Deck 19: Corporations: Stock Values,dividends,treasury Stocks,

Question 1

Total stockholders' equity consists of retained earnings of $100,000 and paid-in capital of $500,000.There are 30,000 common shares outstanding,and no preferred shares outstanding.What is the book value per share of common stock?

A)$20.00 per share
B)$25.00 per share
C)$15.00 per share
D)$ 5.00 per share

Answer 1

A

Question 2

When the corporation has both preferred and common stock,the steps to compute book value for common stock would be:

A)compute common shares divided by number of shares outstanding.
B)compute preferred stock book value first;the remainder is assigned to common stock.
C)divide total stockholders' equity by total shares outstanding.
D)None of these answers is correct.

Answer 2

B

Question 3

If total stockholders' equity is $120,000 with 8,000 common shares outstanding,what is the book value per share of common stock? (Assume no preferred stock is outstanding)

A)$18.00
B)$45.00
C)$15.00
D)$12.00

Answer 3

C

Question 4

Redemption Value is defined as:

A)the price a corporation pays when it reserves the right to retire or redeem stock at a specific price.
B)the price at which shares are bought and sold on the open market.
C)the total stockholders' equity minus total amount assigned to preferred stock.
D)the total of stockholders' equity (when only common stock exists)divided by the number of shares issued.

Question 5

Ariel Investigations has total paid-in capital of $70,000 and retained earnings of $40,000.It has 100 shares of $100 par value common stock outstanding,and no preferred shares outstanding..The book value of each share of common stock is:

A)$400
B)$700.
C)$1,100.
D)$1,000

Question 6

What is the book value per share of common stock if total stockholders' equity is $800,000 with 20,000 shares of common stock outstanding? (Assume no preferred stock is outstanding)

A)$40.00
B)$4.00
C)$400.00
D)$20.00

Question 7

Discuss and describe the major differences among the following common stock values:
a.Par value
b.Stated value
c.Redemption value
d.Market value
e.Book value

Question 8

Redemption value is the price at which a share of stock is bought and sold.

Question 9

From the following,determine the book value per share for preferred and common stocks;no dividends are in arrears on the preferred stock.

Question 10

Dexter Corporation has total paid-in capital of $140,000 and retained earnings of $90,000.It has 2,000 shares of $10 preferred stock outstanding with no dividends in arrears and 4,000 shares of $10 par value common stock outstanding.The book value of each share of common stock is:

A)$52.50.
B)$5.25.
C)$57.50.
D)$38.33.

Question 11

From the following,determine the book value per share for preferred and common stocks,assuming $2,000 of dividends are in arrears on the preferred stock.

Question 12

Book value per share is calculated for both preferred stock and common stock.

Question 13

What are the annual dividends on preferred stock,$25 par,2,000 shares authorized,600 shares issued,and a dividend rate of 3%?

A)$450
B)$45
C)$1,500
D)$150

Question 14

When calculating book value per share,if a redemption value is not stated,market value is used instead.

Question 15

Market Value is defined as:

A)the price a corporation pays when it reserves the right to retire or redeem stock at a specific price.
B)the price at which shares are bought and sold on the open market.
C)the total stockholders' equity minus total amount assigned to preferred stock
D)the total of stockholders' equity (when only common stock exists)divided by the number of shares issued.

Question 16

Patterson Research has 200 shares of 10%,$100 par value,preferred stock,and 2000 shares of $10 par value common stock outstanding.Total paid-in capital is $42,000,and retained earnings are $0.There are one-year dividends in arrears on preferred stock.The book value per share on common stock is:

A)$10.
B)$40.
C)$20.
D)$9.

Question 17

Book value per share is the same as par value per share.

Question 18

Market value per share is the price per share a corporation pays to holders of stock when it is redeemed.

Question 19

Book value per share is found by dividing total assets by total stockholders' equity.

Question 20

Book Value per Share is defined as:

A)the price a corporation pays when it reserves the right to retire or redeem stock at a specific price.
B)the price at which shares are bought and sold on the open market.
C)the total stockholders' equity minus total amount assigned to preferred stock.
D)the total of stockholders' equity (when only common stock exists)divided by the number of shares issued.

Question 21

Before a three-for-one stock split,the shares outstanding were 4,000 shares at $9 par.After the split,what was the par value per share and number of shares?

