financial accounting final

After a corporation declares a cash dividend, what takes place on the date of record? a. Cash increases. b. Liabilities decrease. c. Equity decreases. d. No entry is necessary.

d

If the stated cash dividend on cumulative preferred stock has been unpaid for a period of one year or more, it is referred to as a dividend ____________________.

in arrears

The number of shares sold to stockholders are ____________________ shares.

issued

When is a liability for cash dividends created? a. At the end of each fiscal year. b. At the date of declaration. c. At the date of record. d. At the date of payment.

b

____________________ is the name of the account credited when a corporation issues common stock for a price greater than par.

Additional Paid-In Capital

____________________ shares are the maximum number of shares a corporation can legally issue.

Authorized

The ____________________ is a preferred stock having a feature that provides for the current stated dividends plus dividends in arrears before any dividends are paid to the common stockholders.

cumulative preferred stock

A distribution of profits to owners is called ____________________.

dividend

The ____________________ ratio is computed by dividing dividends by net income.

dividend payout

The ____________________ ratio is computed by dividing dividends per share by market price per share.

dividend yield

To compute the return on equity ratio, the numerator includes ____________________ and the denominator is the average stockholders' equity.

net income

When stockholders exchange their shares of stock for additional shares, and there is a corresponding reduction in the par value of the stock, a stock ____________________ has occurred.

split

Issued stock that is repurchased by the corporation but not retired is ____________________.

treasury stock

The excess of sales price of treasury stock over its cost should be credited to: a. Treasury Stock Receivable b. Premium on Capital Stock c. Additional Paid-In Capital d. Income from Sale of Treasury Stock

c

Which of the following is not a characteristic of a corporation? a. Corporations are organized as a separate legal taxable entity. b. Ownership is divided into shares of stock. c. Corporations experience an ease in obtaining large amounts of resources by issuing stock. d. A corporation's resources are limited to their individual stockholders' resources.

d

Which of the following statements is false regarding the issuance of stock versus bonds to raise capital for a corporation? a. The declaration of dividends reduces the amount of the corporation's taxable income. b. Interest accrues; whereas, dividends do not accrue. c.The payment of bond interest is a contractual requirement. d. The declaration of dividends is at the discretion of the board of directors.

a

Which of the following statements is true regarding a corporation's purchase of treasury stock? a. The cost of treasury stock is a reduction in stockholders' equity. b. Dividends must still be paid on treasury stock because it is still issued. c. Treasury stock is reported as an asset because it is considered an investment in the corporation's own stock. d. Treasury stock is no longer considered issued once it is back in the hands of the issuer.

a

All of the following are reasons that a corporation may purchase treasury stock except: a. if it needs the stock for its employee stock bonus program. b. if it desires to make an investment in its own stock and is reported as an asset. c. to buy out the ownership of stockholders. d. to increase the reported amount of earnings per share.

b

Alma Corp. issues 1,000 shares of $10 par value common stock at $16 per share. When the transaction is recorded, a credit or credits are made to: a. Common Stock $16,000. b. Common Stock $10,000 and Additional Paid-in Capital $6,000. c. Common Stock $6,000 and Additional Paid-in Capital $10,000. d. Common Stock $10,000 and Retained Earnings $6,000.

b

Brumfield, Inc. issued 7,000 shares of $1 par common stock for $20 per share. In addition to the increase in cash, what effect does this transaction have on Brumfield's accounting equation? a. Common stock increases $7,000 and retained earnings increases $133,000. b. Common stock increases $7,000 and additional paid-in capital in excess of par increases $133,000. c. Common stock increases $140,000. d. Retained earnings increases $7,000 and additional paid-in capital in excess of par increases $133,000.

b

Cash paid for preferred stock dividends should be shown on the statement of cash flows under: a. investing activities. b. financing activities. c. both investing and financing activities. d. operating activities

b

Coral Cleaners reported the following information in the stockholders' equity section of its December 31, 2011, balance sheet. 7% Cumulative, non-participating preferred stock, $100 par, 500 shares authorized, issued, and outstanding, callable at par value 50,000 Common stock, $12 par, 100,000 shares authorized 600,000 Additional paid-in capital 25,000 Retained earnings 825,000 Refer to the information presented above for Coral Cleaners, Inc. Coral's total capital stock is: a. $ 650,000. b. $ 675,000. c. $ 625,000. d. $1,500,000.

