Accounting - Chapter 10

Aspen Inc. reacquired 10,000 shares of its $26-par common stock for $70/share. The debit to Treasury Stock will be:

700,000 (10,000 x 70)

A company issues 55,000 shares of its $5 par common stock for $20 per share. The amount to be debited to Cash is:

$1,100,000 (55,000 x 20 = 1,100,000)

Lannister, Inc. issues 5,000 shares of $40 par common stock for $43 per share. The amount credited to paid-in capital in excess of par is:

$15,000 (5000 x 43 - 5000 x 40)

A company issues 15,000 shares of its $22 par common stock for $32 per share. The amount to be debited to Cash is:

$480,000 (15,000 x $32 = 480,000)

Thames Inc.'s outstanding stock is 90 shares of $110 par, 11% cumulative preferred stock and 2,500 shares of $14 par common stock. Thames paid $1,600 in cash dividends during the year. No dividends are in arrears. What amount did common stockholders receive?

$511 (90 x $110 x 11% = 1,089; 1,600 - 1,089 = $511)

What are the annual dividends on $22 par preferred 5% stock, if 2,100 shares are authorized and 800 shares have been issued?

$880 (800 x 22 x 5% = 880)

Syrio's Snowboards 2,000 shares of $12 par common stock outstanding. During the current year, the company distributed a 10% stock dividend. The market value of the stock at that time was $19/share. After the distribution, Syrio's total Stockholders' Equity should increase or decrease by:

0

Cheshire Company's outstanding stock is 80 shares of $80 par, 4% cumulative preferred stock and 2,000 shares of $12 par common stock. Cheshire paid $2,000 in cash dividends including one-year dividends in arrears to preferred stockholders. What amount did common stockholders receive?

1,488 (80 x 80 x 4% x 2= 512 , 2000 - 512= 1488

Evergreen Industries has a $13,000 credit balance in Paid-In Capital -Treasury Stock. It sells 1,000 shares of treasury stock, which the company reacquired at $59/share, for $56/share. After the transaction, what will the balance be in the Paid-In Capital in Excess of Par - Treasury account?

10,000 credit (1,000 x 59 - 1,000 x 56 = 3,000, 13,000 - 3,000 =10,000)

Luna, Inc. has declared a $22,000 cash dividend to shareholders. The company has 3,000 shares of $14-par, 9% preferred stock and 12,000 shares of $20-par common stock. The preferred stock is cumulative. How much will be distributed to the preferred and common stockholders on the date of the payment if the preferred stock is 8,000 in arrears?

11,780 preferred, 10,200 common(3,000 x $14 x 9% + 8000 = 11,870, 22,000 - 11,780 = 10,220)

Ashe Corporation has 280,000 shares of $9-par common stock outstanding. They have declared a 8% stock dividend. The current market price of the common stock is $14/share. What is the amount that will be credited to Paid-in Capital in Excess of Par Common Stock on the date of declaration?

112,000(280,000 x 14 x 8% -280,000 x 9 x 8% = 112,000)

NW Stone Supply's Stockholders' Equity section includes the following information: Total paid-in capital is:

114,000 (add everything except RE)

Luna Corp. has 220,000 shares of $6-par common stock outstanding. They have declared a 10% stock dividend. The current market price of the common stock is $14/share. What is the amount that will be credited to Common Stock on the date of declaration?

132,000 (220,000 x 10% x 6)

Lannister, Inc. reacquired 5,000 shares of its $19-par common stock for $13/share. The debit to Treasury Stock will be:

65,000 (5000 x 13)

Zaina Industries has declared a $43,000 cash dividend to shareholders. The company has 4,500 shares of $20-par, 5% preferred stock and 20,000 shares of $20-par common stock. The preferred stock is cumulative. How much will be distributed to the preferred and common stockholders on the date of payment if the preferred stock is $12,000 in arrears?

16,500 preferred, 26,500 common (4500 x 20 x 5% +12,000 = 16,500; 43,000 - 16,500 = 26,500 common)

Betta Group has 360,000 shares of $3-par common stock outstanding. They have declared a 6% stock dividend. The current market price of the common stock is $8.50/share. What is the amount that will be debited to Retained Earnings on the date of declaration?

183,600 (360,000 x 6% x 8.50)

Manitou Corporation's outstanding stock is 75 shares of $55-par, 7% non-cumulative preferred stock and 2,100 shares of $12-par common stock. Manitou paid $2,500 in dividends during the year. What amount did common stockholders receive?

