Intermediate Accounting Chapter 15

At December 31, Year 3 and Year 4, Apex Co. had 3,000 shares of $100 par, 5% cumulative preferred stock outstanding. No dividends were in arrears as of December 31, Year 2. Apex did not declare a dividend during Year 3. During Year 4, Apex paid a cash dividend of $10,000 on its preferred stock. Apex should report dividends in arrears in its Year 4 financial statements as a(n):

Disclosure of $20,000

which of the following statements about property dividends is NOT true?

The accounting for a property dividend should be based on the carrying value (book value) of the assets transferred.

East Co. issued 2,000 shares of it's $5 par common stock to Krannik as compensation for 1,000 hours of legal services performed. Krannik usually bills $200 per hour for legal services. On the date of issuance, the stock was trading on a pubic exchange at $160 per share. By what amount should the additional paid-in-capital account increase?

$310,000

Zinc Co.'s adjusted trial balance at December 31, Year 6, includes the following account balances: Common stock, $3 par; $600,000 Additional Paid in Capital; 1,800,000 Treasury stock, at cost; 50,000 Net unrealized holding loss on available- for - sale securities; 20,000 retained earnings: appropriated for uninsured earthquake losses; 150,000 Retained earnings: unappropriated; 200,000 What amount should zinc report as total equity in its December 31, Year 6, balance sheet?

$2,680,000

A corporation issuing stock should charge retained earnings for the fair value of the shares issued in a(n):

10% stock dividend

Effective April 27, the shareholders of Dorr Corp. approved a 2-for-1 split of its common stock and an increase in authorized common shares from 100,000 shares (par value $20 per share) to 200,000 shares (par value $10 per share). Dorr's equity accounts immediately before issuance of the stock-split shares were as follows: Common stock, par value $20; 100,000 shares authorized; 50,000 shares outstanding $1,000,000 Additional paid-in capital ($3 per share on issuance of common stock) 150,000 Retained earnings 1,350,000 The stock-split shares were issued on June 30. In Dorr's June 30 statement of equity, the balances of additional paid-in capital and retained earnings are:

Additional Paid-in Capital- $150,000 Retained Earnings- $1,350,000

Knight Corp. holds 20,000 shares of its $10 par value common stock as treasury stock required in Year 1 for $240,000. On December 12, Year3, Knight reissued all 20,000 shares for $380,000. Under the cost method of accounting for treasury stock, the reissuance resulted in a credit to:

Additional paid-in capital of $140,000

On February 1, Hyde Corp., a newly formed company, had the following stock issued and outstanding: *common stock, no par, $1 stated value, 10,000 shares originally issued for $15 per share *preferred stock, $10 par value, 3,000 shares originally issued for $25 per share Hyde's February 1 statement of equity should report:

Common stock- $10,000 Preferred stock- $30,000 Additional Paid-in Capital- $185,000

on June 1, Ligtenburg Company"s board of directors declared a cash dividend of $1.00 per share on the 50,000 shares of common stock outstanding. The company also has 5,000 shares of treasury stock, Shareholders of record on June 15 are eligible for the dividend, which is to be paid on July 1. On June 1, the company should:

Debit retained earnings for $50,000

which of the following is the primary element that distinguishes accounting for corporations from accounting for other legal forms of business entity (such as partnerships)?

The corporation draws a sharper distinction in accounting for sources of capital

The par value of a corporation's issued and outstanding common stock is equal to:

a designated dollar amount per share established in the articles of incorporation

stock dividends distribute should be classified on the

balance sheet an an item of stockholders' equity

Unlike a stock split, a stock dividend requires a formal journal entry in the financial accounting records because stock

dividends represent a transfer from Retained Earnings to Capital Stock.

unlike a stock split, a stock dividend requires a formal journal entry in the financial accounting records because stock:

dividends represent a transfer from retained earnings to capital stock

The shareholders' equity of Kramer Industries includes the data shown below. This year, dividends of $150,000 were declared. Dividends have were not declared the last two years. Determine the dividends paid to the preferred and common shareholders this year Common stock; $200,000 PICEP- Common; 800,000 Preferred stock, 10% fully participating; 100,000 PICEP-preferred; 270,000

preferred- $50,000 common- $100,000

farmer corporation owns a 4,000,000 shares of stock in Baha Corporation. On December 31, Farmer distributed these shares of stock as a dividend to its stockholders. This is an example of a:

property dividen

The Preemptive right of shareholders is the right to

purchase shares of stock on a pro rata basis when new issues are offered for sale

The statement of shareholders' equity accounts and their corresponding dollar amounts

reconciliation of the beginning and ending balances in shareholders' equity accounts

If management wishes to "capitalize" part of the earnings, it may issue a:

stock dividend