A)12,000 shares at $9 per share
B)12,000 shares at $3 per share
C)12,000 shares at $6 per share
D)4,000 shares at $27 per share

Question 22

A stock split:

A)causes decrease in the number of shares outstanding.
B)increases the par or stated value in proportion.
C)reduces retained earnings.
D)has no effect on total shareholders' equity.

Question 23

Declaration of a cash dividend causes:

A)a decrease in stockholders' equity.
B)an increase in cash.
C)a decrease in liabilities.
D)None of these answers is correct.

Question 24

A stock-split journal entry would include a:

A)debit to Retained Earnings and a credit to Common Stock.
B)debit to Common Stock and a credit to Cash.
C)debit to Common Stock Dividend Distributable and a credit Common Stock.
D)memorandum notation only.

Question 25

XYZ Corporation issued a four-for-one stock split.The number of outstanding shares before the split was 20,000 and the par value was $24 per share.After the split,what was the par value per share and number of shares?

A)80,000 shares and $24 per share
B)80,000 shares and $12 per share
C)80,000 shares and $6 per share
D)80,000 shares and $18 per share

Question 26

The entry to record the payment of a cash dividend would include a:

A)debit to Dividends Payable.
B)debit to Retained Earnings.
C)credit to Cash.
D)Both A and C

Question 27

The journal entry to record the issuance of a stock dividend is to:

A)debit Common Stock Dividend Distributable (number of shares × par value common stock);credit Common Stock (same).
B)debit Common Stock Dividends Distributable (number of shares × market value common stock);credit Common Stock (same).
C)debit Retained Earnings (market value × number of shares);credit Common Stock Dividends Distributable (number of shares × par value);credit Paid-in Capital in Excess of Par Value-Stock Dividend.
D)debit Common Stock Dividend Distributable (number of shares × par value);credit Cash.

Question 28

In the dividend process,the liability Dividend Payable is recognized on the:

A)date of declaration.
B)date of record.
C)date of payment.
D)date of stock issue.

Question 29

Which of the following is the journal entry to record the declaration of a stock dividend?

A)Debit Common Stock Dividend Distributable (number of shares × par value common stock);credit Common Stock (same)
B)Debit Common Stock Dividend Distributable (number of shares × market value common stock);credit Common Stock (same)
C)Debit Retained Earnings (market value × number of shares);credit Common Stock Dividend Distributable (number of shares × par value);credit Paid-In Capital in Excess of Par Value Stock Dividend (market value - par value)× number of shares
D)Debit Common Stock (number of shares × par value);credit Cash

Question 30

Malcolm Corporation declared a dividend of $3 per share on 1,200 shares.The entry to record the transaction would be to:

A)debit Dividends Expense $3.600;credit Cash $3.600.
B)debit Retained Earnings $3,600;credit Cash $3,600.
C)debit Dividends Payable $3,600;credit Cash $3,600.
D)debit Retained Earnings $3,600;credit Dividends Payable $3,600.

Question 31

What are the annual dividends on preferred stock,$15 par,500 authorized,300 shares issued,and a dividend rate of 12%?

A)$540
B)$600
C)$300
D)$150

Question 32

The entry to record the distribution of the stock dividend would include:

A)a debit to Common Stock.
B)a debit to Common Stock Dividend Distributable.
C)a debit to Retained Earnings.
D)None of these answers is correct.

Question 33

A distribution to stockholders in the form of stock is called a:

A)stock dividend.
B)stock split.
C)stock conversion.
D)cash dividend.

Question 34

Bailey's Western Wear has 3,000 shares of $20 par value common stock outstanding.During the current year,the company distributed a 5% stock dividend.The market value of the stock at that time was $15 per share.Bailey's total stockholders' equity should increase or decrease by:

A)$0.
B)$1,200.
C)$2,000.
D)($3,200).

Question 35

The journal entry to pay a cash dividend is to:

A)debit Dividends Payable;credit Cash.
B)debit Retained Earnings;credit Cash.
C)debit Dividends Payable;credit Retained Earnings.
D)debit Retained Earnings;credit Dividends Payable.

Question 36

Payment of a cash dividend causes:

A)a decrease in liabilities.
B)an increase in an asset.
C)an increase in stockholders' equity.
D)All of the above are correct.