2,211 (75 x 55 x 7% = 289; 2,500 - 289 = 2,211)

Sassy's Sweet Factory's Stockholders' Equity section includes the following information: What was total selling price of the preferred stock?

20,000 (preferred stock + pic preferred (15,000 + 5,000))

Cascade Supply Company 420,000 shares of $12-par common stock outstanding. They have declared a 7% stock dividend. The current market price of the common stock is $19/share. What is the amount that will be credited to Paid-in Capital in Excess of Par Common Stock on the date of declaration?

205,800 (420,000 x 19 x 7% - 420,000 x 12 x 7% = 205,000)

Archer Group: What was the total selling price of the preferred stock?

21,000 (13,000 + 8,000)

Wonderland: What was the total selling price of the common stock?

23,500 (19,000 + 4,500)

Ironworks: What was the total selling price of the common stock?

24,000 (16,000 + 8,000)

Vandalay Industries has 10,000 shares of treasury stock which it purchased for $10/share. It later resold 3,000 of those shares for $18/share. The amount to be credited to Paid-in Capital Treasury Stock:

24,000 (3000 x 18 - 3000 x 10)

Stella, Inc. has 240,000 shares of $5-par common stock outstanding. They have declared a 10% stock dividend. The current market price of the common stock is $11/share. What is the amount that will be debited to Retained Earnings on the date of declaration?

264,000 (240,000 x 11 x 10%)

The Triple S company has a $30,000 balance in Paid-in Capital - Treasury Stock. It sells 600 shares of treasury stock, which the company reacquired at $22/share, for $18/share. After the transaction, what will the balance be in the Paid-in Capital in Excess of Par-Treasury account?

27,600 (30,000 - 600 x 22 - 600 x 18)

Renoir Associates has declared a $49,000 cash dividend to shareholders. The company has 4,000 shares of $16-par, 6% preferred stock and 11,000 shares of $16-par common stock. The preferred stock is non-cumulative. How much will be distributed to the preferred and common stockholder on the date of payment?

3,840 preferred, 45,160 common (4000 x 16 x 6% = 3,840, 49,000 - 3840 = 45,160)

Dragonstone Corp. issues 8000 shares of $24 par common stock for $29 per share. The amount credited to paid-in capital in excess of par is:

40,000 (8000 x 29 - 8000 x 24 = 40,000)

Bach Inc. has declared a $21,000 cash dividend to shareholders. The company has 5,000 shares of $15-par, 7% preferred stock and 11,000 shares of $20-par common stock. The preferred stock is non-cumulative. How much will be distributed to the preferred and common stockholders on the date of payment?

5,250 preferred, 15,750 common (5,000 x $15 x 7% = 5,250; 21,000 - 5,250 = 15,750)

Aspen, Inc. issues 13,000 shares of $5 par common stock for $9 per share. The amount credited to paid-in capital in excess of par is:

52,000 (13,000 x 9 - 13,000 x 5)

Sassycat, Inc. Stockholders' Equity section includes the following information: Total paid-in capital is:

56,000 (Add everything except RE)

Ironworks Industries has 15,000 shares of treasury stock which it purchased for $63/share. It later resold 3,300 of those shares for $82/share. The amount to be credited to Paid-in Capital-Treasury Stock is:

62,700 (3,300 x 82 - 3,300 x 63 = 62,700)

Danio Corp. has 380,000 shares of $4-par common stock outstanding. They have declared a 5% stock dividend. The current market price of the common stock is $7.50/share. What is the amount that will be credited to common stock on the date of declaration?

76,000 (380,000 x 4 x 5%)

What type of stock pays dividends in arrears?

Cumulative preferred stock

Which of the following is NOT a date associated with cash dividends?

Date of issuance

Which of the following dates do NOT require a journal entry?

Date of record

On the date of payment for a cash dividend, what journal entry is required?

Debit Dividends Payable and credit Cash

On the date of declaration for a cash dividend, what journal entry is required?

Debit Retained Earnings and credit Dividends Payable

Dragonstone Corp. purchased 600 shares of the company's issued common stock, paying $14 per share. To record the purchase, the journal entry will be:

Debit to Treasury Stock $8,400, credit to Cash $8,400 (600 x $14)

Which right do preferred stockholders receive before common stockholders?

Dividend rights

When a company purchases treasury stock, outstanding stock is computed as:

Issued stock - Treasury stock

Which is NOT a value placed on a certificate for a share of the company's stock?

Market value

On the date of record for a cash dividend, what journal entry is required?

No entry is required

The major parts of the Stockholders' Equity section of the Balance Sheet are:

Paid-in Capital and Retained Earnings

Which of these represent internally generated stockholders' equity?