b

If a corporation declares a 2-for-1 stock split, which of the following is true? a. A journal entry is required to show the effect on the stockholders' equity accounts. b. The stockholders will have a higher proportionate ownership share after the split. c. The par value will be reduced to half of the pre-split par value. d. The market price of the stock is expected to increase after the split.

c

If a corporation declares a 2-for-1 stock split, which of the following is true? a. A new class of stock must be authorized with twice the number of issued shares. b. The number of outstanding shares is half the number that was outstanding before the split. c. The number of outstanding shares is twice the number that was outstanding before the split. d. The number of authorized shares is doubled, while the par value is reduced to half of the pre-split par value.

c

When a corporation declares a cash dividend, which of the following is true? a. Cash decreases. b. Liabilities decrease. c. Equity decreases. d. No entry is necessary.

c

Authorized shares represent the: a. number of previously issued shares that have been repurchased by the corporation. b. number of shares that the corporation has sold. c. number of shares that are currently held by stockholders. d. maximum number of shares of stock that a company can legally issue.

d

Characteristics of a corporation include: a. shareholders who are mutual agents. b. direct management by the shareholders (owners). c. its inability to own property. d. shareholders who have limited liability.

d

Coral Cleaners reported the following information in the stockholders' equity section of its December 31, 2011, balance sheet. 7% Cumulative, non-participating preferred stock, $100 par, 500 shares authorized, issued, and outstanding, callable at par value 50,000 Common stock, $12 par, 100,000 shares authorized 600,000 Additional paid-in capital 25,000 Retained earnings 825,000 Refer to the information presented above for Coral Cleaners, Inc. If Coral repurchased 500 shares of its common stock for $20 per share, what is the amount of total stockholders' equity after this transaction? a. $1,510,000 b. $1,500,000 c. $1,494,000 d. $1,490,000

d

Dividends in arrears are required to be reported in: a. a liability account. b. a contra-equity account. c. the stockholders' equity section of the balance sheet. d. the notes to the financial statements.

d

Murton Industries, Inc. reported the following information on its recent balance sheet. Common stock, $10 par, 100,000 shares authorized, 75,000 shares issued and outstanding Refer to the information for Murton Industries. What is the effect of a 10% stock dividend if the market price of the common stock is $30 per share when the stock dividend is declared? a. A stock dividend has no impact on any of the stockholders' equity accounts. b. Total stockholders' equity increases $75,000. c. Cash increases $300,000. d. Retained earnings decreases by $225,000.

d

The stockholders' equity section of the December 31, 2011, balance sheet for Denny's Deli appeared as follows: Common stock, $20 par, 40,000 shares issued and outstanding 800,000 Additional paid-in capital 320,000 Retained earnings 600,000 Total stockholders' equity 1,720,000 Assume that all of the 40,000 shares of Denny's stock that was issued as of December 31, 2011, was issued for $35 per share. On March 1, 2012, Denny reacquired 5,000 shares of its common stock for $43 per share. Refer to the information presented above for Denny's Deli, Inc. How much should be reported on Denny's March 31, 2012, balance sheet for treasury stock? a. $42,000 b. $126,000 c. $162,000 d. $215,000

d

Earnings per share is an indication of how much: a. the company has in cash for each share of outstanding common stock. b. the company earned for each share of outstanding common stock. c. the company paid as dividends for each share of common stock held by stockholders. d. the company earned for each share of outstanding common and preferred stock.

b

If a corporation issues cumulative, participating preferred stock, which of the following is true regarding the rights of the preferred stockholders? a. They must forgo dividends for any periods when no dividends are declared. b.They have the right to receive current-year dividends and all unpaid dividends from prior years. c. They will receive a fixed dividend each year regardless of the amount of dividends declared. d. They will have an option to convert their shares to common stock at a specified date.

b

In which of the following organization forms are the owners' legal responsibility for the debt of the business limited to the amount they invested in the business? a. Sole proprietorship b. Corporation c. Partnership d. Cooperative

b

Issued shares represent the: a. number of previously issued shares that have been repurchased by the corporation. b. number of shares that the corporation has distributed to owners to date. c. number of shares that are currently held by stockholders. d. maximum number of shares that can be sold by the corporation.

