Ch 15 Quizlet

On March 1, 20X5, Rya Corp. issued 1,000 shares of its $20 par value common stock and 2,000 shares of its $20 par value convertible preferred stock for a total of $80,000.At this date, Rya's common stock was selling for $36 per share, and the convertible preferred stock was selling for $27 per share.What amount of the proceeds should be allocated to Rya's convertible preferred stock? A) $48,000 B) $44,000 C) $60,000 D) $54,000

A) $48,000

The book value per share is based on A)common shares outstanding. B)common shares issued. C)both common shares and preferred shares outstanding. D)both common shares and preferred shares issued.

A) common shares outstanding

When a property dividend is declared, Retained Earnings is reduced by the: A) fair value of the property. B) cost of the property. C) carrying value of the property. D) book value of the property.

A) fair value of the property

Blowing Rock Inc. has 5,000 shares of 5%, $100 par value, cumulative preferred stock and 30,000 shares of $1 par value common stock outstanding at December 31, 2017. There were no dividends declared in 2015. The board of directors declares and pays a $45,000 dividend in 2016 and in 2017. What is the amount of dividends received by the common stockholders in 2017? A)$15,000 B)$45,000 C)$25,000 D)$0

A)$15,000

On April 1, year 1, Hyde Corp., a newly formed company, had the following stock issued and outstanding:1) Common stock, no par, $1 stated value, 20,000 shares originally issued for $30 per share.2) Preferred stock, $10 par value, 6,000 shares originally issued for $50 per share.Hyde's April 1, year 1 statement of stockholders' equity should report Common stockPreferred stockAdditional paid-in capital A)$20,000$60,000$820,000 B)$20,000$300,000$580,000 C)$600,000$300,000$0 D)$600,000$600,000$240,000

A)$20,000$60,000$820,000

Presented below is information related to Schoenthaler Corporation: Common Stock , $5 par$1,100,000Paid-in Capital in Excess of Par - Common Stock400,000Preferred 5 ½% Stock, $100 par1,500,000Paid-in Capital in Excess of Par—Preferred Stock500,000Retained Earnings2,000,000Paid-in Capital from Treasury Stock150,000 The total stockholders' equity of Schoenthaler Corporation is A)$5,350,000. B)$5,500,000. C)$3,650,000. D)$5,650,000.

D)$5,650,000.

Which of the following increases the number of shares outstanding and decreases the par value per share? A)Small stock dividend. B)Large stock dividend. C)Treasury stock. D)Stock split.

D)Stock Split

Participating preferred stock requires that if a corporation fails to pay a dividend in any year, it must make it up in a later year before paying any dividends to common stockholders. True False

False

Treasury stock sold for less than its cost decreases net income. True False

False

How would a stock split affect each of the following?nt is increased when the treasury shares are reissued above cost. Remember: "capital in excess of par value" includes APIC from all sources. Assets Totl stockholders'equity Additional paid-incapital A) Increase Increase No effect B) No effect No effect No effect C) No effect No effect Increase D) Decrease Decrease Decrease

B) No effect No effect No effect

Treasury stock was acquired for cash at more than its par value, and then subsequently sold for cash at more than its acquisition price. Assuming that the cost method of accounting for treasury stock transactions is used, what is the effect on additional paid-in capital from treasury stock transactions? Purchase of treasury stockSale of treasury stock A) No effectNo effect B) No effectIncrease C) DecreaseIncrease D) DecreaseNo effect

B) No effectIncrease

Under the cost method, when treasury stock is sold for more than its cost, the excess is credited to: A) Paid-in Capital in Excess of Par. B) Paid-in Capital from Treasury Stock. C) Gain on Sale of Treasury Stock. D) Retained Earnings.

B) Paid-in Capital from Treasury Stock

Which one of the following is not a right of common stockholders? A) To share proportionately in profits and losses. B) To share proportionately in all management decisions. C) To share proportionately in corporate assets upon liquidation. D) To share proportionately in any new issues of stock of the same class.

B) To share proportionately in all management decisions.

The residual interest in a corporation belongs to A) management. B)the common stockholders. C)the preferred stockholders. D)the board of directors.

B)the common stockholders

Elaine Corporation was organized on January 1, year 1, with an authorization of 1,000,000 shares of common stock with a par value of $5 per share. During year 1, the corporation had the following capital transactions:January 4—issued 200,000 shares @ $5 per share.April 8—issued 100,000 shares @ $7 per share.June 9—issued 30,000 shares @ $10 per share.July 29—purchased 50,000 shares @ $4 per share.December 31—sold 50,000 shares held in treasury @ $8 per share.Elaine used the cost method to record the purchase and reissuance of the treasury shares. What should be the balance in the account "capital in excess of par value" as of December 31, year 1? A)$450,000 B) $500,000 C) $550,000 D) $400,000

C) $550,000

Stock issued in non-cash transactions should be recorded at the: A) Par value of the stock issued. B) Fair market value of the stock issued. C) Fair market value of the stock issued or the property received, whichever is more readily determinable. D) Fair market value of the property received.

