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

Rancho Corporation sold 200 treasury shares for $40 per share.The cost for the shares was $30.The entry to record the sale will include a

Dividends in arrears on cumulative preference shares

Net income of a corporation should be closed to retained earnings and net losses should be closed to the share premium account.

S. Lawyer performed legal services for $E$ . Corp. Due to a cash shortage, an agreement was re ached whereby E. Corp. Would pay $S$ . Lawyer a legal fee of approximately $\$ 10,000$ by issuing 5,000 ordinary shares $($ par $\$ 1)$ . The shares trade on a daily basis and the market price of the shares on the day the debt was settled is $\$ 1.80$ per share. Given this information, the journal entry for $E$ . Corp. to record this transaction is:

On January 1, Edmiston Corporation had 1,000,000 ordinary shares with a $10 par value outstanding.On March 31, the company declared a 20% share dividend.Market value was $15/share.As a result of this event,

Treasury shares should be reported in the equity section immediately after

Which of the following statements regarding the date of a cash dividend declaration is not accurate?

A shareholder has the right to vote in the election of the board of directors.

Double taxation means that

Net losses reduce the balance of Share Capital.

A 3-for-1 ordinary share split will increase total equity but reduce the par or stated value per share.

On the dividend record date,

Outstanding shares of the Colt Corporation included 20,000 ordinary shares with a $5 par and 5,000 shares of 5%, $10 par noncumulative preference shares.In 2010, Colt declared and paid dividends of $2,000.In 2011, Colt declared and paid dividends of $6,000.How much of the 2011 dividend was distributed to preference shareholders?

Treasury shares purchased for $25 per share that are reissued at $20 per share, result in a Loss on Sale of Treasury Shares being recognized on the income statement.

The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.

Ownership rights of a shareholder include the right to be involved in the daily operations of the corporation.

Voltaire Corporation issued 2,000 ordinary shares of CHF5 par value for CHF20 per share.This transaction will increase

The acquisition of treasury shares by a corporation increases total assets and total equity.

When share dividends are distributed,

Andrews, Inc.paid $45,000 to buy back 9,000 shares of its $1 par value ordinary shares.These shares were sold later at a selling price of $6 per share.The entry to record the sale includes a