b

On January 15, 2011, Rockney Systems, Inc. paid a cash dividend that had been declared prior to the end of its 2010 fiscal year. The entry to pay the dividends includes a debit to: a. Cash and a credit to Dividends Payable. b. Dividends Payable and a credit to Cash. c. Retained Earnings and a credit to Dividends Payable. d. Dividends Payable and a credit to Retained Earnings.

b

One of the main disadvantages of the corporate form is the: a. professional management. b. double taxation of dividends. c. charter. d. corporation must issue stock.

b

The ability of a corporation to obtain capital is: a. less than a partnership. b. about the same as a partnership. c. restricted because of the limited life of the corporation. d. enhanced because of the limited liability and the ease of share transferability.

d

An arbitrary monetary amount that determines an entity's legal capital is the ____________________.

par value

Under the corporate form of business organization: a. ownership rights are easily transferred. b. a stockholder is personally liable for the debts of the corporation. c. stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. d. stockholders wishing to sell their corporation shares must get the approval of other stockholders.

a

What types of accounts are Treasury Stock and Additional Paid-in Capital from treasury stock transactions? Treasury Stock - Additional Paid-in Capital from treasury stock transactions a. Contra equity - Stockholders' equity b. Contra equity - Contra equity c. Stockholders' equity - Stockholders' equity d. Retained earnings - Retained earnings

a

When a corporation decides whether to pay a cash dividend, which of the following is an important consideration? a. The balances in the corporation's cash account to determine cash available for dividends. b. The number of authorized shares of the corporation's stock. c. The book value of the treasury stock. d. The balance of paid-in capital in excess of par on the corporation's stock accounts.

a

When a corporation declares a small stock dividend, which of the following is false? a. Cash decreases. b. Total stockholders' equity remains the same. c. The capital stock accounts increase. d. Retained earnings decreases.

a

Selected data from the financial statements of Fred's Car Repair Service are provided below. Total stockholders' equity: 2012= 350,000, 2011= 265,000 Current liabilities: 2012= 75,000, 2011= 72,000 Total liabilities & stockholders' equity: 2012= 600,000, 2011= 590,000 Cash flow from operations: 2012= 250,000, 2011= 190,000 Net sales: 2012= 570,000, 2011= 560,000 Capital expenditures: 2012= 110,000, 2011= 60,000 Refer to the selected data provided for Fred's Car Repair Service. Which of the following would result from a vertical analysis of Fred's total stockholders' equity in 2012? a. Total stockholders' equity increased $85,000 or 42.08% during 2012. b. The total of liabilities & stockholders' equity is $600,000 in 2012. c. Total stockholders' equity is 58.33% of total liabilities & stockholders' equity in 2012. d. Total stockholders' equity is 35.67% of total assets in 2012.

c

A corporation issues 1,500 shares of common stock for $32,000. The stock has a par value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for: a. $15,000. b. $32,000. c. $17,000. d. $2,000.

a

Cash dividends paid on common stock would be reported in the statement of cash flows in: a. the cash flows from financing activities section. b. the cash flows from investing activities section. c. a separate schedule. d. the cash flows from operating activities section.

a

Coral Cleaners reported the following information in the stockholders' equity section of its December 31, 2011, balance sheet. 7% Cumulative, non-participating preferred stock, $100 par, 500 shares authorized, issued, and outstanding, callable at par value 50,000 Common stock, $12 par, 100,000 shares authorized 600,000 Additional paid-in capital 25,000 Retained earnings 825,000 Refer to the information presented above for Coral Cleaners, Inc. What is the number of shares of common stock issued and outstanding? a. 50,000 shares b. 100,000 shares c. 6,000 shares d. 5,000 shares

a

Murton Industries, Inc. reported the following information on its recent balance sheet. Common stock, $10 par, 100,000 shares authorized, 75,000 shares issued and outstanding Refer to the information for Murton Industries. What is the effect of a 2-for-1 stock split if the market value of the common stock is $20 per share at the time the stock split is declared? a. A stock split has no impact on any of the stockholders' equity account balances. b. Total stockholders' equity increases $750,000. c. Cash increases $750,000. d. $1,500,000 of retained earnings is transferred to the capital stock accounts.