Question 37

On the date of record,the journal entry would include:

A)a debit to Dividend Payable.
B)a credit to Dividend Payable.
C)a credit to Cash.
D)No entry is required on date of record.

Question 38

The date of record for cash dividends is:

A)the date the board of directors pays a dividend.
B)the date established by the board of directors that determines who will receive dividends.
C)the date that creates a liability for the company.
D)None of these answers is correct.

Question 39

Which of the following dividend dates does NOT get a formal journal entry?

A)Date of payment
B)Date of declaration
C)Date of record
D)All receive formal journal entries.

Question 40

The entry to record the declaration of a stock dividend would include:

A)a debit to Retained Earnings.
B)a credit to Cash.
C)a credit to Common Stock.
D)None of these answers is correct.

Question 41

A corporation may issue a stock dividend for which of the following reasons?

A)May want to increase permanent capital in the business
B)May want to decrease market value
C)May be short of cash and unable to pay a cash dividend
D)All of the above are correct.

Question 42

Which of the following is true about retained earnings?

A)Declaring a stock split will decrease retained earnings.
B)Appropriating retained earnings will increase total stockholders' equity.
C)Distributing stock dividends will decrease retained earnings.
D)Declaring cash dividends will decrease retained earnings.

Question 43

A dividend is declared by:

A)the board of directors.
B)president of the corporation.
C)CFO of the corporation.
D)stockholders.

Question 44

The board of Bogswell,Inc.declared a $2 per share cash dividend on common stock.The corporation has 4,000 shares of common stock outstanding.The entry required to declare the dividend is:

A)debit Cash;credit Common Dividends Payable.
B)debit Common Dividends Payable;credit Cash.
C)debit Retained Earnings;credit Dividends Payable.
D)debit Cash Dividends;credit Common Dividends Payable.

Question 45

A stock split will decrease total stockholders' equity and the number of shares of stock issued.

Question 46

The declaration of a stock dividend was credited to Dividends Payable and debited to Retained Earnings.This error would cause:

A)the period end assets to be overstated.
B)the period end liabilities to be overstated.
C)the period end stockholders' equity to be overstated.
D)the period's net income to be overstated.

Question 47

Retained earnings represent past investments into the company.

Question 48

An exchange of one share of an old issue of stock for a multiple number of shares of a new issue of stock with reduced par value is known as a:

A)property dividend.
B)stock dividend.
C)stock split.
D)liquidating dividend.

Question 49

When a 10% stock dividend was declared,only the par value was recorded and the excess over par value was ignored.This error would cause:

A)the period end assets to be overstated.
B)the period end liabilities to be overstated.
C)the period end stockholders' equity to be overstated.
D)None of these is correct.

Question 50

Retained Earnings is reported as part of shareholders' equity on the balance sheet.

Question 51

The retained earnings section after a two-for-one stock split will:

A)be one-half as much after the split.
B)be double as much after the split.
C)not change after the split.
D)Cannot be determined from the information given.

Question 52

Declaration of a cash dividend was recorded by debiting Operations Expense and crediting Cash.This error would cause:

A)the period end assets to be overstated.
B)the period end net income to be understated.
C)the period end stockholders' equity to be understated.
D)None of the above is correct.

Question 53

Gino's Corporation had 30,000 shares of $16 par value common stock outstanding with a market value of $30 per share.Gino announced a four-for-one stock split.After the split,the par value of the stock:

A)remained the same as before the split.
B)was reduced to $4.00 per share.
C)was reduced by $4.00 per share.
D)was reduced to $8.00 per share.

Question 54

When a stock dividend is distributed,the account to be debited would be:

A)Common Stock.
B)Paid-in Capital in Excess of Par Value.
C)Stock Dividends Distributable.
D)stock dividends.

Question 55

The payment of a cash dividend was debited to Retained Earnings and credited to Cash.This error would cause:

A)the period end liabilities to be overstated.
B)the period end stockholders' equity to be overstated.
C)the period end stockholders' equity to be understated.
D)Both A and C

Question 56

The date of record determines who receives the declared dividends.

Question 57

Common Stock Dividend Distributable is a liability account.