C) Fair market value of the stock issued or the property received, whichever is more readily determinable

Stockholders' equity is generally classified into two major categories: A)contributed capital and appropriated capital. B) retained earnings and unappropriated capital. C) retained earnings and contributed capital. D) appropriated capital and retained earnings.

C) Retained earnings and contributed capital

Cash dividends are paid on the basis of the number of shares A) issued. B) authorized. C) outstanding. D) outstanding less the number of treasury shares.

C) outstanding

In 20X4, Seda Corp. acquired 6,000 shares of its $1 par value common stock at $36 per share. During 20X5, Seda issued 3,000 of these shares at $50 per share. Seda uses the cost method to account for its treasury stock transactions.What accounts and amounts should Seda credit in 20X5 to record the issuance of the 3,000 shares? Treasury stockAdditional paid-in capitalRetained earningsCommon stock A)$102,000$42,000$6,000 B)$144,000$6,000 C)$108,000$42,000 D)$108,000$42,000

C)$108,000$42,000

Cross Corp. had outstanding 2,000 shares of 11% preferred stock, $50 par. On August 8, 1992, Cross redeemed and retired 25% of these shares for $22,500. On that date, Cross' additional paid-in capital from preferred stock totaled $30,000.To record this transaction, Cross should debit (credit) its capital accounts as follows: Preferred stockAdditional paid-in capitalRetained earnings A) $25,000$7,500($10,000) B)$25,000-($2,500) C) $25,000($2,500)- D) $22,500--

C)$25,000($2,500)-

In every corporation the one class of stock that represents the basic ownership interest is called A)owners' stock. B)cumulative stock. C)common stock. D)preferred stock.

C)common stock

Additional paid-in capital is not affected by the issuance of: A)preferred stock. B)no par with a stated value stock. C)no-par stock. D)par value stock.

C)no-par stock.

Doe Corporation owned 1,000 shares of Spun Corporation. These shares were purchased in year 1 for $9,000. On December 15, year 1, Doe declared a property dividend of one share of Spun for every ten shares of Doe held by a stockholder. On that date, when the market price of Spun was $14 per share, there were 9,000 shares of Doe outstanding. What gain and net reduction in retained earnings would result from this property dividend? GainNet reduction inretained earnings A) $0$8,100 B) $0$12,600 C) $4,500$3,600 D) $4,500$8,100

D) $4,500$8,100

Which of the following are requirements of the declaration of a cash dividend? A) Sufficient cash. B) Sufficient retained earnings. C) Declaration by the Board. D) All of these answer choices are requirements of the declaration of a cash dividend.

D) All of these answer choices are requirements of the declaration of a cash dividend

The residual interest in a corporation belongs to the A) preferred stockholders. B) management. C) creditors. D) common stockholders.

D) Common stockholders

Which of the following statements related to dividends is incorrect? A) Before declaring a dividend, management must consider availability of funds to pay the dividend. B) Dividends must be declared by the Board of Directors. C) Distributions to owners must be in compliance with the state laws. D) Dividends must be paid in the period declared.

D) Dividends must be paid in the period declared.

Cumulative preferred dividends in arrears should be shown in a corporation's financial statements as A) an increase in current liabilities. B) an increase in stockholders' equity. C) an increase in current liabilities for the current portion and long-term liabilities for the long-term portion. D) a footnote.

D) a footnote

Before declaring a cash dividend, management must consider the A) effect on paid-in capital. B) current market price of the stock. C) legal capital of the stock. D) availability of funds.

D) availability of funds

The type of preferred stock that would generate a dividend in arrears is: A) convertible preferred stock. B) callable preferred stock. C) participating preferred stock. D) cumulative preferred stock.

D) cumulative preferred stock

Jackson Corporation issued a 100% stock dividend of its common stock, which had a par value of $.01, and a market value of $123 before the dividend and $62 after the dividend. At what amount should retained earnings be capitalized for the additional shares issued? A) There should be no capitalization of retained earnings. B) Market value on the declaration date. C) Market value on the payment date. D) Par value.

D) par value

Treasury stock is classified on the balance sheet as an asset. True False

false

Preferred stock has no voting rights. True False

true