a

On January 1, 2010, Framm Corporation issued 10,000 shares of its 10%, $20 par value cumulative preferred stock. No dividends were declared by Framm in 2010 or 2011. In 2012, Framm had a profitable year and was in a strong cash position, so it declared a dividend of $200,000. How much of this dividend was paid to Framm's common stockholders? a. $140,000 b. $160,000 c. $180,000 d. $200,000

a

On June 1, 2011, Donner Technologies declared a $50,000 cash dividend to record on June 15, 2011. The dividend will be paid on July 1, 2011. The required journal entry on June 1 includes a: a. $50,000 debit to retained earnings. b. $50,000 debit to dividends payable. c. $50,000 credit to cash. d. $50,000 credit to common stock.

a

Par value represents the: a. arbitrary amount that establishes a minimum price for the stock when it is first issued. b. current market price of the stock. c. amount for which any treasury shares have been acquired by the corporation. d. amount for which treasury shares may be reissued.

a

Parnell, Inc. has 5,000 shares of $5 par, 3% cumulative preferred stock outstanding and 25,000 shares of $2 par common stock outstanding. No dividends have been paid for the past two years. If the company wishes to distribute $2 per share to the common stockholders, what is the total amount of dividends that must be paid in the current year? a. $52,250 b. $50,750 c. $50,000 d. $2,250

a

Porter Hardware, Inc. issues $2 par common stock. Which of the following is true? a. $2 per share is presented on the balance sheet in the common stock account. b. $2 per share is the maximum selling price for these shares of stock. c. Liabilities will increase as a result of this transaction. d. $2 in dividends will be paid to the stockholders as a result of this transaction.

a

Selected data from the financial statements of Ark, Inc. are presented below. Net income: 2012= 110,000, 2011= 123,000 Cash dividends paid on common stock: 2012= 42,000, 2011= 38,000 Market price per share of common stock: 2012= 16, 2011= 13 Average number of common shares outstanding: 2012= 140,000, 2011= 140,000 Refer to the information presented above for Ark, Inc. Ark's 2012 dividend yield ratio is reported as: a. 1.87%. b. 2.12%. c. 36.30%. d. 38.18%.

a

Selected data from the financial statements of Max's Tire Center are provided below. Total stockholders' equity: 2012= 350,000, 2011= 278,000 Current liabilities: 2012= 45,000, 2011= 42,000 Total liabilities & stockholders' equity: 2012= 500,000, 2011= 490,000 Cash flow from operations: 2012= 350,000, 2011= 290,000 Net sales: 2012= 370,000, 2011= 360,000 Capital expenditures: 2012= 150,000, 2011= 130,000 Refer to the selected data provided for Max's Tire Center. Which of the following would result from a horizontal analysis of Max's total stockholders' equity in 2012? a. Total stockholders' equity increased $72,000 or 25.9% during 2012. b. Total stockholders' equity increased $72,000 or 29.5% during 2012. c. Total stockholders' equity is 70.0% of total assets in 2012. d. Total liabilities & stockholders' equity is $500,000 in 2012.

a

Selected data from the financial statements of Wolfgang, Inc. are presented below. Net income: 2012= 150,000, 2011= 120,000 Cash dividends paid on common stock: 2012= 42,000, 2011=38,000 Market price per share of common stock: 2012= 15, 2011= 14 Purchases of treasury stock: 2012= 100,000, 2011= -0- Common stockholders' equity: 2012= 1,780,000, 2011= 1,637,000 Average number of common shares outstanding: 2012= 104,000, 2011= 95,000 Refer to the information presented above for Wolfgang, Inc. Wolfgang's 2012 dividend yield is reported as a. 2.69%. b. 2.80%. c. 26.67%. d. 28.00%.