Retained Earnings

Which of the following would cause the decrease of the par value of a company's stock?

Stock split

What are dividends in arrears?

The portion of an annual dividend on cumulative preferred stock which has not been paid

Which of the following is TRUE regarding treasury stock?

Treasury Stock is recorded at cost

The number of shares of stock that a corporation is given the right to sell is called:

authorized stock

Values such as par, stated value, and no-par are assigned based upon:

choice of the organizers of the corporation.

If there is only one class of stock outstanding, such stock would be classified as:

common stock

A journal entry for the sale of $10 par common stock for $18 per share would include a:

credit to Paid-in Capital in Excess of Par-Common Stock

The entry to record selling 400 shares of $28 stated value common stock for $44 per share would include

crediting Paid-in Capital in Excess of Stated Value for 6,400 (400 x 44 - 400 x 28)

The entry to record selling 700 shares of stated vale $50 common stock for $74 per share would be:

debit Cash 51,800; credit Common Stock $35,000, credit Paid-in Capital in Excess of Stated Value $16,800

The entry to record Shaman, Inc. selling 1,200 shares of $5 par common stock at $9 per share would be to:

debit Cash, $10,800, credit Common Stock $6,000; credit Paid-In Capital in Excess of Par-Common Stock $4,800 (1,200 x 9 = 10,800 cash; 1,200 x 5 = 6,000; 10,800 - 6,000 = 4800 PIC)

A company issued 700 shares of $2 par common stock in exchange for a piece of equipment with a current market value of $24,000. Which of the following is the correct journal entry for this transaction?

debit Equipment $24,000; credit Common Stock $1,400; credit Paid-in Capital in Excess of Par-Common $22,600

Triple S Supply Co. declared its annual cash dividend on its 3% preferred stock (total par value $98,000) and a $0.25 per share cash dividend on its common stock (54,000 shares outstanding). The journal entry for the declaration date is:

debit Retained Earnings $16,440, credit Dividends Payable -Preferred $2,940, credit Dividends Payable -Common $13,500 (98,000 x 3% = 2,940 preferred; 54,000 x 0.25 = 13,500; RE 2,940 + 13,500 = $16,440

The entry to record Sansa, Inc. selling 1,500 shares of $9 par common stock for $22 per share would be to:

debit cash $33,000, credit Common Stock $13,500, credit Paid in Capital in Excess of Par-Common Stock 19,500 (1,500 x 22 = 33,000 cash; 1,500 x 9 = 13,500 Common Stock; 33,000 - 13,500 = 19,500 PIC)

The entry to record selling 800 shares of stated value $37 common stock for $59 per share would be:

debit cash $47,200; credit Common Stock $29,600; credit Paid-in Capital in Excess of Stated Value $17,600

Caesar's Coffee Company has a $9,000 credit balance in Paid-in Capital - Treasury Stock. It sells 4,500 shares of treasury stock, which the company reacquired at $35/share for $29/share. The journal entry to record this sale is:

debit cash, $130,500, debit Paid-in Capital - Treasury Stock $9,000, debit Retained Earnings $18,000, credit Treasury Stock $157,500 (4,500 x 29 - 130,500 cash, 4,500 x 35 = 157,500; 157,500-130,500 = 27,000; 27,000 - 9,000 = 18,000 RE)

If shares of preferred stock are sold at par value for cash, the transaction would be entered by:

debiting Cash and crediting Preferred Stock

The liability "dividend payable" is recognized on the date of:

declaration

Payment of a cash dividend causes a:

decrease in assets

A company has 75,000 shares of $1 par, 8% preferred stock. The 8% refers to the stock's:

dividend rate

A 2-for-1 stock split will:

double the number of shares and halve the par value per share

The date of declaration creates a ______ for the corporation.

liability

Authorized capital stock are those shares:

listed in the charter

A stock split is recorded as a:

memorandum entry

Stock that is held by stockholders is called:

outstanding stock

Stockholders' Equity consist of:

paid-in capital and Retained Earnings

The formula to determine dividends on par-value preferred stock is:

par value times number of outstanding shares times dividend rate

In the Stockholders' Equity section of a Balance Sheet:

preferred stock goes first

The basic unit of stock is called a:

share

Stockholders will be issued ______ physically or electronically.

stock certificates

At least one "class" of stock MUST have:

voting rights

Stated value is assigned:

when the company decides to issue the stock.

Par value is assigned:

when the corporate charter is filed

The date of record is the date that:

will determine which shareholders receive the dividends