Chapter 13 MCQ
A company has the following data at the end of the current year: Number of shares of Common Stock issued 200,000 Number of shares of Common Stock outstanding 185,000 Net Income $395,000 Income from Continuing Operations $363,000 Income from Discontinued Operations $12,000 What is the earnings per share on the company's net income? (Round to two decimal places.)
$2.14
Sweet Smiles Bakery issued 15,900 shares of $7 stated value common stock for $24 per share. The total increase to the Paid−in Capital in Excess of Stated Value account would be ___________.
$270,300
Element Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $13.25 per share. Common Stock, $5 par, 324,000 shares authorized, 140,000 shares issued and outstanding $700,000 Paid−In Capital in Excess of Par—Common 129,000 Retained Earnings 298,000 Total Stockholders' Equity $1,127,000 After a 2−for−1 stock split, what is the number of issued shares?
$280,000
The following information is from the December 31, 2024 balance sheet of Millner Corporation. Preferred Stock, $100 par $540,000 Paid−In Capital in Excess of Par—Preferred 40,000 Common Stock, $1 par 250,000 Paid−In Capital in Excess of Par—Common 590,000 Retained Earnings 201,500 Total Stockholders' Equity $1,621,500 What was the average issue price of the common stock shares? (Round your answer to the nearest cent.)
$3.36
Midtown, Inc. had the following transactions in 2024, its first year of operations: •Issued 39,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $22.00 per share. •Earned net income of $70,000. •Paid no dividends. At the end of 2024, what is total stockholders' equity?
$928,000
The 2024 and 2025 comparative balance sheet for Travel Services, Inc. reported the following items: Balance Sheet As of December 31, 2025 Balance Sheet As of December 31, 2024 Total Assets $590,000 $460,000 Total Liabilities 300,000 200,000 Total Stockholders' Equity (all common) 290,000 260,000 Total Liabilities and Stockholders' Equity $590,000 $460,000 Net income for 2025 was $38,000. Compute the rate of return on common stockholders' equity for 2025. (Round your final answer to two decimal places.)
13.82%
Anderson Corporation received cash from issuing 29,000 shares of no−par common stock for $1 per share on January 1, 2018. Which is the correct journal entry to record this transaction?
Cash 29,000 Common Stock — No−Par Value 29,000
Thompson Company's common stock carries a par value of $1 per share. The company is authorized to issue an additional 19,000 shares of common stock. What would the journal entry be for the issuance of 5,000 shares of common stock at par value?
Cash 5,000 Common Stock − $1 Par Value 5,000
Ballard, Inc. issued 11,000 shares of preferred stock for $796,000. The stock had a par value of $45 per share. The journal entry to record this transaction would be:
Cash 796,000 Preferred Stock−$45 Par Value 495,000 Paid−in Capital in Excess of Par − Preferred 301,000
Roberts Company's common stock has a $3 stated value per share. The company issued 8,000 shares at $8 per share on January 30 of the current year. Which is the correct journal entry to record this transaction?
Cash 64,000 Common Stock − $3 Stated Value 24,000 Paid−in Capital in Excess of Stated − Common 40,000
Allridge Corporation received cash from issuing 26,000 shares of common stock at $3 per share on January 1, 2018. The stock has a par value of $1 per share. Which is the correct journal entry to record this transaction?
Cash 78,000 Common Stock − $1 Par Value 26,000 Paid−in Capital in Excess of Par − Common 52,000
Fancy Clothing Company is authorized to issue 120,000 shares of $2 par common stock. The company issued 5,700 shares at $6 per share, when the market price of the common stock was $10 per share. Later, Charter declared and paid a $0.30 per share cash dividend. The journal entry to declare the cash dividend would be:
Cash Dividends 1,710 Dividends Payable − Common 1,710
A corporation declares a dividend of $1.50 per share on 13,000 shares of common stock. Which of the following is included in the entry to record the declaration?
Cash Dividends is debited for $19,500.
