Question 1

The legal capital of a corporation may be any of the following except

Accepted Answer

A)  the stated value of the stock 
B)  the par value of the stock 
C)  the market value of the stock at the balance sheet date (assuming the market value differs from the par or stated value) 
D)  the entire proceeds from the stock issuance 
A)  the stated value of the stock 
B)  the par value of the stock 
C)  the market value of the stock at the balance sheet date (assuming the market value differs from the par or stated value) 
D)  the entire proceeds from the stock issuance C

Question 2

Under the cost method of accounting for treasury stock transactions, when the proceeds from a sale are greater than the cost, the excess over cost is treated as a(n)

Accepted Answer

A)  increase in Other Expenses from Treasury Stock Sales 
B)  increase in Additional Paid-in Capital from Treasury Stock 
C)  increase in a contra-stockholders' equity account 
D)  None of these choices 
A)  increase in Other Expenses from Treasury Stock Sales 
B)  increase in Additional Paid-in Capital from Treasury Stock 
C)  increase in a contra-stockholders' equity account 
D)  None of these choices B

Question 3

For a noncompensatory employee stock option plan, a formal journal entry or entries would be required for which of the following dates?

Accepted Answer

A)  I 
B)  II 
C)  III 
D)  IV 
A)  I 
B)  II 
C)  III 
D)  IV D

Question 4

On January 1, 2013 Howard Corporation issued 1000 shares of $100 par convertible stock for $125 per share. On January 15, 2015 all shares are converted to common stock.
Required:
1) Record the January 1, 2013 issuance of the preferred stock.
2) Record the January 15, 2015 to convert the preferred stock to common based upon the following stated contract information:
a.) each share is convertible into 5 shares of $15 par common stock.
b.) each share is convertible into 11 shares of $15 par common stock.
3) What if the preferred stock was callable instead of convertible. Prepare the journal entries to recall the stock:
a.) at a price of $155 per share
b.) at a price of $120 per share

Accepted Answer

The answer of On January 1, 2013 Howard Corporation issued...

Question 5

Universities, hospitals, and churches are examples of which type of corporation?

Accepted Answer

A)  stock companies 
B)  privately held companies 
C)  nonstock companies 
D)  publicly held companies 
A)  stock companies 
B)  privately held companies 
C)  nonstock companies 
D)  publicly held companies

Question 6

A share option plan will be defined as compensatory if it has which one of the following characteristics?

Accepted Answer

A)  The discount from market price for the stock option is greater than either what would be reasonable in an offer of stock to stockholders or others or the per-share amount of issuance costs avoided by not issuing the stock to the public. 
B)  Employees have 31 days or less from the date the purchase price is set to decide whether or not to enroll in the plan. 
C)  Almost all full-time employees are able to participate in the plan. 
D)  The purchase price is based solely on the market price of the stock on the purchase date. 
A)  The discount from market price for the stock option is greater than either what would be reasonable in an offer of stock to stockholders or others or the per-share amount of issuance costs avoided by not issuing the stock to the public. 
B)  Employees have 31 days or less from the date the purchase price is set to decide whether or not to enroll in the plan. 
C)  Almost all full-time employees are able to participate in the plan. 
D)  The purchase price is based solely on the market price of the stock on the purchase date.

Question 7

On January 1, 2014, Nelson Company gave 45 executives a performance-based stock option plan that allowed them to buy a maximum of 2,000 shares each of the company's $5 par common stock at $15 a share. On the grant date, the fair value per option was $8. The shares will be awarded based on the increase in sales over a four-year service and vesting period as follows:   
The company estimates sales will increase by 8% during the service period and that the annual employee turnover rate will be 4%. During 2016, the estimated annual employee turnover rate was changed to 3% for the entire service period. At the end of the four-year period, options vested for the remaining 40 executives and sales actually increased by 12%.
Required:
Prepare the journal entries to reflect the events affecting Nelson's plan for the four-year service period.

Accepted Answer

January 1, 2014:
Mem

Question 8

Noncumulative preferred stock is entitled to all dividends, even if they are in the arrears.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 15-3 On January 1, 2014, Howard, Inc. granted to a key executive a fixed compensatory share option plan for 1,000 shares of $4 par common stock for $30 a share. The fair value per option on that date was $14 per option. The service period extended through December 31, 2015.
-Refer to Exhibit 15-3. What entry, if any, was required on December 31, 2014?

