Exam 11: Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Cole Corporation issues 10,000 preference shares with a $50 par value for cash at $60 per share.The entry to record the transaction will consist of a debit to Cash for $600,000 and a credit or credits to

A debit balance in the Retained Earnings account is identified as a deficit.

Five thousand treasury shares of Meyer, Inc., previously acquired at $12 per share, are sold at $18 per share.The entry to record this transaction will include a

When no-par value shares do not have a stated value, the entire proceeds from the issuance of the shares becomes legal capital.

The cumulative effect of the declaration and payment of a cash dividend on a company's statement of financial position is to

A dividend declared out of share capital or share premium is termed a liquidating dividend.

The per share amount normally assigned by the board of directors to a large share dividend is

The share capital category on the statement of financial position includes both preference and ordinary shares.

A book value per ordinary share is the same amount as the market value per share.

The ability of a corporation to obtain capital is

The date on which a cash dividend becomes a binding legal obligation is on the

Which of the following would not be true of a privately held corporation?

The effect of a share dividend is to

Kendrick Corporation was organized on January 2, 2011.During 2011, Kendrick issued 20,000 shares at $24 per share, purchased 3,000 treasury shares at $26 per share, and had net income of $300,000.What is the total amount of equity at December 31, 2011?

Outstanding shares of the Abel Corporation included 20,000 ordinary shares with a $5 par and 10,000 shares of 5%, $10 par noncumulative preference shares.In 2010, Abel declared and paid dividends of $4,000.In 2011, Abel declared and paid dividends of $12,000.How much of the 2011 dividend was distributed to preference shareholders?

Corporations can pay dividends out of share capital in most countries.

The per share amount normally assigned by the board of directors to a small share dividend is

The sale of ordinary shares below par

The two ways that a corporation can be classified by ownership are

Which of the following show the proper effect of a share split and a share dividend?