a

The journal entry to issue 1,000,000 shares of $6 par common stock for $8.00 per share on January 2nd would be: a. debit: Cash $8,000,000, credit: Common Stock $6,000,000, credit: Additional Paid-In Capital $2,000,000 b. debit: Cash $6,000,000, credit: Common Stock $6,000,000 c. debit: Cash $6,000,000, debit: Additional Paid-In Capital $2,000,000, credit: Common Stock $8,000,000 d. debit: Cash $1,000,000, credit: Common Stock $1,000,000

a

The stockholders' equity section of the December 31, 2011, balance sheet for Denny's Deli appeared as follows: Common stock, $20 par, 40,000 shares issued and outstanding 800,000 Additional paid-in capital 320,000 Retained earnings 600,000 Total stockholders' equity 1,720,000 Assume that all of the 40,000 shares of Denny's stock that was issued as of December 31, 2011, was issued for $35 per share. On March 1, 2012, Denny reacquired 5,000 shares of its common stock for $43 per share. Refer to the information presented above for Denny's Deli, Inc. What is the total amount of stockholders' equity that will be presented on Denny's March 31, 2012, balance sheet? a. $1,505,000 b. $1,432,000 c. $1,600,000 d. $1,530,000

a

Treasury shares represent the: a. number of previously issued shares that have been repurchased by the corporation. b. number of shares that the corporation has sold. c. number of shares that are currently held by stockholders. d. maximum number of shares that can be sold by the corporation.

a

Which of the following statements is true with regard to equity capital? a. The number of shares actually in the hands of stockholders are called outstanding shares. b. It is unusual for corporations to have more than one class of stock outstanding at any point in time. c. Preferred stock represents the shares of stock that have been permanently retired. d. Issued shares represent the maximum number of shares that can be issued by a corporation.

a

Which one of the following would not be considered an advantage of the corporate form of organization? a. Government regulation b. Separate legal existence c. Continuous life d. Limited liability of stockholders

a

Murton Industries, Inc. reported the following information on its recent balance sheet. Common stock, $10 par, 100,000 shares authorized, 75,000 shares issued and outstanding Refer to the information for Murton Industries. What is the effect on Murton's accounting equation of issuing 1,000 additional shares of common stock at $15 per share? a. Assets increase $15,000, liabilities increase $5,000, and equity increases $10,000 b. Assets increase $15,000, liabilities remain unaffected, and equity increases $15,000 c. Assets decrease $10,000, liabilities remain unaffected, and equity increases $10,000 d. Assets decrease $15,000, liabilities decrease $5,000, and equity decrease $10,000

b

Select the type of business that is most likely to obtain large amounts of resources by issuing stock. a. Partnership b. Corporation c. Sole proprietorship d. None are correct.

b

Selected data from the financial statements of Fred's Car Repair Service are provided below. Total stockholders' equity: 2012= 350,000, 2011= 265,000 Current liabilities: 2012= 75,000, 2011= 72,000 Total liabilities & stockholders' equity: 2012= 600,000, 2011= 590,000 Cash flow from operations: 2012= 250,000, 2011= 190,000 Net sales: 2012= 570,000, 2011= 560,000 Capital expenditures: 2012= 110,000, 2011= 60,000 Refer to the selected data provided for Fred's Car Repair Service. Which of the following would result from a horizontal analysis of Fred's total stockholders' equity in 2012? a. Total stockholders' equity is 45.0% of total liabilities and stockholders' equity in 2012. b. Total stockholders' equity increased $85,000 or 32.08% during 2012. c. Total stockholders' equity is 50.0% of total assets in 2012. d. Total liabilities & stockholders' equity increased by $85,000 in 2012.

b

The Sneed Corporation issues 10,000 shares of $50 par value preferred stock for cash at $70 per share. The entry to record the transaction will consist of a debit to Cash for $700,000 and a credit or credits to: a. Preferred Stock for $700,000. b. Preferred Stock for $500,000 and Additional Paid-in Capital for $200,000. c. Preferred Stock for $500,000 and Retained Earnings for $200,000. d. Paid-in Capital from Preferred Stock for $700,000.

b

The stockholders' equity accounts of Jamison Corporation include $37,500 of common stock with a par value of $0.50, and 5,000 shares of treasury stock with a total cost of $25,000. The total number of shares outstanding for Jamison Corporation are: a. 32,500 shares. b. 70,000 shares. c. 75,000 shares. d. 80,000 shares.

