Keisha .... Ch.13 Homework

If Grant Corporation has 120,000 shares of common stock authorized, 75,000 shares of common stock issued, and holds 3,000 shares of common stock as treasury stock, the total number of outstanding shares of Grant Corporation amounts to

72,000 (# of outstanding share less than or equal to # of issued shares less than or equal to #'s of authorized shares) (Issue-Holds= outstanding)

Use the following information to answer the question below. The following transactions involving Cactus Wren Corporation occurred during the year: Apr. 1 Purchased 2,000 shares of its own preferred stock for $20, the current market price. This is the first transaction involving its own stock engaged in by the company. May 3 Sold 400 of the shares purchased on April 1 for $25 per share. June 5 Retired 600 of the shares purchased on April 1. The original issue price was $10. The par value of the stock is $5. The entry to record the May 3 transaction is:

Cash 10,000 Treasury Stock, Preferred 8,000 Paid in capital, Treasury Stock 2,000

A corporation's residual equity is its

Common stock

Which of the following transactions affects total retained earnings?

Declaration of a stock dividend

How will the declaration and distribution of a 10 percent stock dividend affect the issuing corporation's balance of retained earnings and total stockholders' equity, respectively?

Decrease and no effect

Dividends in arrears are disclosed as liabilities of a corporation.

False

Legal capital of a corporation is the maximum amount that can be reported as contributed capital.

False

No entry is required on the date of payment for a cash dividend.

False

The account Common Stock Distributable is classified as a current liability.

False

How should dividends in arrears be shown on a corporation's balance sheet?

In a note or in the body of the financial statements.

Which of the following could be described as both an advantage and a disadvantage of incorporation?

Limited liablility

A statement of stockholders' equity can take the place of a statement of retained earnings.

True

In computing book value per share of common stock, common stock distributable is included in the divisor

True

The liability of a stockholder is usually limited to the stockholder's investment in the corporation.

True

If only common stock is outstanding, total stockholders' equity divided by the number of shares of common stock outstanding is called the

book value per share

Holders of preferred stock normally do not have

full voting rights

Start-up and organization costs for a corporation that is to operate a retail store would include the costs of

promoters' fees and printing stock certificates

Which of the following items will not be disclosed on a statement of stockholders' equity?

results of discontinued operations

When a common stock is issued by corporation for a cash price above par value, the excess of the cash proceeds over the par value should be reported in the financial statements as a component of

total contributed capital on the balance sheet.

On May 1, 20x5, Ironwood Corporation had 200,000 shares of $10 par value common stock outstanding with a market value of $16 per share. On May 2, 20x5, Ironwood announced a 4-for-1 stock split. After the split, the par value of the stock

was reduced to $2.50 per share