Question 1

Martian Magic issued 800 shares of $50 par preferred stock and 1000 shares of $1 par common stock in a "package" sale for $150,000. The preferred stock market value was $88 per share, and the common stock market value was $156 per share.
Required:
Fill in the lines below to indicate the accounts and amounts credited in the entry to record the issuance of the stock.

Accepted Answer

The answer of Martian Magic issued 800 shares of $50...

Question 2

Miscellaneous fees arising from the issuance of stock are charged to the organization expense account only if this is
not the company's first issuance of stock.

Accepted Answer

A) True 
 B)False

Question 3

What are the variables that must be considered when a corporation uses the option pricing model?

Accepted Answer

The answer of What are the variables that must be...

Question 4

The following information is provided for Wolf Company: 
 If total contributed capital is $506,000, what is the amount of additional paid-in capital on common stock for Wolf Company?

Accepted Answer

A)  $52,500 
B)  $51,000 
C)  $53,500 
D)  $56,700

Question 5

During 2016, 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 and 100,000 shares are authorized.
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 2016, Goodfellow has the following transactions...

Question 6

Under IFRS companies are allowed to revalue their property, plant, and equipment as well as intangible assets.The revaluation is based upon market value and can be either adjusted up or down.

Accepted Answer

A) True 
 B)False

Question 7

Why would a corporation want to repurchase their own stock?

Accepted Answer

The answer of Why would a corporation want to repurchase...

Question 8

Companies can reacquire their own stock to reduce the likelihood of a hostile takeover.

Accepted Answer

A) True 
 B)False

Question 9

Which one of the following statements is false?

Accepted Answer

A)  When stock is issued, legal capital is usually the total amount received. 
B)  Par value has no direct relationship to market value. 
C)  The accounting for stated value, no-par stock parallels accounting for par-value stock. 
D)  Capital shareholders have limited liability.

Question 10

On January 3, 2016, Maris Corporation issued 4,000 shares of $50 par convertible preferred stock at $90 per share.
Each share is convertible into four shares of $10 par common stock.
Required:
a. Prepare the journal entry to record the issuance of the stock on January 3, 2016.
b. On March 5, 2018, each share of preferred was converted. Prepare the journal entry to record this conversion.
c. Assume that instead of the above circumstances regarding conversion, the company agrees to convert each share of preferred into ten shares of $10 par common stock on March 5,
2018. Prepare the journal entry to record this conversion.
a. Prepare the journal entry to record the issuance of the stock on January 3, 2016.
b. On March 5, 2018, each share of preferred was converted. Prepare the journal entry to record this conversion.
c. Assume that instead of the above circumstances regarding conversion, the company agrees to convert each share of preferred into ten shares of $10 par common stock on March 5,

Accepted Answer

The answer of On January 3, 2016, Maris Corporation issued...

Question 11

The intrinsic value method of measuring options based compensation is no longer supported by FASB and the IASB.

Accepted Answer

A) True 
 B)False

Question 12

Norwalk Corporation issued 10,000 shares of $50 par preferred stock at $74 a share. A stock warrant attached to each preferred share allows the holder to buy one share of $10 par common stock for $20. Right after issuance, the preferred stock sells ex-rights for $63 per share. The warrants began selling at $7 per warrant. The amount credited to Common Stock Warrants at issuance of the preferred stock is

Accepted Answer

A)  $0. 
B)  $70,000. 
C)  $74,000. 
D)  $160,000.

Question 13

Match between columns
                        Premises:  Installment purchase contract with an investor.
 An independent party hired to handle the stock issuance.
 Maintains the shareholders records.
 The ability to elect directors.
 Maintains a proportionate share of ownership.
 Shares authorized by state charter.
 Stocks that were issued and  reacquired by the corporation.
 To protect the corporations creditors.
 No-par value
 The excess received is recorded in this account.

Accepted Answer

The Answer of Additional paid in capital and Authorized capital is...

