EXAM 3 ACCOUNTING

If 1,000 shares of $6 par common stock are reacquired by a corporation for $10 a share, by how much will total stockholders' equity change?

$10,000 decrease

A corporation has 2,000 shares of cumulative preferred stock with a $100 par value per share and a 5% dividend rate. The dividends are in arrears for two years. If the corporation plans to distribute $55,000 as dividends in the current year, how much will the common stockholders receive?

$25,000 $30,000 $40,000 $50,000 $45,000 $25,000

If a corporation issues 800 shares of $4 par common stock for $7 a share, how much is the legal capital?

$3,200

ABC Corporation has cumulative preferred stock on which it pays dividends of $20,000 per year. The dividends are in arrears for two years. If the corporation plans to distribute $90,000 as dividends in the current year, how much will the common stockholders receive?

$30,000

Danielle Inc. has 8,000 shares of 5%, $50 par, non-cumulative preferred stock and 50,000 shares of $3 par common stock outstanding. Both the common stock and the preferred stock have been outstanding since the company began last year. No dividends were paid last year. The board of directors declared a $50,000 dividend this year. What amount of the total dividend will be paid to common stockholders?

$30,000

A corporation's year-end balance sheet showed the following: 6% preferred stock, $20 par value, cumulative, 30,000 shares authorized; 15,000 shares issued $ 300,000 Common stock, $10 par value, 3,000,000 shares authorized; 1,950,000 shares issued, 1,920,000 shares outstanding 19,500,000 Paid-in capital in excess of par value--Preferred stock 60,000 Paid-in capital in excess of par value--Common stock 27,000,000 Retained earnings 7,650,000 Treasury stock (30,000 shares) 630,000 During the year, the corporation declared and paid a $75,000 cash dividend. If the company's dividends in arrears prior to the current year were $27,000, the corporation's common stockholders would receive

$30,000. $27,000. $33,000. $24,000. $30,000. $30,000

If 1,000 shares of $5 par common stock are reacquired by a corporation for $9 a share, by how much will total stockholders' equity change? Group of answer choices

$4,000 increase $9,000 decrease $0 $9,000 increase $4,000 decrease $9,000 decrease

The company's total stockholders' equity is

$77,610,000.

A partial list of a corporation's accounts shows the following account balances: Retained earnings, $375,000Treasury stock—common, $20,000Paid-in capital in excess of par value—common, $60,000Treasury stock—preferred, $20,000Common stock, $200,000Preferred stock, $175,000Paid-in capital in excess of par value—preferred, $60,000 How much is total stockholders' equity?

$845,000 $805,000 $830,000 $945,000 $850,000 $830,000

Carlyle Corporation reported net income of $340,000 and paid dividends of $100,000 on its common stock and $40,000 on its preferred stock. Common stockholders' equity was $1,600,000 at the start of the year and $2,000,000 at the end of the year. Total assets was $2,250,000 at the start of the year and $2,750,000 at the end of the year. What is the company's return on common stockholder's equity?

16.67%

In the current year, a corporation reported net income of $180,000, paid dividends of $40,000 on common stock, and $25,000 of dividends on preferred stock. The corporation's common stockholders' equity was $650,000 at the beginning of the year and its common stockholders' equity is $850,000 at the end of the year. The company's return on common stockholders' equity for the current year is Group of answer choices

24.0%. 20.7% 15.3% 18.2%. 18.7% 20.7%

A corporation is authorized to sell 1,200,000 shares of common stock. Today there are 450,000 shares outstanding, and the board of directors declares a 8% stock dividend. How many shares will be issued as a stock dividend?

36,000

What is the payout ratio?

4.2%

The following data is available for a certain corporation at December 31: Common stock, par $4 (authorized 500,000 shares), $200,000 Treasury stock (at cost $20 per share), $10,000Based on the data, how many shares of common stock are outstanding?

600,000 50,000 100,000 99,750 49,500 49,500

Consider the following data for a corporation: Net income, $800,000 Preferred stock dividends, $50,000 Market value of common equity, $5,000,000 Beginning common stockholders' equity, $3,800,000 Ending common stockholder's equity, $4,200,000 Common stock dividends, $20,000What is the payout ratio?

8.75% 6.25% 1.40% 2.50 18.75% 2.50

Based on the data, how many shares of common stock are outstanding?

99,900

- A credit to Common Stock for $8,000

A credit to Common Stock for $8,000

- Additional taxes

Additional taxes

A corporation issued 1,000 shares of its $3.00 par value common stock for $12.00 per share and later repurchased 50 of those shares for $9.00 per share. Which of the following will be debited when the repurchase of the shares is journalized? Group of answer choices

Common Stock for $450 Treasury Stock for $450 Treasury Stock for $150 Retained Earnings for $450 Retained Earnings for $150 treasury stock for $450

Which of these is a disadvantage of corporations?

Continuous life Government regulations Transferable ownership rights Ability to raise capital All of these are advantages of corporations government regulations

- Credit to Common Stock for $18,000

Credit to Common Stock for $15,000

Which of the following is the appropriate general journal entry to record the declaration of cash dividends? Group of answer choices

Debit the Cash Dividends account and credit the Cash account Debit the Dividends Payable account and credit the Cash account Debit the Paid-in Capital account and credit to the Dividends Payable account Debit the Cash Dividends account and credit the Dividends Payable account No journal entry is required. Debit the Cash Dividends account and credit the Dividends Payable account

A corporation issued 2,500 shares of $6 par value common stock for $7 per share. Which of the following is included in the journal entry to record the issuance? Group of answer choices

Debit to Paid-in Capital in Excess of Par Value for $2,500 Debit to Cash for $15,000 Credit to Common Stock for $15,000 Credit to Common Stock for $18,000 Credit to Paid-in Capital in Excess of Par Value for $15,000 credit to common stock for $15,000

On which dates are entries for cash dividends required?

