Question 1

Ken Corp declared a 0.60 per share common dividend.The company has 20,000 common shares authorized,with 6,000 shares issued and outstanding.A possible journal entry to record the declaration is:

Accepted Answer

A) 
 
B) 
 
C) 
 
D) 
 
E)

Question 2

A limited liability company is a corporation for professionals such as lawyers and accountants.

Accepted Answer

A) True 
 B)False

Question 3

When a corporation sells shares directly,it pays a brokerage house to issue the shares.

Accepted Answer

A) True 
 B)False

Question 4

Parker Corp has 1,000 $5,noncumulative,preferred shares outstanding,and $250,000 worth of common shares outstanding.During Parker's first year of operation,no dividends were paid,but during the second year,the company paid dividends of $45,000.How should the dividends be distributed?

Accepted Answer

The answer of Parker Corp has 1,000 $5,noncumulative,preferred shares outstanding,and...

Question 5

Callable preferred shares give the shareholders the option of exchanging their preferred shares into common shares at a specified rate.

Accepted Answer

A) True 
 B)False

Question 6

Explain the type of information used to prepare the journal entries to record the issuance of no par value shares.

Accepted Answer

The answer of Explain the type of information used to...

Question 7

On July 31,Crispy Corp declared a dividend of $0.55 per common share outstanding to the shareholders of record on August 15.The dividend will be paid on August 25.Crispy Corp has unlimited shares authorized and 100,000 shares issued and outstanding.Prepare the journal entry to record the declaration of the dividend.

Accepted Answer

The answer of On July 31,Crispy Corp declared a dividend...

Question 8

Quality Cleaning Corp.issued 50 no-par-value common shares for land with a market value of $4,000.Dillon had originally issued common shares at $100 two years ago,but there is currently no market value available for their shares.The amount of contributed capital arising from this transaction is:

Accepted Answer

A)  $100. 
B)  $600. 
C)  $1,000. 
D)  $4,000. 
E)  $6,000.

Question 9

The declaration of cash dividends reduces retained earnings.

Accepted Answer

A) True 
 B)False

Question 10

Shares are attractive to investors because shareholders are not liable for the corporation's actions and debts and because shares are easily transferred.

Accepted Answer

A) True 
 B)False

Question 11

Whenever the dividend rate on preferred shares is higher than the rate the corporation earns on its assets,the effect of issuing preferred shares is to increase the dividend rate earned by common shareholders.

Accepted Answer

A) True 
 B)False

Question 12

One of the preference rights for preferred shares is the right to vote.

Accepted Answer

A) True 
 B)False

Question 13

Pam Corporation sold 10,000 common shares at $25 per share cash.The entry to record this transaction would include:

Accepted Answer

A)  A debit to Contributed Capital for $250,000. 
B)  A credit to Cash for $250,000. 
C)  A credit to Common Shares for $250,000. 
D)  A credit to Common Shares for $25,000. 
E)  A debit to Common Shares for $250,000.

Question 14

Discuss the characteristics of corporations.

Accepted Answer

The answer of Discuss the characteristics of corporations....

Question 15

Dividends represent the distribution of profits to the shareholders of a corporation.

Accepted Answer

A) True 
 B)False

Question 16

Common shares usually carry a preference for dividends.

Accepted Answer

A) True 
 B)False

Question 17

The income of a corporation is taxed twice,first as corporate income and then as personal income to shareholders who receive cash dividends.

Accepted Answer

A) True 
 B)False

Question 18

Shares are most commonly issued for cash.

Accepted Answer

A) True 
 B)False

Question 19

Zach Sports Ltd has 1,000 shares of $5.50,cumulative preferred shares and 10,000 common shares issued and outstanding.In the previous year (which was the first year of operations),the company paid total dividends of $1,000.The amount that must be paid to the preferred shareholders in the current year before any dividend is paid to common shareholders is:

Accepted Answer

A)  $1,000. 
B)  $3,500. 
C)  $4,500. 
D)  $10,000. 
E)  $12.000.

Question 20

Dallas Sports Ltd has 100 shares of $15,noncumulative,preferred shares outstanding,and $160,000 of common shares outstanding.In the company's first year of operation,no dividends were paid,but during the second year Dallas Sports paid dividends of $24,000.The dividend should be distributed as follows:

Accepted Answer

A)  $1,500 preferred; $22,500 common. 
B)  $3,000 preferred; $21,000 common. 
C)  $12,000 preferred; $12,000 common. 
D)  $1,400 preferred; $12,600 common. 
E)  $7,000 preferred; $7,000 common.

Exam 13: Organization and Operation of Corporations

Ken Corp declared a 0.60 per share common dividend.The company has 20,000 common shares authorized,with 6,000 shares issued and outstanding.A possible journal entry to record the declaration is:

A limited liability company is a corporation for professionals such as lawyers and accountants.

When a corporation sells shares directly,it pays a brokerage house to issue the shares.

Parker Corp has 1,000 $5,noncumulative,preferred shares outstanding,and $250,000 worth of common shares outstanding.During Parker's first year of operation,no dividends were paid,but during the second year,the company paid dividends of $45,000.How should the dividends be distributed?

Callable preferred shares give the shareholders the option of exchanging their preferred shares into common shares at a specified rate.

Explain the type of information used to prepare the journal entries to record the issuance of no par value shares.

Quality Cleaning Corp.issued 50 no-par-value common shares for land with a market value of $4,000.Dillon had originally issued common shares at $100 two years ago,but there is currently no market value available for their shares.The amount of contributed capital arising from this transaction is:

The declaration of cash dividends reduces retained earnings.

Shares are attractive to investors because shareholders are not liable for the corporation's actions and debts and because shares are easily transferred.

Whenever the dividend rate on preferred shares is higher than the rate the corporation earns on its assets,the effect of issuing preferred shares is to increase the dividend rate earned by common shareholders.

One of the preference rights for preferred shares is the right to vote.

Pam Corporation sold 10,000 common shares at $25 per share cash.The entry to record this transaction would include:

Discuss the characteristics of corporations.

Dividends represent the distribution of profits to the shareholders of a corporation.

Common shares usually carry a preference for dividends.

The income of a corporation is taxed twice,first as corporate income and then as personal income to shareholders who receive cash dividends.

Shares are most commonly issued for cash.