ACC201 Chapter 11 (wileyplus) Plattsburgh

If 1,000 shares of $5 par common stock are reacquired by a corporation for $12 a share, by how much will total stockholders' equity be reduced?

$12,000

M-Bot Corporation has 10,000 shares of 8%, $100 par value, cumulative preferred stock outstanding at December 31, 2014. No dividends were declared in 2012 or 2013. If M-Bot wants to pay $375,000 of dividends in 2014, how much will common stockholders receive?

$135,000

If a corporation issues 1,000 shares of $3 par common stock for $7 a share, how much is the legal capital?

$3,000

A corporation has cumulative preferred stock on which it pays dividends of $20,000 per year. The dividends are in arrears for two years. If the corporation plans to distribute $90,000 as dividends in the current year, how much will the common stockholders receive?

$30,000

A corporation is authorized to sell 1,000,000 shares of common stock. Today there are 400,000 shares outstanding, and the board of directors declares a 10% stock dividend. How many shares will be issued as a stock dividend?

$40,000

A corporation shows the following account balances: Retained earnings$400,000 Treasury stock―common20,000 Paid-in capital in excess of par value―common55,000 Treasury stock―preferred30,000 Common stock200,000 Preferred stock180,000 Paid-in capital in excess of par value―preferred60,000 How much is total stockholders' equity?

$845,000

Which statement about stock dividends is true?

A stock dividend has no effect on total stockholders' equity.

Which of the following is a feature associated only with preferred stock?

All of the answer choices are correct

Which of the following does not increase the return on common stockholders' equity?

An increase in the company's stock price

Which of the following represents the maximum number of shares a corporation can issue?

Authorized shares

Dynatech issues 1,000 shares of $10 par value common stock at $12 per share. When the transaction is recorded, which accounts are credited?

Common Stock $10,000 and Paid-in Capital in Excess of Par Value $2,000

What method is normally used to account for treasury stock?

Cost Method

DT Inc. issued 3,000 shares of $5 par value common stock for $6 per share. Which of the following is one part of the journal entry to record the issuance?

Credit to Common Stock for $15,000

Harrison, Inc. issued 4,000 shares of common stock at $12 per share. If the stock has a par value of $0.50 per share, which of the following will be part of the journal entry to record the issuance?

Credit to Common Stock for $2,000

Wynola, Inc. issued 1,000 shares of common stock at $10 per share. If the stock has a par value of $4 per share, which of the following will be part of the journal entry to record the issuance?

Credit to Common Stock for $4,000

Harrison, Inc. issued 600 shares of common stock at $10 per share. If the stock was no-par value stock, which of the following will be part of the journal entry to record the issuance?

Credit to Common Stock for $6,000

On which date are entries for cash dividends required?

Declaration date and the payment date

Which one of the following statements is incorrect?

Dividends may be paid on common stock while dividends are in arrears on preferred stock.

A corporation must be incorporated in each state in which it does business.(T/F)

False

A cumulative dividend feature means that preferred stockholders must be paid only current-year dividends before common stockholders receive dividends.(T/F)

False

A stock split results in a transfer at market value from retained earnings to paid-in capital.(T/F)

False

If a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends received from that corporation.(T/F)

False

The acquisition of treasury stock by a corporation increases total assets and total stockholders' equity. (T/F)

False

The par value of common stock must always be equal to its market value on the date the stock is issued. (T/F)

False

The stockholders of a corporation have unlimited liability.(T/F)

False

When no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds.(T/F)

False

When stock dividends are declared and issued, total stockholders' equity increases.(T/F)

False

Which of the following is a disadvantage of the corporate business form?

Government regulation

Which of these is not a major advantage of a corporation?

Government regulations

How are dividends in arrears reported in the financial statements?

In a footnote

Which of the following represents the amount per share of stock that must be retained in the business for the protection of corporate creditors?

Legal capital

Which of the following increases when a corporation purchases treasury stock?

Number of treasury shares

Which one of the following decreases when a corporation purchases treasury stock?

Outstanding shares

Raptor Inc. has retained earnings of $500,000 and total stockholders' equity of $2,000,000. It has 100,000 shares of $8 par value common stock outstanding, which is currently selling for $30 per share. What will occur is Raptor declares a 10% stock dividend on its common stock?

Retained earnings will decrease by $300,000 and total paid-in capital will increase by $300,000

Which of the following will increase the paid-in capital section of the balance sheet?

Stock dividend

Which of the following is not a stockholder's right?

The right to participate in management decisions

For what reason might a company acquire treasury stock?

To reissue the shares to officers and employees under bonus and stock compensation plans

A corporation sold 1,000 shares of its $2.00 par value common stock for $10.00 per share and later repurchased 100 of those shares for $12.00 per share. Which of the following will be debited to record the repurchase of the 100 shares?

Treasury Stock for $1,200

A corporation can be organized for the purpose of making a profit or it may be nonprofit.(T/F)

True

A stockholder has the right to vote in the election of the board of directors.(T/F)

True

Dividends may be declared and paid in cash or stock.(T/F)

True

For accounting purposes, stated value is treated the same way as par value. (T/F)

True

No journal entry is required on the dividend record date.(T/F)

True

The liability of a stockholder is usually limited to the stockholder's investment in the corporation.(T/F)

True

The number of common shares outstanding can never be greater than the number of shares issued.(T/F)

True

The par value of corporate shares issued represents a corporation's legal capital.(T/F)

True

The tax laws can be a significant disadvantage of the corporate form of business.(T/F)

True

Treasury stock is a contra stockholders' equity account.(T/F)

True

When no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock become legal capital.(T/F)

True

When treasury stock is purchased, the number of outstanding shares decreases.(T/F)

True

Which of the following is not a characteristic of a corporation?

Unlimited liability for stockholders

The chief accounting officer in a company is known as the

controller

The two ways that a corporation can be classified by purpose are

profit and not-for-profit.

The two ways that a corporation can be classified by ownership are

publicly held and privately held.

Stockholders of a corporation directly elect

the board of directors.

Under the corporate form of business organization

the corporation's life is stipulated in its charter.