b

The stockholders' equity section of the December 31, 2011, balance sheet for Denny's Deli appeared as follows: Common stock, $20 par, 40,000 shares issued and outstanding 800,000 Additional paid-in capital 320,000 Retained earnings 600,000 Total stockholders' equity 1,720,000 Assume that all of the 40,000 shares of Denny's stock that was issued as of December 31, 2011, was issued for $35 per share. On March 1, 2012, Denny reacquired 5,000 shares of its common stock for $43 per share. Refer to the information presented above for Denny's Deli, Inc. Suppose that Denny reissued 1,500 shares of its treasury stock on June 1, 2012, for $50 each. Which of the following is true regarding the entry required to record this transaction? a. A debit to treasury stock is required for $75,000. b. A credit to treasury stock is required for $64,500. c. A credit to retained earnings is required for $10,500. d. A debit to additional paid-in capital from treasury stock transactions is required for $10,500.

b

What is the primary reason for a stock split? a. To distribute cash to the investor. b. To decrease the market value of the stock. c. To decrease the number of shares outstanding. d. To increase the capital stock of the corporation.

b

When a corporation declares a stock dividend, which of the following is true? a. Cash decreases. b. Equity remains the same. c. Equity decreases. d. Retained earnings increases.

b

When a corporation pays a previously declared cash dividend, which of the following is true? a. Cash decreases. b. Liabilities decrease. c. Equity decreases. d. No entry is necessary.

b

Which of the following is not characteristic of a corporation? a. The financial loss that a stockholder may suffer from owning stock in a public company is limited. b. Cash dividends paid by a corporation are deductible as expenses by the corporation. c. A corporation can own property in its name. d. Corporations are required to file federal income tax returns.

b

A disadvantage of the corporate form of business entity is: a. mutual agency for stockholders. b. unlimited liability for stockholders. c. corporations are subject to more governmental regulations. d. the ease of transfer of ownership.

c

Ebberle Corporation reported the following in the stockholders' equity section of its balance sheet at December 31, 2012: Common stock, $1 par value 10,000 Paid-in capital in excess of par-common stock 40,000 Total capital stock 50,000 Retained earnings 25,000 Less: Treasury stock (at cost, $20 per share) 2,000 Total stockholders' equity 73,000 How many shares of stock are issued? a. 9,000 shares b. 9,900 shares c. 10,000 shares d. 10,100 shares

c

Many stockholders choose to invest in preferred stock because: a. preferred stock can always be converted into common stock at the stockholder's option. b. the preferred dividend distributions are generally increased each year. c. dividends are distributed to preferred stockholders before common stockholders. d. preferred stockholders includes the right to participate in management decisions through voting privileges.

c

Outstanding shares represent the: a. number of previously issued shares that have been repurchased by the corporation. b. number of shares that the corporation has sold. c. number of shares that are currently held by stockholders. d. maximum number of shares that can be sold by the corporation.

c

Patch, Inc. plans to distribute $134,000 in dividends. It has outstanding 200,000 shares of 7% $10 par preferred stock (cumulative) and 60,000 shares of $2 par common stock. How much will be distributed per share on preferred and common stock? Preferred stock - Common stock a. $3.35 - $1.12 b. $0.70 - $2.00 c. $0.67 - $ -0- d. $1.68 - $1.68

c

Petry Corporation issues 20,000 shares of $.50 par common stock for $6 per share. The account for Additional Paid-In Capital in excess of par will increase by: a. $130,000. b. $120,000. c. $110,000. d. $10,000.

c

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding? a. 40,000 shares b. 70,000 shares c. 50,000 shares d. 60,000 shares

c

The following information is available pertaining to the stockholders' equity accounts for Melisch, Inc. Common stock, $7 par, 100,000 shares authorized 700,000 Additional paid-in capital 160,000 Retained earnings ?? Treasury stock, 2,000 shares at cost (16,000) Total Stockholders' Equity 974,000 Refer to the information presented above for Melisch, Inc. How many shares of common stock are outstanding? a. 68,000 shares b. 78,000 shares c. 98,000 shares d. 100,000 shares

c

The following information is available pertaining to the stockholders' equity accounts for Melisch, Inc. Common stock, $7 par, 100,000 shares authorized 700,000 Additional paid-in capital 160,000 Retained earnings ?? Treasury stock, 2,000 shares at cost (16,000) Total Stockholders' Equity 974,000 Refer to the information presented above for Melisch, Inc. What is the amount of Melisch's retained earnings? a. $98,000 b. $114,000 c. $130,000 d. $860,000