Accepted Answer

A)  no entry was necessary 
B)  Compensation Expense $\quad $$\quad $$\quad $7,000 
Paid-in Capital Share Options $\quad $$\quad $$\quad $7,000 
C)  Compensation Expense$\quad $$\quad $$\quad $ 6,000 
Paid-in Capital Share Options$\quad $$\quad $$\quad $ 6,000 
D)  Compensation Expense $\quad $$\quad $$\quad $9,000
 Deferred Compensation $\quad $$\quad $$\quad $$\quad $$\quad $9,000 
A)  no entry was necessary 
B)  Compensation Expense $\quad $$\quad $$\quad $7,000 
Paid-in Capital Share Options $\quad $$\quad $$\quad $7,000 
C)  Compensation Expense$\quad $$\quad $$\quad $ 6,000 
Paid-in Capital Share Options$\quad $$\quad $$\quad $ 6,000 
D)  Compensation Expense $\quad $$\quad $$\quad $9,000
 Deferred Compensation $\quad $$\quad $$\quad $$\quad $$\quad $9,000

Question 10

Trevor had outstanding 40,000 shares of $30 par convertible preferred stock that had been sold at $50 a share. One-fourth of these shares were converted into common stock at the stated ratio of four shares of $5 par common stock (now selling at $15 a share) for each share of preferred stock.
Required: 
a.Record the conversion of preferred into common stock.
b.Use the same information as in requirement a except assume that each share of preferred stock is convertible into two shares of $35 par common stock (now selling at $40 a share). Record this conversion of preferred into common stock.
c.Why did Trevor not have common stock converted into preferred stock?

Accepted Answer

The answer of Trevor had outstanding 40,000 shares of $30...

Question 11

Below is the partial trial balance for James River Corporation.  
 Required:
Prepare the shareholder's equity portion of the balance sheet dated December 31, 2014.

Accepted Answer

The answer of Below is the partial trial balance for...

Question 12

Exhibit 15-9 Groundcover, Inc. had never had a treasury stock transaction prior to 2013. It experienced the following treasury stock transactions during 2013:

Assume the cost method is used.
-Refer to Exhibit 15-9. The entry to record the retirement of 100 shares on 5/10/2013 would include a

Accepted Answer

A)  credit to Additional Paid-in Capital from Treasury Stock for $200 
B)  debit to Treasury Stock for $1,000 
C)  debit to Additional Paid-in Capital on Common Stock for $1,200 
D)  debit to Common Stock for $1,200 
A)  credit to Additional Paid-in Capital from Treasury Stock for $200 
B)  debit to Treasury Stock for $1,000 
C)  debit to Additional Paid-in Capital on Common Stock for $1,200 
D)  debit to Common Stock for $1,200

Question 13

During 2014, Goodfellow has the following transactions involving its common and preferred stock: 
a.Issued 15,000 shares of $5 par common stock for $15 a share. This brings total shares outstanding to 50,000 shares.
b.Issued 5,000 shares of $100 par, 6%, cumulative preferred stock for $121 per share.
c.When the market value of the common stock reached $15 a share, Goodfellow declared a 3-for-1 stock split, reducing the par value to $1.67 per share.
Required:
Prepare a journal entry for each transaction.

Accepted Answer

The answer of During 2014, Goodfellow has the following transactions...

Question 14

Which one of the following statements is not true?

Accepted Answer

A)  Treasury stock transactions do not result in gains or losses on the income statement. 
B)  The treasury stock account is treated as a contro-stockholders' equity account 
C)  The total amount of stockholders' equity is unaffected by the method used to account for treasury stock. 
D)  Treasury stock transactions may result in an increase to retained earnings. 
A)  Treasury stock transactions do not result in gains or losses on the income statement. 
B)  The treasury stock account is treated as a contro-stockholders' equity account 
C)  The total amount of stockholders' equity is unaffected by the method used to account for treasury stock. 
D)  Treasury stock transactions may result in an increase to retained earnings.

Question 15

In the United States, corporations account for

Accepted Answer

A)  10% of all companies 
B)  15% of all companies 
C)  11% of all companies 
D)  50% of all companies 
A)  10% of all companies 
B)  15% of all companies 
C)  11% of all companies 
D)  50% of all companies

Question 16

Dividends in arrears pertain to

Accepted Answer

A)  non cumulative preferred stock 
B)  non-participating preferred stock 
C)  cumulative preferred stock 
D)  convertible preferred stock 
A)  non cumulative preferred stock 
B)  non-participating preferred stock 
C)  cumulative preferred stock 
D)  convertible preferred stock

Question 17

Define the following terms:
Treasury Stock
Authorized capital stock
Subscribed capital stock
Outstanding capital stock
Issued capital stock

Accepted Answer

Treasury stock is corporate stock that t

Question 18

Exhibit 15-2 Lawrence, Inc., entered into a subscription contract with several subscribers that calls for the purchase of 2,000 shares of $5 par common stock for $15 a share. The contract calls for a 20% down payment and specifies that any amounts not paid within the contract period will be forfeited in full.

-Refer to Exhibit 15-2. The initial entry to record this subscription and the down payment would include a

Accepted Answer

A)  credit to Common Stock Subscribed for $10,000 
B)  credit to Additional Paid-in Capital from Subscribed Stock for $10,000 
C)  debit to Subscriptions Receivable: Common Stock for $30,000 
D)  debit to Cash for $2,000 
A)  credit to Common Stock Subscribed for $10,000 
B)  credit to Additional Paid-in Capital from Subscribed Stock for $10,000 
C)  debit to Subscriptions Receivable: Common Stock for $30,000 
D)  debit to Cash for $2,000

Question 19

Which one of the following entries would not be likely to be made by a corporation?

