Question 1

The following accounts appear in the ledger of Fall Inc. after the books are closed at December 31, 2018.  Instructions
Prepare the stockholders' equity section at December 31, 2018, assuming that retained earnings is restricted for plant expansion in the amount of $200,000.

Accepted Answer

The answer of The following accounts appear in the ledger...

Question 2

A corporation purchases 30,000 shares of its own $15 par common stock for $30 per share, recording it at cost. What will be the effect on total stockholders' equity?

Accepted Answer

A)  Increase by $450,000 
B)  Decrease by $900,000 
C)  Increase by $900,000 
D)  Decrease by $450,000

Question 3

Treasury stock is

Accepted Answer

A)  stock issued by the U.S. Treasury Department. 
B)  stock purchased by a corporation and held as an investment in its treasury. 
C)  corporate stock issued by the treasurer of a company. 
D)  a corporation's own stock which has been reacquired but not retired.

Question 4

On October 10, the board of directors of Pattern Corporation declared a 15% stock dividend. On October 10, the company had 10,000 shares of $1 par common stock issued and outstanding with a market price of $16 per share. The stock dividend will be distributed on October 31 to shareholders of record on October 25. Journalize the entries needed for the declaration and distribution of the stock dividend.

Accepted Answer

The answer of On October 10, the board of directors...

Question 5

Outstanding stock of the Zone Corporation included 20,000 shares of $5 par common stock and 5,000 shares of 6%, $10 par noncumulative preferred stock. In 2017, Zone declared and paid dividends of $2,000. In 2018, Zone declared and paid dividends of $6,000. How much of the 2018 dividend was distributed to preferred shareholders?

Accepted Answer

A)  $2,000 
B)  $4,000 
C)  $3,000 
D)  None of these answers are correct

Question 6

IFRS uses each of the following terms to describe retained earnings except

Accepted Answer

A)  accumulated profit or loss. 
B)  retained earnings. 
C)  retained profits. 
D)  share earnings.

Question 7

Era Company has 3,000 shares of 6%, $100 par non-cumulative preferred stock outstanding at December 31, 2018. No dividends have been paid on this stock for 2017 or 2018. Dividends in arrears at December 31, 2018 total

Accepted Answer

A)  $0. 
B)  $1,800. 
C)  $18,000. 
D)  $36,000.

Question 8

Corporations sometimes segregate retained earnings into two categories: (1)__________ retained earnings and (2)________________ retained earnings.

Accepted Answer

The answer of Corporations sometimes segregate retained earnings into two...

Question 9

On September 5, Borton Corporation acquired 2,500 shares of its own $1 par common stock for $22 per share. On October 15, 1,000 shares of the treasury stock is sold for $25 per share.
Instructions
Journalize the purchase and sale of the treasury stock assuming that the company uses the cost method.

Accepted Answer

The answer of On September 5, Borton Corporation acquired 2,500...

Question 10

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

Accepted Answer

A)  decrease total liabilities and stockholders' equity. 
B)  increase total expenses and total liabilities. 
C)  increase total assets and stockholders' equity. 
D)  decrease total assets and stockholders' equity.

Question 11

The date on which a cash dividend becomes a binding legal obligation is on the

Accepted Answer

A)  declaration date. 
B)  date of record. 
C)  payment date. 
D)  last day of the fiscal year-end.

Question 12

The following information is available for Matlin Inc.:  Instructions
Based on the preceding information, prepare a retained earnings statement for 2018.

Accepted Answer

The answer of The following information is available for Matlin...

Question 13

Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $80 per share. The entry to record the transaction will consist of a debit to Cash for $800,000 and a credit or credits to

Accepted Answer

A)  Preferred Stock for $800,000. 
B)  Preferred Stock for $500,000 and Paid-in Capital in Excess of Par-Preferred Stock for $300,000. 
C)  Preferred Stock for $300,000 and Paid-in Capital from Preferred Stock for $500,000. 
D)  Paid-in Capital from Preferred Stock for $800,000.

Question 14

Last Inc., has 2,000 shares of 6%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2018, and December 31, 2017. The board of directors declared and paid a $4,000 dividend in 2017. In 2018, $24,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2018?

Accepted Answer

A)  $16,000 
B)  $12,000 
C)  $8,000 
D)  $6,000

Question 15

Treasury stock should not be classified as a current asset.

Accepted Answer

A) True 
 B)False

Question 16

During 2018, Pink Corporation had the following transactions and events:
1. Issued par value preferred stock for cash at par value.
2. Issued par value common stock for cash at an amount greater than par value.
3. Completed a 2 for 1 stock split in which the $10 par value common stock was changed to $5 par value stock.
4. Declared a small stock dividend when the market value was higher than the par value.
5. Declared a cash dividend.
6. Issued the shares of common stock required by the stock dividend declaration in 4 above.
7. Issued par value common stock for cash at par value.
8. Paid the cash dividend.
Instructions
Indicate the effect(s) of each of the foregoing items on the subdivisions of stockholders' equity. Present your answers in tabular form with the following columns. Use (I) for increase, (D) for decrease, and (NE) for no effect.

Accepted Answer

The answer of During 2018, Pink Corporation had the following...

Question 17

The following information is available for Zip Corporation:  The company accountant, in preparing financial statements for the year ending December 31, 2018, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on equipment in 2016 and 2017 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was $35,000, ignoring income taxes. Depreciation was computed by the straight-line method in 2018.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2018.

Accepted Answer

The answer of The following information is available for Zip...

Question 18

Preferred stockholders generally do not have the right to vote for the board of directors.

Accepted Answer

A) True 
 B)False

Question 19

On January 1, 2018, Dreamy Company issued 30,000 shares of $2 par value common stock for $150,000. On March 1, 2018, the company purchased 6,000 shares of its common stock for $7 per share for the treasury. On June 1, 2018, 1,500 of the treasury shares are sold for $10 per share. On September 1, 2018, 3,000 treasury shares are sold at $5 per share.
Instructions
Journalize the stock transactions of Dreamy Company in 2018.

Accepted Answer

The answer of On January 1, 2018, Dreamy Company issued...

Question 20

When the selling price of treasury stock is greater than its cost, the company credits the difference to

Accepted Answer

A)  Gain on Sale of Treasury Stock. 
B)  Paid-in Capital from Treasury Stock. 
C)  Paid-in Capital in Excess of Par. 
D)  Treasury Stock.

Exam 11: Corporations: Organization, Stock Transactions

The following accounts appear in the ledger of Fall Inc. after the books are closed at December 31, 2018. Instructions Prepare the stockholders' equity section at December 31, 2018, assuming that retained earnings is restricted for plant expansion in the amount of $200,000.