chapter 13 accounting
A company originally issued 19,000 shares of $9 par value common stock at $7 per share. The board of directors declares a 12% stock dividend when the market price of the stock is $15 a share. Which of the following is included in the entry to record the declaration of a stock dividend?
Stock Dividends is debited for $34,200. 19,000x12% x15
Which of the following is a true statement?
Stockholders receive their proportionate share of any assets remaining after the corporation pays its debts and liquidates.
Which of the following occurs when a 2−for−1 stock split is declared?
The balance in Common Stock remains the same.
Which of the following is true of a corporation?
The earnings of a corporation may be subject to double taxation.
Which of the following occurs when the board of directors declares a 3−for−1 stock split on 14,000 outstanding shares of $21 par common stock?
The number of outstanding shares increases to 42,000.
Treasury stock is ________.
a contra equity account
The distribution of a stock dividend ________.
affects only stockholders' equity accounts
Paid−in capital consists of________.
amounts received from stockholders in exchange for stock
Outstanding stock represents shares of stock that ________.
are held by the stockholders
Stock dividends are declared by the ________.
board of directors of the company
Which of the following actions will decrease the amount of Total Stockholders' Equity?
cash dividend declared
On December 2, 2024, Eshares, Inc. purchases land. In payment for the land, Eshares, Inc. issues 5,000 shares of common stock with $4 par value. The land has been appraised at a market value of $500,000. Which of the following is included in the journal entry to record this transaction?
credit Common Stock—$4 Par Value for $20,000 and credit Paid−In Capital in Excess of Par—Common $480,000
Risingstar Corporation currently has 120,000 shares outstanding of $5 par value common stock. The stock was originally issued for $19 per share. On March 15, the board of directors declares a 12% stock dividend when the stock is selling for $17 per share. Which of the following is the correct journal entry to record this transaction? (Do not round intermediate calculations.)
debit Stock Dividends $244,800, credit Common Stock Dividend Distributable 72,000 and credit Paid-In Capital in Excess of Par-Common $172,000
Pumpkin Corporation issued 6,000 shares of common stock on January 1, 2024. The stock has no par value and was issued at $24 per share. The journal entry for this transaction includes a ________.
debit to Cash for $144,000 and a credit to Common Stock—No−Par Value for $144,000
The entry to record the payment of a previously declared dividend of $1.00 per share on 20,500 shares of common stock includes a ________.
debit to Dividends Payable for $20,500
On the ________, cash dividends become a liability of a corporation.
declaration date
The purchase of treasury stock ________.
decreases assets and stockholders' equity
Treasury stock ________.
decreases the number of shares outstanding
On the date of record for a dividend, the company ________.
determines who owns the shares of stock
The retained earnings of a corporation is ________.
internally generated equity that is earned by profitable operations that is not distributed to stockholders
Which of the following is an advantage of the corporate form of business?
limited liability of of stockholders
Preferred stockholders ________.
receive a dividend preference over common stockholders
When the corporation declares a stock dividend, a stockholder's percentage ownership in the stock of the corporation ________.
remains unchanged
The par value of stock is ________.
the amount assigned by a company to a share of its stock
Which of the following is a reason for a company to announce a stock split?
to decrease the market price at which the stock is trading
Superstar Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $14.50 per share. Common Stock, $10 Par, 127,000 shares authorized, 58,000 shares issued and outstanding $580,000 Paid−in Capital in Excess of Par—Common 130,000 Retained Earnings 310,000 Total Stockholders' Equity $1,020,000 What would be the total stockholders' equity after a 12% common stock dividend?
$1,020,000
Atlantis Corporation has 12,000 shares of 12%, $82 par noncumulative preferred stock outstanding and 30,000 shares of no−par common stock outstanding. At the end of the current year, the corporation declares a dividend of $195,000. How is the dividend allocated between preferred and common stockholders?
The dividend is allocated $118,080 to preferred stockholders and $76,920 to common stockholders. 12,000x12%x$82 195,000-118,080
The two basic sources of stockholders' equity are ________.
paid−in capital and retained earnings
Ballpark has 53,000 shares of $16 par common stock outstanding. Ballpark announces a stock split of 4−for−1. What is the effect of the split?
par drops to $4.00; total shares increase to 212,000
Dividends in arrears are ________.
passed dividends on cumulative preferred stock
On June 30, 2024, Dakota, Inc. showed the following data on the equity section of their balance sheet: Stockholders' Equity Common Stock, $1 par; 198,000 shares authorized, 140,000 shares issued and outstanding $140,000 Paid−In Capital in Excess of Par—Common $261,000 Retained Earnings 953,000 Total Stockholders' Equity $1,354,000 On July 1, 2024, the company declared and distributed a 8% stock dividend. The market value of the stock at that time was $19 per share. After closing the stock dividend, what is the balance of Retained Earnings?
$740,200. 140,000x8%x19 =212,800 953,000-212,800=740,200
Megastar Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $21.25 per share. Common Stock, $14 Par, 121,000 shares authorized, 49,000 shares issued and outstanding $686,000 Paid−in Capital in Excess of Par—Common 155,000 Retained Earnings 430,000 Total Stockholders' Equity $1,271,000 What would be the balance in the Common Stock account after the issuance of a 13% stock dividend?