Accepted Answer

A)  Land $\quad $$\quad $$\quad $$\quad $XX 
Common Stock, $10 stated value $\quad $$\quad $XX
Additional Paid-in Capital on Common Stock $\quad $$\quad $XX 
B)  Cash$\quad $$\quad $$\quad $$\quad $$\quad $ XX 
Common Stock, no-par $\quad $$\quad $XX
Additional Paid-in Capital on Common Stock $\quad $$\quad $XX 
C)  Cash$\quad $$\quad $$\quad $ XX 
Subscriptions Receivable: Common Stock $\quad $$\quad $XX
Common Stock Subscribed $\quad $$\quad $XX
Additional Paid-in Capital on Common Stock $\quad $$\quad $$\quad $XX 
D)  Building$\quad $$\quad $$\quad $ XX 
Common Stock, no-par $\quad $$\quad $XX 
A)  Land $\quad $$\quad $$\quad $$\quad $XX 
Common Stock, $10 stated value $\quad $$\quad $XX
Additional Paid-in Capital on Common Stock $\quad $$\quad $XX 
B)  Cash$\quad $$\quad $$\quad $$\quad $$\quad $ XX 
Common Stock, no-par $\quad $$\quad $XX
Additional Paid-in Capital on Common Stock $\quad $$\quad $XX 
C)  Cash$\quad $$\quad $$\quad $ XX 
Subscriptions Receivable: Common Stock $\quad $$\quad $XX
Common Stock Subscribed $\quad $$\quad $XX
Additional Paid-in Capital on Common Stock $\quad $$\quad $$\quad $XX 
D)  Building$\quad $$\quad $$\quad $ XX 
Common Stock, no-par $\quad $$\quad $XX

Question 20

The corporate form of organization is important to the U.S. economy because

Accepted Answer

A)  there are more corporations than sole proprietorships 
B)  there are more corporations than partnerships 
C)  there are more sales of goods and services by corporations than other business forms 
D)  corporations provide more donations to the economy than other business forms due to the many tax incentives geared toward corporations 
A)  there are more corporations than sole proprietorships 
B)  there are more corporations than partnerships 
C)  there are more sales of goods and services by corporations than other business forms 
D)  corporations provide more donations to the economy than other business forms due to the many tax incentives geared toward corporations

The legal capital of a corporation may be any of the following except

Under the cost method of accounting for treasury stock transactions, when the proceeds from a sale are greater than the cost, the excess over cost is treated as a(n)

For a noncompensatory employee stock option plan, a formal journal entry or entries would be required for which of the following dates?

Universities, hospitals, and churches are examples of which type of corporation?

A share option plan will be defined as compensatory if it has which one of the following characteristics?

Noncumulative preferred stock is entitled to all dividends, even if they are in the arrears.

Below is the partial trial balance for James River Corporation. Required: Prepare the shareholder's equity portion of the balance sheet dated December 31, 2014.

Exhibit 15-9 Groundcover, Inc. had never had a treasury stock transaction prior to 2013. It experienced the following treasury stock transactions during 2013: Assume the cost method is used. -Refer to Exhibit 15-9. The entry to record the retirement of 100 shares on 5/10/2013 would include a

Which one of the following statements is not true?

In the United States, corporations account for

Dividends in arrears pertain to

Define the following terms: Treasury Stock Authorized capital stock Subscribed capital stock Outstanding capital stock Issued capital stock

Which one of the following entries would not be likely to be made by a corporation?

The corporate form of organization is important to the U.S. economy because

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters

Exam 15: Contributed Capital

The legal capital of a corporation may be any of the following except

Under the cost method of accounting for treasury stock transactions, when the proceeds from a sale are greater than the cost, the excess over cost is treated as a(n)

For a noncompensatory employee stock option plan, a formal journal entry or entries would be required for which of the following dates?

Universities, hospitals, and churches are examples of which type of corporation?

A share option plan will be defined as compensatory if it has which one of the following characteristics?

Noncumulative preferred stock is entitled to all dividends, even if they are in the arrears.

Below is the partial trial balance for James River Corporation. Required: Prepare the shareholder's equity portion of the balance sheet dated December 31, 2014.

Exhibit 15-9 Groundcover, Inc. had never had a treasury stock transaction prior to 2013. It experienced the following treasury stock transactions during 2013: Assume the cost method is used. -Refer to Exhibit 15-9. The entry to record the retirement of 100 shares on 5/10/2013 would include a

Which one of the following statements is not true?

In the United States, corporations account for

Dividends in arrears pertain to

Define the following terms: Treasury Stock Authorized capital stock Subscribed capital stock Outstanding capital stock Issued capital stock

Which one of the following entries would not be likely to be made by a corporation?

The corporate form of organization is important to the U.S. economy because

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters