chapter 13 accounting

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A company originally issued 19,000 shares of $9 par value common stock at $7 per share. The board of directors declares a 12​% stock dividend when the market price of the stock is $15 a share. Which of the following is included in the entry to record the declaration of a stock​ dividend?

Stock Dividends is debited for $34,200. 19,000x12% x15

Which of the following is a true​ statement?

Stockholders receive their proportionate share of any assets remaining after the corporation pays its debts and liquidates.

Which of the following occurs when a 2−for−1 stock split is​ declared?

The balance in Common Stock remains the same.

Which of the following is true of a​ corporation?

The earnings of a corporation may be subject to double taxation.

Which of the following occurs when the board of directors declares a 3−for−1 stock split on 14,000 outstanding shares of $21 par common​ stock?

The number of outstanding shares increases to 42,000.

Treasury stock is​ ________.

a contra equity account

The distribution of a stock dividend​ ________.

affects only​ stockholders' equity accounts

Paid−in capital consists of​________.

amounts received from stockholders in exchange for stock

Outstanding stock represents shares of stock that​ ________.

are held by the stockholders

Stock dividends are declared by the​ ________.

board of directors of the company

Which of the following actions will decrease the amount of Total​ Stockholders' Equity?

cash dividend declared

On December​ 2, 2024,​ Eshares, Inc. purchases land. In payment for the​ land, Eshares, Inc. issues 5,000 shares of common stock with $4 par value. The land has been appraised at a market value of $500,000. Which of the following is included in the journal entry to record this​ transaction?

credit Common Stock—$4 Par Value for $20,000 and credit Paid−In Capital in Excess of Par—Common $480,000

Risingstar Corporation currently has 120,000 shares outstanding of $5 par value common stock. The stock was originally issued for $19 per share. On March​ 15, the board of directors declares a 12​% stock dividend when the stock is selling for $17 per share. Which of the following is the correct journal entry to record this​ transaction? (Do not round intermediate​ calculations.)

debit Stock Dividends $244,800, credit Common Stock Dividend Distributable 72,000 and credit Paid-In Capital in Excess of Par-Common $172,000

Pumpkin Corporation issued 6,000 shares of common stock on January​ 1, 2024. The stock has no par value and was issued at $24 per share. The journal entry for this transaction includes a​ ________.

debit to Cash for $144,000 and a credit to Common Stock—No−Par Value for $144,000

The entry to record the payment of a previously declared dividend of $1.00 per share on 20,500 shares of common stock includes a​ ________.

debit to Dividends Payable for $20,500

On the​ ________, cash dividends become a liability of a corporation.

declaration date

The purchase of treasury stock​ ________.

decreases assets and​ stockholders' equity

Treasury stock​ ________.

decreases the number of shares outstanding

On the date of record for a​ dividend, the company​ ________.

determines who owns the shares of stock

The retained earnings of a corporation is​ ________.

internally generated equity that is earned by profitable operations that is not distributed to stockholders

Which of the following is an advantage of the corporate form of​ business?

limited liability of of stockholders

Preferred stockholders​ ________.

receive a dividend preference over common stockholders

When the corporation declares a stock​ dividend, a​ stockholder's percentage ownership in the stock of the corporation​ ________.

remains unchanged

The par value of stock is​ ________.

the amount assigned by a company to a share of its stock

Which of the following is a reason for a company to announce a stock​ split?

to decrease the market price at which the stock is trading

Superstar Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $14.50 per share. Common​ Stock, $10 ​Par, 127,000 shares​ authorized, 58,000 shares issued and outstanding $580,000 Paid−in Capital in Excess of Par—Common 130,000 Retained Earnings 310,000 Total​ Stockholders' Equity $1,020,000 What would be the total​ stockholders' equity after a 12​% common stock​ dividend?

$1,020,000

Atlantis Corporation has 12,000 shares of 12​%, $82 par noncumulative preferred stock outstanding and 30,000 shares of no−par common stock outstanding. At the end of the current​ year, the corporation declares a dividend of $195,000. How is the dividend allocated between preferred and common​ stockholders?

The dividend is allocated $118,080 to preferred stockholders and $76,920 to common stockholders. 12,000x12%x$82 195,000-118,080

The two basic sources of​ stockholders' equity are​ ________.

paid−in capital and retained earnings

Ballpark has 53,000 shares of $16 par common stock outstanding. Ballpark announces a stock split of 4−for−1. What is the effect of the​ split?

par drops to $4.00​; total shares increase to 212,000

Dividends in arrears are​ ________.

passed dividends on cumulative preferred stock

On June​ 30, 2024,​ Dakota, Inc. showed the following data on the equity section of their balance​ sheet: ​Stockholders' Equity Common​ Stock, $1 ​par; 198,000 shares​ authorized, 140,000 shares issued and outstanding $140,000 Paid−In Capital in Excess of Par—Common $261,000 Retained Earnings 953,000 Total​ Stockholders' Equity $1,354,000 On July​ 1, 2024, the company declared and distributed a 8​% stock dividend. The market value of the stock at that time was $19 per share. After closing the stock​ dividend, what is the balance of Retained​ Earnings?

$740,200. 140,000x8%x19 =212,800 953,000-212,800=740,200

Megastar Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $21.25 per share. Common​ Stock, $14 ​Par, 121,000 shares​ authorized, 49,000 shares issued and outstanding $686,000 Paid−in Capital in Excess of Par—Common 155,000 Retained Earnings 430,000 Total​ Stockholders' Equity $1,271,000 What would be the balance in the Common Stock account after the issuance of a 13​% stock​ dividend?