Question 14

What account should be debited when stock issuance costs are associated with the initial issuance of stock at incorporation?

Accepted Answer

A)  Organization Expense 
B)  Additional Paid-in Capital 
C)  Organization Costs 
D)  Common stock

Question 15

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

Accepted Answer

The answer of Which one of the following entries would...

Question 16

Noncompensatory share purchase plans are utilized to increase employee ownership.

Accepted Answer

A) True 
 B)False

Question 17

The preference to dividends that preferred shareholders have is

Accepted Answer

A)  the right to receive the appropriate dividend before common shareholders are paid any dividends when dividends are declared. 
B)  the right to accumulate dividends that have not been declared. 
C)  the right to share dividends equally with common shareholders when dividends are declared. 
D)  the right to be paid a minimum dividend each year.

Question 18

Exhibit 15-4
On January 1, 2016, Masters, Inc., grants a compensatory share option plan to 15 of its executives. The plan allows each executive to buy 1,000 shares of its $1 par common stock at $30 per share after a three-year service period. At January 1, 2016, the value of each option is estimated to be $9. The company also estimates it will have an annual
3% employee turnover rate during the service period.
-Refer to Exhibit 15-4. By how much has contributed capital increased as of the beginning of 2019?

Accepted Answer

A)  $0 
B)  $ 41,070 
C)  $135,000 
D)  $123,211

Question 19

Exhibit 15-4
On January 1, 2016, Masters, Inc., grants a compensatory share option plan to 15 of its executives. The plan allows each executive to buy 1,000 shares of its $1 par common stock at $30 per share after a three-year service period. At January 1, 2016, the value of each option is estimated to be $9. The company also estimates it will have an annual
3% employee turnover rate during the service period.
-Refer to Exhibit 15-4. What is the compensation expense for the year ended December 31, 2017?

Accepted Answer

A)  $0 
B)  $ 41,070 
C)  $135,000 
D)  $123,211

Question 20

A partial listing of accounts and ending balances for Carver, Inc., on December 31, 2016, is shown below: 
 Following is additional information relative to the above accounts:
· The preferred stock is 8% cumulative with par value of $50. For the preferred stock, 10,000 shares have been authorized, 6,000 shares are issued and outstanding, and 1,000 shares
have been subscribed at a price of $65 per share. Each share of preferred stock is convertible into four shares of common.
· Bonds payable mature on September 30, 2020. They have a stated interest rate of 10%, payable semiannually. The straight-line method is used to amortize the premium.
· Common stock has a par value of $4 per share. For the common stock, 60,000 shares have been authorized, 45,000 shares are issued and outstanding, and 5,000 shares have been subscribed at $32 per share.
Required:
Prepare the contributed capital section of the December 31, 2016 balance sheet for Carver, Inc. Include appropriate parenthetical notes for the common and preferred stock.

Accepted Answer

The answer of A partial listing of accounts and ending...

Exam 15: Contributed Capital

Miscellaneous fees arising from the issuance of stock are charged to the organization expense account only if this is not the company's first issuance of stock.

What are the variables that must be considered when a corporation uses the option pricing model?

The following information is provided for Wolf Company: If total contributed capital is $506,000, what is the amount of additional paid-in capital on common stock for Wolf Company?

Under IFRS companies are allowed to revalue their property, plant, and equipment as well as intangible assets.The revaluation is based upon market value and can be either adjusted up or down.

Why would a corporation want to repurchase their own stock?

Companies can reacquire their own stock to reduce the likelihood of a hostile takeover.

Which one of the following statements is false?

The intrinsic value method of measuring options based compensation is no longer supported by FASB and the IASB.

Match the following definition with the terms listed above.

What account should be debited when stock issuance costs are associated with the initial issuance of stock at incorporation?

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

Noncompensatory share purchase plans are utilized to increase employee ownership.

The preference to dividends that preferred shareholders have is