Declaration date and the payment date

- Dividends cannot be paid on common stock while any dividend on preferred stock is in arrears.

Dividends may be paid on common stock while dividends are in arrears on preferred stock.

Andrews Company declared a cash dividend of $1.00 per share on 20,000 shares of common stock on January 15. The dividend is to be paid one month later on February 15 to stockholders of record on January 31. Which of the following summarizes the effects of the journal entry recorded on the date of payment on February 15?

It decreases liabilities and decreases assets.

A corporation declared a cash dividend of $1.00 per share on 20,000 shares of common stock on December 15. The dividend is to be paid one month later on January 15 to stockholders of record on December 30. Which of the following summarizes the effects of the journal entry recorded on the date of declaration on December 15?

It decreases stockholders' equity and increases liabilities. It decreases stockholders' equity and decreases assets. It increases stockholders' equity and increases liabilities. It decreases liabilities and decreases assets. No journal entry is recorded when dividends are declared. It decreases stockholders' equity and increases liabilities.

In the stockholders' equity section of the balance sheet, where and how is treasury stock reported?

It is reported as a deduction appearing after both total paid-in capital and retained earnings.

- It is reported on the income statement.

It is reported on the income statement.

Which of the following accounts is listed first in the stockholders' equity section of the balance sheet? Group of answer choices

Preferred stock if preferred stock had been issued. Otherwise, common stock is listed first. Retained earnings. Common stock if common stock had been issued. Otherwise, preferred stock is listed first. Common stock because all corporations have outstanding common stock. Treasury stock. Preferred stock if preferred stock had been issued. Otherwise, common stock is listed first.

A disadvantage of the corporate form of organization is

Professional Management additional taxes ease of transfer of ownership seperate legal existence from shareholders continuity of life additional taxes

Black Raptor Inc. has retained earnings of $500,000 and total stockholders' equity of $2,000,000. It has 120,000 shares of $8 par value common stock outstanding, which is currently selling for $25 per share. What will occur if Black Raptor declares a 10% stock dividend on its common stock?

Retained earnings will decrease by $300,000 and total paid-in capital will increase by $300,000.

Which of the following is a characteristic of sole proprietorships?

Separate legal existence Limited liability for owners Low taxation Ability to acquire capital easily Unlimited life low taxation

Which of the following is not considered to be a characteristic of the corporate form of organization?

Unlimited liability of stockholders Separate legal existence Continuous life Ability to acquire capital through the issuance of stock Transferable ownership rights unlimited liability of stockholders

- The corporation pays $210 of federal income tax.

The corporation pays $210 of federal income tax.

- The number of treasury shares equals the number of outstanding shares.

The number of authorized shares equals or exceeds the number of outstanding shares.

- The right to share in assets upon liquidation in proportion

The right to share in assets upon liquidation in proportion

Which of the following is a stockholder's right?

The right to share in the corporate earnings through receipt of dividends The right to vote in the election of the company president The right to declare a dividend The right to participate in management decisions None of these

- Retained Earnings for $200

Treasury Stock for $600

If a corporation's stock is not traded on a stock exchange, the corporation is referred to as a closely held corporation which is another name for Group of answer choices

a publicly held corporation. a privately held corporation. a mutual corporation. an S corporation. a chartered corporation. a privately held corporation

A corporation issues 50,000 shares of $50 par value preferred stock for cash at $60 per share. The entry to record the transaction will include a

credit to Preferred Stock for $3,000,000. credit to Preferred Stock for $2,500,000 and a credit to Paid-in Capital in Excess of Par Value for $500,000. credit to Preferred Stock for $2,500,000 and a credit to Retained Earnings for $500,000. credit to Paid-in Capital in Excess of Par Value for $3,000,000. credit to Retained Earnings for $300,000. credit to preferred stock for $2,500,000 and a credit to paid-in capital in excess of par value for $500,000

Stockholders have certain rights. One of these rights is called preemptive right. The term preemptive right refers to a stockholders' right to

declare dividends. share in assets upon liquidation in proportion to their holdings. keep the same percentage ownership when new shares of stock are issued. vote in election of board of directors. exchange their stock for bonds. keep the same percentage ownership when new shares of stock are issued

If the board of directors authorizes a $100,000 restriction of retained earnings for a future plant expansion, the effect of this action is to Group of answer choices

decrease total assets and total stockholders' equity. increase stockholders' equity and to decrease total liabilities. decrease total retained earnings and increase total liabilities. reduce the amount of retained earnings available for dividends to shareholders. increase total liabilities and decrease total stockholders' equity. reduce the amount of retained earnings available for dividends to shareholders.

- average price per share issued is $27.80.

legal capital is $80,000.

Corporations have several officers who manage the corporation. One such officer is the chief executive officer. The chief executive officer

maintains the corporation's accounting records, systems of internal controls, and prepares its financial statements, tax returns, and internal reports. has overall responsibility for managing the business. has custody of the corporation's funds and maintains the company's cash position. All of these None of these has overall responsibility for managing the business

Dividends in arrears on cumulative preferred stock

never have to be paid, even if common dividends are paid. must be paid before common stockholders can receive a dividend. should be recorded as a current liability until they are paid. enable the preferred stockholders to share equally in corporate earnings with the common stockholders. will be paid only after common dividends have been paid. must be paid before common stockholders can receive a dividend

The two ways that a corporation can be classified based on their ownership are

publicly held and privately held.

Corporations have several officers who manage the corporation. The officer who has custody of the corporation's funds and maintains the company's cash position is the

treasurer.