c

The stockholders' equity section of the December 31, 2011, balance sheet for Denny's Deli appeared as follows: Common stock, $20 par, 40,000 shares issued and outstanding 800,000 Additional paid-in capital 320,000 Retained earnings 600,000 Total stockholders' equity 1,720,000 Assume that all of the 40,000 shares of Denny's stock that was issued as of December 31, 2011, was issued for $35 per share. On March 1, 2012, Denny reacquired 5,000 shares of its common stock for $43 per share. Refer to the information presented above for Denny's Deli, Inc. Suppose that Denny reissued 1,500 shares of its treasury stock on June 1, 2012, for $50 each. Which of the following is true regarding the entry required to record this transaction? a. A debit to treasury stock is required for $64,500. b. A credit to treasury stock is required for $49,000. c. A debit to cash is required for $75,000. d. A debit to additional paid-in capital from treasury stock transactions is required for $10,500.

c

Which of the following is the appropriate general journal entry to record the declaration of a cash dividends? a. debit: Retained Earnings, credit: Cash b. debit: Dividends Payable, credit: Cash c. debit: Additional Paid-in Capital, credit: Dividends Payable d. debit: Retained Earnings, credit: Dividends Payable

c

If a corporation declares a 2-for-1 stock split, which of the following is true? a. The amount of stockholders' equity doubles as a result of the split. b. The amount of capital stock doubles as a result of the split. c. The price of each share will be doubled as a result of the split. d. A stockholder who previously held 100 shares will have 200 shares after the split.

d

Magnum Corporation had 60,000 of its $3 par common stock issued before its recent 3-for-1 stock split. The market price of the stock was $30 per share before the split. Which of the following is true as a result of the split? a. There were 20,000 shares of common stock issued after the split. b. The balance in the common stock account increased to $180,000. c. The market price of the stock was not affected. d. The par value of the stock decreased to $1 per share.

d

On the statement of cash flows, the cash flows from financing activities section would include: a. receipts from the sale of investments. b. payments for the acquisition of investments. c. receipts from a note receivable. d. receipts from the issuance of capital stock.

d

Prady, Inc. began operations on October 1, 2011, with 3,000 shares of $2 par common stock authorized. Prady issued all of its common stock during 2011 and 2012. On December 31, 2012, Prady repurchased 1,000 shares of its outstanding shares, then reissued 500 of these shares on March 1, 2013. On June 1, 2013, Prady declared a 2-for-1 stock split. As a result of this stock split, which of the following is true? a. Assets decreased. b. Stockholders' equity decreased. c. Stockholders' equity increased. d. Total stockholders' equity remained the same.

d

Selected data from the financial statements of Ark, Inc. are presented below. Net income: 2012= 110,000, 2011= 123,000 Cash dividends paid on common stock: 2012= 42,000, 2011= 38,000 Market price per share of common stock: 2012= 16, 2011= 13 Average number of common shares outstanding: 2012= 140,000, 2011= 140,000 Refer to the information presented above for Ark, Inc. Ark's 2010 dividend payout ratio is reported as: a. 1.87%. b. 2.12%. c. 36.30%. d. 38.18%.

d

Selected data from the financial statements of Max's Tire Center are provided below. Total stockholders' equity: 2012= 350,000, 2011= 278,000 Current liabilities: 2012= 45,000, 2011= 42,000 Total liabilities & stockholders' equity: 2012= 500,000, 2011= 490,000 Cash flow from operations: 2012= 350,000, 2011= 290,000 Net sales: 2012= 370,000, 2011= 360,000 Capital expenditures: 2012= 150,000, 2011= 130,000 Refer to the selected data provided for Max's Tire Center. Which of the following would result from a vertical analysis of Max's total stockholders' equity in 2012? a. Total stockholders' equity increased $72,000 or 25.9% during 2012. b. The total of liabilities & stockholders' equity is $500,000 in 2012. c. Total stockholders' equity is 30% of total assets in 2012. d. Total stockholders' equity is 70% of total liabilities & stockholders' equity in 2012.

d

Selected data from the financial statements of Wolfgang, Inc. are presented below. Net income: 2012= 150,000, 2011= 120,000 Cash dividends paid on common stock: 2012= 42,000, 2011=38,000 Market price per share of common stock: 2012= 15, 2011= 14 Purchases of treasury stock: 2012= 100,000, 2011= -0- Common stockholders' equity: 2012= 1,780,000, 2011= 1,637,000 Average number of common shares outstanding: 2012= 104,000, 2011= 95,000 Refer to the information presented above for Wolfgang, Inc. Wolfgang's 2012 dividend payout ratio is reported as: a. 2.67%. b. 2.80%. c. 26.67%. d. 28.00%.

