds to retire all of its outstanding bonds on January 1, 2014. The following information is available for the company for 2013 and 2014.   Instructions
(a) Compute the return on common stockholders' equity for both years.
(b) Explain how it is possible that net income increased, but the return on common stockholders' equity decreased.
(c) Compute the debt to assets ratio for both years, and comment on the implications of this change in the company's solvency.

Accepted Answer

@#IMG-DLM& (b) Mann Corporation's net income incre

Question 18

Which of the following factors does not affect the initial market price of a stock?

Accepted Answer

A)  The company's anticipated future earnings. 
B)  The par value of the stock. 
C)  The current state of the economy. 
D)  The expected dividend rate per share. 
A)  The company's anticipated future earnings. 
B)  The par value of the stock. 
C)  The current state of the economy. 
D)  The expected dividend rate per share.

Question 19

Johnson Company issued 900 shares of no-par common stock for $15,300. Which of the following journal entries would be made if the stock has no stated value?

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 20

Which of the following statements concerning taxation is accurate?

Accepted Answer

A)  Partnerships pay state income taxes but not federal income taxes. 
B)  Corporations pay federal income taxes but not state income taxes. 
C)  Corporations pay federal and state income taxes. 
D)  Only the owners must pay taxes on corporate income. 
A)  Partnerships pay state income taxes but not federal income taxes. 
B)  Corporations pay federal income taxes but not state income taxes. 
C)  Corporations pay federal and state income taxes. 
D)  Only the owners must pay taxes on corporate income.

A 3-for-1 common stock split will increase total stockholders' equity but reduce the par or stated value per share of common stock.

Restricted retained earnings are available for preferred stock dividends but unavailable for common stock dividends.

On January 1, 2014, Wooden Company issued 16,000 shares of $2 par value common stock for $120,000. On March 1, 2014, the company purchased 2,000 shares of its common stock for $15 per share for the treasury. Instructions Journalize the stock transactions of Wooden Company in 2014.

Companies frequently issue both preferred stock and common stock. What are the major differences in the rights of stockholders between these two classes of stock?

Name at least three advantages of a corporation. 2. Corporations acquire treasury stock for a variety of purposes. Name three reasons why a corporation may acquire treasury stock.

Treasury stock is a contra stockholders' equity account.

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

Retained earnings represents the amount of cash available for dividends.

The effect of a stock dividend is to

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

The issuance of common stock affects both paid-in capital and retained earnings.

Alt Corp. issues 3,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:

Listed below are items typically found in the stockholders' equity section of the balance sheet. Instructions Place each of the items listed below in the appropriate subdivision of the stockholders' equity section of a balance sheet.

Which of the following factors does not affect the initial market price of a stock?

Johnson Company issued 900 shares of no-par common stock for $15,300. Which of the following journal entries would be made if the stock has no stated value?

Which of the following statements concerning taxation is accurate?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Statement of Cash Flows

Financial Analysis: The Big Picture

Time Value of Money

Filters

Exam 11: Reporting and Analyzing Stockholders Equity

A 3-for-1 common stock split will increase total stockholders' equity but reduce the par or stated value per share of common stock.

Restricted retained earnings are available for preferred stock dividends but unavailable for common stock dividends.

On January 1, 2014, Wooden Company issued 16,000 shares of $2 par value common stock for $120,000. On March 1, 2014, the company purchased 2,000 shares of its common stock for $15 per share for the treasury. Instructions Journalize the stock transactions of Wooden Company in 2014.

Companies frequently issue both preferred stock and common stock. What are the major differences in the rights of stockholders between these two classes of stock?

Name at least three advantages of a corporation. 2. Corporations acquire treasury stock for a variety of purposes. Name three reasons why a corporation may acquire treasury stock.

Treasury stock is a contra stockholders' equity account.

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

Retained earnings represents the amount of cash available for dividends.

The effect of a stock dividend is to

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

The issuance of common stock affects both paid-in capital and retained earnings.

Alt Corp. issues 3,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:

Listed below are items typically found in the stockholders' equity section of the balance sheet. Instructions Place each of the items listed below in the appropriate subdivision of the stockholders' equity section of a balance sheet.

Which of the following factors does not affect the initial market price of a stock?

Johnson Company issued 900 shares of no-par common stock for $15,300. Which of the following journal entries would be made if the stock has no stated value?

Which of the following statements concerning taxation is accurate?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Statement of Cash Flows

Financial Analysis: The Big Picture

Time Value of Money

Filters