Question 58

The payment of a cash dividend was recorded as payment to Miscellaneous Expense.This error would cause:

A)the period end net income to be understated.
B)the period end liabilities to be overstated.
C)the period end stockholders' equity to be overstated.
D)Both A and B

Question 59

A stock split has no effect on retained earnings.

Question 60

Distribution of earnings to stockholders may be in the form of cash only.

Question 61

Prepare the following stock dividend journal entries for Tamera,Inc.

Question 62

Treasury stock was sold above cost;the excess was credited to Gain on Sale.This error would cause:

A)the period end assets to be overstated.
B)the period end liabilities to be overstated.
C)the total period end stockholders' equity to be overstated.
D)the period's net income to be overstated.

Question 63

To record the purchase of treasury stock:

A)debit Treasury Stock-Common (par value);credit Cash (same).
B)debit Treasury Stock-Common (purchase price);credit Cash (same).
C)debit Treasury Stock-Common (par value);debit any difference to Paid-in Capital;credit Cash (purchase price).
D)None of these answers is correct.

Question 64

A stock dividend may be distributed even if the company is short of cash.

Question 65

Treasury stock is:

A)stock that is issued in a stock dividend.
B)stock that has been reacquired by the corporation.
C)previously issued stock that has been canceled.
D)unissued,but authorized stock.

Question 66

When treasury stock was sold at cost,Cash was debited and Common Stock was credited.This error would cause:

A)the period end assets to be overstated.
B)the period end liabilities to be overstated.
C)the total period end stockholders' equity to be overstated.
D)None of these is correct.

Question 67

On May 31,Mason Corporation has the following stockholders' equity:

The board of directors declared a 10% stock dividend on June 5 to the stockholders of record on June 15.The stock is to be distributed on June 30.On the date of declaration,the stock had a market value of $15 per share.Prepare the appropriate journal entries for these transactions.

Question 68

Declared a stock dividend when the market price was above par.
Debit ________ Credit ________ & ________

Question 69

When treasury stock was sold below cost,the decrease was debited to Loss on Sale.This error would cause:

A)the period end assets to be overstated.
B)the period end liabilities to be overstated.
C)the period's end net income to be understated.
D)Both A and C are correct.

Question 70

Prepare the following journal entries for Complex Company.
March 15 Declared the stated dividend on 7,000 shares of $10 par,10% preferred stock.
April 15 Paid the dividend.

Question 71

Paid a cash dividend.
Debit ________ Credit ________

Question 72

Treasury stock was purchased and recorded as an asset.This error would cause:

A)the period end assets to be understated.
B)the period end liabilities to be overstated.
C)the period end stockholders' equity to be overstated.
D)None of the above is correct.

Question 73

Declared a cash dividend.
Debit ________ Credit ________

Question 74

Which of the following statements is false about treasury stock?

A)It carries no right to dividends.
B)It carries no right to vote.
C)It is stock that is outstanding.
D)All of the statements are false.

Question 75

Which of the following is considered a contra-stockholders' equity account?

A)Common Stock
B)Accumulated Depreciation
C)Treasury Stock
D)Preferred Stock

Question 76

Quinn Corporation has 3,000 shares of common stock issued and outstanding.The board of directors declared a $2.00 per share cash dividend on January 25,payable on March 25,to stockholders of record on February 25.Prepare the appropriate journal entries for the declaration and payment of the dividend.

Question 77

The Tiger Football Corporation has 9,000 shares of $1.50 par value common stock issued and outstanding.The board of directors declared a 3-for-1 stock split May 10,distributable on June 15,to stockholders of record on June 1.The Retained Earnings account balance is $50,000 on May 10.Prepare the equity section of the balance sheet on May 10 and June 15,before and after the stock split.

Question 78

The credit purchase of treasury stock was recorded as a purchase.This error would cause:

A)the period end assets to be overstated.
B)the period end liabilities to be overstated.
C)the period end stockholders' equity to be overstated.
D)the period end liabilities to be understated.

Question 79

Explain some possible reasons a company may declare a stock dividend instead of a cash dividend.

Question 80

The Black Bear Basketball Corporation has 7,000 shares of common stock issued and outstanding.The board of directors declared a $1.00 per share cash dividend on January 9,payable on March 9,to stockholders of record on February 9.Prepare the appropriate journal entries.