d

Selected data from the financial statements of Wolfgang, Inc. are presented below. Net income: 2012= 150,000, 2011= 120,000 Cash dividends paid on common stock: 2012= 42,000, 2011=38,000 Market price per share of common stock: 2012= 15, 2011= 14 Purchases of treasury stock: 2012= 100,000, 2011= -0- Common stockholders' equity: 2012= 1,780,000, 2011= 1,637,000 Average number of common shares outstanding: 2012= 104,000, 2011= 95,000 Refer to the information presented above for Wolfgang, Inc. Wolfgang's 2012 earnings per share is reported as a. $1.08 per share b. $1.20 per share c. $1.30 per share d. $1.44 per share

d

Selected data from the financial statements of Wolfgang, Inc. are presented below. Net income: 2012= 150,000, 2011= 120,000 Cash dividends paid on common stock: 2012= 42,000, 2011=38,000 Market price per share of common stock: 2012= 15, 2011= 14 Purchases of treasury stock: 2012= 100,000, 2011= -0- Common stockholders' equity: 2012= 1,780,000, 2011= 1,637,000 Average number of common shares outstanding: 2012= 104,000, 2011= 95,000 Refer to the information presented above for Wolfgang, Inc. Wolfgang's 2012 return on equity is reported as: a. 7.58%. b. 7.90%. c. 8.43%. d. 8.78%.

d

The stockholders' equity section of the December 31, 2011, balance sheet for Bravo Bistro appeared as follows: Common stock, $3 par, 2,000 shares issued and outstanding 6,000 Additional paid-in capital 1,000 Retained earnings 5,400 Total stockholders' equity 12,400 Assume that all of the 2,000 shares of Bravo's stock that was issued as of December 31, 2011, was issued for $3.50 per share. On March 1, 2012, Bravo reacquired 1,000 shares of its common stock for $4.50 per share. Refer to the information presented above for Bravo Bistro, Inc. If all of the 1,000 shares that Bravo Bistro repurchased on March 1 were later reissued for $5.00 per share, the journal entry to record this transaction includes a debit to what account and for what amount? a. $4,000 to additional paid-in capital from treasury stock transactions b. $2,000 to treasury stock c. $500 to retained earnings d. $5,000 to cash

d

The stockholders' equity section of the December 31, 2011, balance sheet for Bravo Bistro appeared as follows: Common stock, $3 par, 2,000 shares issued and outstanding 6,000 Additional paid-in capital 1,000 Retained earnings 5,400 Total stockholders' equity 12,400 Assume that all of the 2,000 shares of Bravo's stock that was issued as of December 31, 2011, was issued for $3.50 per share. On March 1, 2012, Bravo reacquired 1,000 shares of its common stock for $4.50 per share. Refer to the information presented above for Bravo Bistro, Inc. The journal entry to record the transaction on March 1 includes a credit to what account and for what amount? a. $3,000 to paid-in capital from treasury stock transactions b. $4,500 to treasury stock c. $3,000 to common stock d. $4,500 to cash

d

The stockholders' equity section of the December 31, 2011, balance sheet for Inglenook Interiors, Inc. before its recent stock dividend: Common stock, $5 par, 100,000 shares issued and outstanding 500,000 Additional paid-in capital 100,000 Retained earnings 725,000 Total stockholders' equity 1,325,00 Inglenook declared a 10% stock dividend when the market price per share was $8.00. After the stock dividend, the components of Inglenook's stockholders' equity section were: Common Stock - Paid-in Capital - Retained Earnings a. $580,000 - $100,000 - $645,000 b. $550,000 - $100,000 - $805,000 c. $580,000 - $130,000 - $805,000 d. $550,000 - $130,000 - $645,000

d

The ____________________ is a preferred stock having a feature that provides for the current year dividends only to be paid to preferred stockholders before they are paid to common stockholders.

noncumulative preferred stock

The number of shares issued less the number of shares of treasury stock is the ____________________ shares.

outstanding