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

In the United States, a corporation must be incorporated in each state in which it does business.

On December 31, 2011, Springer, Inc.has 3,000 shares of 6% $100 par value cumulative preference shares and 45,000 ordinary shares with a $10 par value outstanding.On December 31, 2011, the directors declare a $12,000 cash dividend.The entry to record the declaration of the dividend would include:

James Corporation issued 1,000 preference shares with a par value of CHF100 for CHF205 per share.This transaction will

A privately traded corporation would be traded on a national securities exchange such as the London Stock Exchange.

A proxy is a legal document that instructs a shareholder's agent how to vote shares for the shareholder.

Richard Company paid £21,000 to buy 4,000 shares of its £6 par value ordinary shares for distribution in an executive compensation plan.The stock was originally sold for £25,000.The entry to record purchase includes a

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

If a corporation declares a 10% ordinary share dividend, the account to be debited on the date of declaration is

The par value of shares issued for noncash assets is never a factor in determining the cost of the assets received.

Match the items below by entering the appropriate code letter in the space provided.

A statement of changes in equity shows the changes in each equity account and in total that have occurred during the year.

Archer, Inc has 10,000 shares of 5%, $100 par value, noncumulative preference shares and 40,000 ordinary shares with a $1 par value outstanding at December 31, 2011.There were no dividends declared in 2010.The board of directors declares and pays a $120,000 dividend in 2011.What is the amount of dividends received by the ordinary shareholders in 2011?

On January 1, Sandford Corporation had 80,000 ordinary shares with a $10 par value outstanding.On June 17, the company declared a 15% share dividend to shareholders of record on June 20.Market value of the shares was $15 on June 17.The entry to record the transaction of June 17 would include a

Anders, Inc has 5,000 shares of 5%, €100 par value, cumulative preference shares and 20,000 ordinary shares with a $1 par value outstanding at December 31, 2011.There were no dividends declared in 2009.The board of directors declares and pays a €45,000 dividend in 2010 and in 2011.What is the amount of dividends received by the ordinary shareholders in 2011?

A corporation purchases 20,000 shares of its own $10 par ordinary shares for $25 per share, recording it at cost.What will be the effect on total equity?

The term residual claim refers to a shareholders' right to

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

Under the corporate form of business organization

Under the cost method, Treasury Shares is debited at the price paid to reacquire the shares, and the same amount is credited to Treasury Shares when the shares are sold.

Simon Company issued 4,000 ordinary shares with a $5 par value in payment of its attorney's bill of $35,000.The bill was for services performed in helping the company incorporate.Simon should record this transaction by debiting