Exam 12: Corporations: Paid-In Capital and the Balance Sheet

All corporations must issue both common and preferred shares of stock.

Overton Company had the following transactions in 2012, its first year of operations. • Issued 5,000 shares of common stock. Stock has par value of $0.01 per share and was issued at $30.00 Per share. • Earned net income of $200,000. • Paid dividends of $5.00 per share. - At the end of 2012, how much is the total Paid-in capital?

The formation of a corporation is generally less complicated than the formation of a partnership.

Which of the following factors may cause a difference between book income and taxable income?

On December 2, 2014, Ewell Company purchases a piece of land from the original owner. In payment for the land, Ewell Company issues 8,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of $400,000. The journal entry to record this transaction would include which of the following items?

Occidental Produce Company has 40,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding. The common stock is $0.01 par value; the preferred stock is 4% non-cumulative, with $100 par value. On October 15, 2014, the company declares a total dividend payment of $40,000. - What is the total amount of dividends that will be paid to the common shareholders?

Which of the following is a TRUE statement about a corporation?

Retained earnings as shown on the balance sheet can, under certain circumstances, show a negative balance.

If preferred stock is cumulative, then the company does NOT need to pay dividends that were passed in previous years.

On which of the following dates do dividends become a liability of a corporation?

A dividend's declaration date is the date the board of directors announces the intention to pay the dividend.

If a company has a strong rate of return on common stockholders' equity, that is an indication of good cash flow.

Peterson Company issued 4,000 shares of preferred stock for $240,000. The stock has a par value of $60 per share. The journal entry to record this transaction would:

Which of the following is a TRUE statement about no-par stock?

Which of the following statements describes the corporate characteristic termed no mutual agency?

The following information is from the balance sheet of Tudor Corporation as of December 31, 2014. Preferred stock, \ 100 par \ 500,000 Paid-in capital in excess of par-preferred 35,000 Common stock, \ 1 par 190,000 Paid-in capital in excess of par-common 380,000 Retained earnings 131,500 Total stockholders' equity \ 1,236,500 - What was the total paid-in capital as of December 31, 2014?

Pearland Company has 50,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding. The common stock is $1.00 par value. The preferred stock has a $100 par value, a 5% dividend rate, and is non-cumulative. On October 31, 2013, the company declares dividends of $0.25 per share for common stock and $5.00 per share for preferred stock. Please provide the journal entry for the declaration of dividends.

Deferred tax would normally arise from which of the following situations?

Which of the following is TRUE of dividends?

A disadvantage of the corporation is the separation between the owners of the corporation (the stockholders) and the managers of the corporation, which can sometimes result in a conflict of interests.