$775,180 686,000x13%=89,180 89,180+686,000=775,180

Assume the following information for Western​ Sales, Inc.: • Common​ Stock, $1.00 ​par, 200,000 shares​ issued, 188,000 shares outstanding • Paid−In Capital in Excess of Par—​Common: $1,680,000 • Retained​ Earnings: $2,520,000 • Treasury​ Stock: 12,000 shares purchased at $17 per share If Western Sales purchases an additional 14,000 shares of treasury stock at $18 per​ share, what number of shares will be shown as issued and​ outstanding?

200,000 ​issued; 174,000 outstanding

The following information is from the December​ 31, 2024 balance sheet of Millner Corporation. Preferred​ Stock, $100 par $510,000 Paid−In Capital in Excess of Par—Preferred 38,000 Common​ Stock, $1 par 200,000 Paid−In Capital in Excess of Par—Common 570,000 Retained Earnings 171,500 Total​ Stockholders' Equity $1,489,500 What was the average issue price of the common stock​ shares? ​(Round your answer to the nearest​ cent.)

3.85. 570,000+200,00 /200,000

Maybridge, Inc. has 9,000 shares of common stock outstanding. A stockholder has 300 shares. If the company distributes a 21​% stock​ dividend, the stockholder now holds​ ________ shares of Maybridge stock.

363

Which of the following is true of​ dividends?

Dividends are a distribution of​ cash, stock, or other property to stockholders.

A corporation declares a dividend of $2.00 per share on 11,000 shares of common stock. Which of the following is included in the entry to record the​ declaration?

Cash Dividends is debited for $22,000.

Which of the following is included in the entry to record the issuance of 13,000 shares of $12 par value common stock at $14 per share for​ cash?

Cash is debited for $182,000. 13000x14

On November​ 1, 2024,​ Uno, Inc. declared a dividend of $4.25 per share.​ Uno, Inc. has 21,000 shares of common stock outstanding and no preferred stock. Which of the following is the journal entry needed to record the declaration of the​dividend?

Debit Cash Dividends $89,250​, and credit Dividends Payable—Common $89,250.

On November​ 1, 2024,​ Nada, Inc. declared a dividend of $4.75 per share on common stock.​ Nada, Inc. has 24,000 shares of common stock outstanding and no preferred stock. The date of record is November​ 15, and the payment date is November​ 30, 2024. Which of the following is the journal entry needed on November​ 30, 2024?

Debit Dividends Payable—Common $114,000​, and credit Cash $114,000.

From its inception through the year of​ 2023, First​ Mart, Inc. was profitable and made strong dividend payments each year including all payments to preferred shareholders. In the year​ 2024, First Mart had major losses and paid no dividends. In​2025, the company started making large profits​ again, and they were able to pay dividends to all shareholders—both common and preferred. There are 2,300 shares of​ cumulative, 13​% preferred stock outstanding. The preferred stock has a par value of $100. What is the total amount of dividends that should be paid to the preferred stockholders in December​ 2025?

$59,800. 2,300x13%x100x2

Valley, Inc. has 8,000 shares of preferred stock outstanding. The preferred stock has a $110 par​ value, a 7​% dividend​ rate, and is noncumulative. If Valley has sufficient funds to pay​ dividends, what is the total amount of dividends that will be paid out to preferred​ stockholders?

$61,600. 8,000x110x7%

Milton, Inc. had the following transactions in​ 2025, its first year of​ operations: • Issued 13,000 shares of common stock. Stock has par value of $0.01 per share and was issued at $39.00 per share. • Earned net income of $300,000. • Paid dividends of $9.00 per share. At the end of​ 2025, what is total​ stockholders' equity?

$690,000 13,000x39=507,000 507,000+300,000=807,000 807,000-(13,000x9)=690,000

Refer to the following information for Tolan​ Corporation: • Common​ Stock, $1.00 ​par, 103,000 shares​ issued, 90,000 shares outstanding • Paid−In Capital in Excess of Par—​Common: $2,260,000 • Retained​ Earnings: $910,000 • Treasury​ Stock: 13,000 shares purchased at $26 per share If Tolan resold 1,600 shares of treasury stock for $20 per​ share, which of the following statements would be​ true?

The Treasury Stock account would decrease by $41,600.

Which of the following is a true statement regarding the effect of a stock split and stock dividend on total assets or​ liabilities?

Neither a stock split nor a stock dividend will affect total assets or total liabilities.

Nice International originally issued 102,000 shares of common stock at a price of $24 per share. A year​ later, it distributed a 13​% stock dividend to shareholders. At the time of the stock​ dividend, the share price had increased to $32 per share. Which of the following statements is​ true?

Nice will record neither a gain nor a loss.

On November​ 1, 2025,​ Juno, Inc. declared a dividend of​ $3.00 per share on common stock.​ Juno, Inc. has​ 10,000 shares of common stock outstanding and​ 20,000 shares of preferred stock. The date of record is November​ 15, and the payment date is November​ 30, 2025. Regarding the date of​ record, which of the following statements is​ true?

No journal entry is made on the date of record.

Which of the following occurs when a cash dividend is​ declared?

Stockholders' equity decreases.

Land Corporation reported the​ following: Common​ Stock, $5 ​par, 213,000 shares​ authorized, 168,000 shares issued $840,000 Paid in Capital in Excess of Par—Common 201,000 Retained Earnings 227,000 Total​ Stockholders' Equity $1,268,000 Which of the following is included in the entry to record the​ corporation's purchase of 40,000 shares of its common stock for $14 per​ share?

Treasury Stock—Common is debited for $560,000.

A company cannot report a gain or loss when buying or selling its own stock.

True


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