accounting chapter 10

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:

$110,000

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?

$140,000

On June 1, 2011, Donner Technologies declared a $50,000 cash dividend to be distributed to its common stockholders of record on June 15, 2011. The dividend will be paid on July 1, 2011. The required journal entry on June 1 includes a:

$50,000 debit to retained earnings

Which of the following is not a characteristic of a corporation?

a corporations's resources are limited to their individual stockholder's resources

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:

common stock $6,000 and additional paid-in capital $6,000

Par value represents the:

arbitrary amount that establishes a minimum price for the stock when it is first issued

Which of the following is not characteristic of a corporation?

cash dividends paid by a corporation are deductible as expenses by the corporation

When is a liability for cash dividends created?

at the date of declaration

Select the type of business that is most likely to obtain large amounts of resources by issuing stock.

corporation

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:

dividends payable and a credit to cash

One of the main disadvantages of the corporate form is the:

double taxation of dividends

All of the following are reasons that a corporation may purchase treasury stock except:

if it desires to make an investment in its own stock and is reported as an asset

Authorized shares represent the:

maximum number of shares of stock that a company can legally issue

After a corporation declares a cash dividend, what takes place on the date of record?

no entry is necessary

Treasury shares represent the:

number of previously issued shares that have been repurchased by the corporation

Issued shares represent the:

number of shares that the corporation has distributed to owners to date

Outstanding shares represent the:

numbers of shares that are currently held by stockholders

Characteristics of a corporation include:

shareholders who have limited liability

A disadvantage of the corporate form of business entity is:

that corporations are subject to more governmental regulations