$775,180 686,000x13%=89,180 89,180+686,000=775,180
Assume the following information for Western Sales, Inc.: • Common Stock, $1.00 par, 200,000 shares issued, 188,000 shares outstanding • Paid−In Capital in Excess of Par—Common: $1,680,000 • Retained Earnings: $2,520,000 • Treasury Stock: 12,000 shares purchased at $17 per share If Western Sales purchases an additional 14,000 shares of treasury stock at $18 per share, what number of shares will be shown as issued and outstanding?
200,000 issued; 174,000 outstanding
The following information is from the December 31, 2024 balance sheet of Millner Corporation. Preferred Stock, $100 par $510,000 Paid−In Capital in Excess of Par—Preferred 38,000 Common Stock, $1 par 200,000 Paid−In Capital in Excess of Par—Common 570,000 Retained Earnings 171,500 Total Stockholders' Equity $1,489,500 What was the average issue price of the common stock shares? (Round your answer to the nearest cent.)
3.85. 570,000+200,00 /200,000
Maybridge, Inc. has 9,000 shares of common stock outstanding. A stockholder has 300 shares. If the company distributes a 21% stock dividend, the stockholder now holds ________ shares of Maybridge stock.
363
Which of the following is true of dividends?
Dividends are a distribution of cash, stock, or other property to stockholders.
A corporation declares a dividend of $2.00 per share on 11,000 shares of common stock. Which of the following is included in the entry to record the declaration?
Cash Dividends is debited for $22,000.
Which of the following is included in the entry to record the issuance of 13,000 shares of $12 par value common stock at $14 per share for cash?
Cash is debited for $182,000. 13000x14
On November 1, 2024, Uno, Inc. declared a dividend of $4.25 per share. Uno, Inc. has 21,000 shares of common stock outstanding and no preferred stock. Which of the following is the journal entry needed to record the declaration of thedividend?
Debit Cash Dividends $89,250, and credit Dividends Payable—Common $89,250.
On November 1, 2024, Nada, Inc. declared a dividend of $4.75 per share on common stock. Nada, Inc. has 24,000 shares of common stock outstanding and no preferred stock. The date of record is November 15, and the payment date is November 30, 2024. Which of the following is the journal entry needed on November 30, 2024?
Debit Dividends Payable—Common $114,000, and credit Cash $114,000.
From its inception through the year of 2023, First Mart, Inc. was profitable and made strong dividend payments each year including all payments to preferred shareholders. In the year 2024, First Mart had major losses and paid no dividends. In2025, the company started making large profits again, and they were able to pay dividends to all shareholders—both common and preferred. There are 2,300 shares of cumulative, 13% preferred stock outstanding. The preferred stock has a par value of $100. What is the total amount of dividends that should be paid to the preferred stockholders in December 2025?
$59,800. 2,300x13%x100x2
Valley, Inc. has 8,000 shares of preferred stock outstanding. The preferred stock has a $110 par value, a 7% dividend rate, and is noncumulative. If Valley has sufficient funds to pay dividends, what is the total amount of dividends that will be paid out to preferred stockholders?
$61,600. 8,000x110x7%
Milton, Inc. had the following transactions in 2025, its first year of operations: • Issued 13,000 shares of common stock. Stock has par value of $0.01 per share and was issued at $39.00 per share. • Earned net income of $300,000. • Paid dividends of $9.00 per share. At the end of 2025, what is total stockholders' equity?
$690,000 13,000x39=507,000 507,000+300,000=807,000 807,000-(13,000x9)=690,000
Refer to the following information for Tolan Corporation: • Common Stock, $1.00 par, 103,000 shares issued, 90,000 shares outstanding • Paid−In Capital in Excess of Par—Common: $2,260,000 • Retained Earnings: $910,000 • Treasury Stock: 13,000 shares purchased at $26 per share If Tolan resold 1,600 shares of treasury stock for $20 per share, which of the following statements would be true?
The Treasury Stock account would decrease by $41,600.
Which of the following is a true statement regarding the effect of a stock split and stock dividend on total assets or liabilities?
Neither a stock split nor a stock dividend will affect total assets or total liabilities.
Nice International originally issued 102,000 shares of common stock at a price of $24 per share. A year later, it distributed a 13% stock dividend to shareholders. At the time of the stock dividend, the share price had increased to $32 per share. Which of the following statements is true?
Nice will record neither a gain nor a loss.
On November 1, 2025, Juno, Inc. declared a dividend of $3.00 per share on common stock. Juno, Inc. has 10,000 shares of common stock outstanding and 20,000 shares of preferred stock. The date of record is November 15, and the payment date is November 30, 2025. Regarding the date of record, which of the following statements is true?
No journal entry is made on the date of record.
Which of the following occurs when a cash dividend is declared?
Stockholders' equity decreases.
Land Corporation reported the following: Common Stock, $5 par, 213,000 shares authorized, 168,000 shares issued $840,000 Paid in Capital in Excess of Par—Common 201,000 Retained Earnings 227,000 Total Stockholders' Equity $1,268,000 Which of the following is included in the entry to record the corporation's purchase of 40,000 shares of its common stock for $14 per share?
Treasury Stock—Common is debited for $560,000.
A company cannot report a gain or loss when buying or selling its own stock.
True
