Accounting Ch 13

What is the total stockholders' equity based on the following data? Common Stock $903,300 Excess of Issue Price over Par 232,100 Retained Earnings (deficit) (65,770)

$1,069,630

Treasury stock that was purchased for $2,277 is sold for $3,948. As a result of these two transactions combined- stockholders' equity will be increased by

$1,671

A corporation has 50,000 shares of $25 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately

$30

A corporation has 45,207 shares of $31 par stock outstanding that has a current market value of $345 per share. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately

$86.25

Alma Corp. issues 900 shares of $6 par common stock at $20 per share. When the transaction is recorded, credits are made to

Common Stock, $5,400 and Paid-In Capital in Excess of Par—Common Stock, $12,600

A large retained earnings account means that there is cash available to pay dividends.

False

Cash dividends are normally paid on shares of treasury stock.

False

If paid-in capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit), total stockholders' equity is $880,000.

False

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

False

The excess of sales price of treasury stock over its cost should be credited to

Paid-In Capital from Sale of Treasury Stock

Treasury stock that had been purchased for $4,210 last month was reissued this month for $5,530. The journal entry to record the reissuance would include a credit to

Paid-In Capital from Sale of Treasury Stock for $1,320

Treasury Stock is listed in the Stockholders' equity section on the balance sheet.

True

Those most responsible for the major policy decisions of a corporation are the

board of directors

The entry to record the issuance of common stock at a price above par includes a debit to

cash

The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to

common stock

A corporation purchases 6,927 shares of its own $5 par common stock for $21 per share, recording it at cost. What will be the effect on total stockholders' equity?

decrease by $145,467

Treasury stock should be reported in the financial statements of a corporation as a(n)

deduction from stockholders' equity

One of the main disadvantages of the corporate form is the

double taxation of dividends

The price at which a stock can be sold depends on a number of factors. Which of the following is not one of those factors?

how high the par value is

Stockholders equity

includes retained earnings and paid-in capital

The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?

retained earnings

When a stock dividend is declared, which of the following accounts is credited?

stock dividends distributable