On November 1, 2024, Uno, Inc. declared a dividend of $4.25 per share. Uno, Inc. has 23,000 shares of common stock outstanding and no preferred stock. Which of the following is the journal entry needed to record the declaration of the dividend?
Debit Cash Dividends $97,750, and credit Dividends Payable—Common $97,750.
Which of the following statements regarding earnings per share (EPS) is incorrect?
EPS reports the amount of income (loss) for each share of the company's issued common stock.
When a previously declared dividend is paid, which of the following occurs?
Liabilities decrease.
Which of the following is true of a stock split and a stock dividend?
Neither a stock split nor a stock dividend will increase total stockholders' equity.
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 is a basic right of stockholders?
Stockholders may receive dividends from corporate earnings.
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.
A corporation has 20,000 shares of 17%, $50 par cumulative preferred stock outstanding and 36,000 shares of no−par common stock outstanding. Preferred dividends of $18,500 are in arrears. At the end of the current year, the corporation declares a dividend of $236,000. How is the dividend allocated between preferred and common stockholders?
The dividend is allocated $188,500 to preferred stockholders and $47,500 to common stockholders.
Which of the following occurs when the board of directors declares a 3−for−1 stock split on 18,000 outstanding shares of $19 par common stock?
The number of outstanding shares increases to 54,000.
Which of the following statements regarding the price/earnings ratio is incorrect?
The price/earnings ratio represents the market price of one share of common stock.
Which of the following occurs when a corporation distributes a stock dividend?
Total stockholders' equity would be unchanged.
A corporation originally issued $19 par value common stock for $21 per share. Which of the following is included in the entry to record the purchase of 100 shares of treasury stock for $29 per share?
Treasury Stock—Common is debited for $2,900.
Paid in capital in excess of par is also called __________________.
additional paid−in capital
Outstanding stock represents shares of stock that
are held by the stockholders
The maximum number of shares of stock that the corporate charter allows the corporation to issue is _______________________.
authorized stock
Stock that represents basic ownership of a corporation is _______________________.
common stock
Preferred stock whose owners must receive all dividends in arrears plus the current year dividend before dividends are paid to common stockholders is _____________.
cumulative preferred stock
On the ________, cash dividends become a liability of a corporation.
declaration date
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
A distribution of a corporation's earnings to shareholders is _______________________.
dividends
The price/earnings ratio _________.
is most useful when comparing one company to another
Stock that has been issued but may or may not be held by stockholders is _______________________.
issued stock
Preferred stock that does not require unpaid dividends from past periods to be paid before dividends are paid for the current year to preferred and common stockholders is _____________.
noncumulative preferred stock
The two basic sources of stockholders' equity are ________.
paid−in capital and retained earnings
Dividends in arrears are ________.
passed dividends on cumulative preferred stock
Preferred stockholders ________.
receive a dividend preference over common stockholders
Rate of return on common stockholders' equity is often called ____________.
return on equity
A reason a company may purchase treasury stock is to __________.
reward valued employees with stock
A reason a company may purchase treasury stock is to __________.
support the company's stock price
Preferred stock is stock ________.
that gives its owners certain advantages over common stockholders
The par value of stock is ________.
the amount assigned by a company to a share of its stock
Which of the following is NOT a reason for which a company may purchase treasury stock?
to avoid a takeover by an outside party by increasing the number of outstanding shares that have voting rights
A company's own stock that it has previously issued and later reacquired is called ___________.
treasury stock
Valley, Inc. has 8,000 shares of preferred stock outstanding. The preferred stock has a $160 par value, a 11% 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?
$140,800
Healthy Farmer, Inc. has 42,000 shares of common stock outstanding and 3,000 shares of preferred stock outstanding. The common stock is $0.09 par value; the preferred stock is 4% noncumulative with a $100.00 par value. On October 15, 2025, the company declares a total dividend payment of $45,000. What is the total amount of dividends that will be paid to the common stockholders?
$33,000