Financial accounting chapter 13 Questions

Greg's Grocery, Inc. has​ 46,000 shares of common stock outstanding and​ 4,000 shares of preferred stock outstanding. The common stock is​ $0.10 par​ value; the preferred stock is​ 7% noncumulative with a​ $100.00 par value. On October​ 15, 2017, the company declares a total dividend payment of​ $51,000. What is the amount of dividend that will be paid for each share of common​ stock? ​(Round your answer to the nearest​ cent.) A. ​$45.00 B. ​$0.50 C. ​$0.90 D. ​$4.50

$.50 Dividend paid to the common stockholders = $51,000.00 - [($100 x 7%) x 8,000] = 28,000 51,000 - 28,000 = 23,000 Dividends per common share = 23,000 / 46,000 = $.50

On June 30, 2017, Stephans, Inc showed the following data on the equity section of their balance sheet Stockholders' equity Common stock, $1 par; 199,000 shares authorized, 157,000 shares issued and outstanding $157,000 Paid-In Capital in Excess of Parâ€"Common $262,000 Retained Earnings 957,000 Total Stockholder's Equity $1,376,000 On July 1, 2017, the company declared and distributed a 6% stock dividend. The market value of the stock at that time was $14 per share. Following this transaction, what is total stockholders' equity? A) $1,376,000 B) $1,558,140 C) $1,302,860 D) $1,208,840

$1,376,000

Revival Corporation provides the following information March 31, 2016 March 31, 2017 Net Income $358,000 $425,500 Preferred Dividends 0 0 Total Stockholders' Equity $4,380,000 $5,132,000 Stockholders' Equity attributable to Preferred Stock 0 0 Number of Common Shares Outstanding 294,464 195,168 Based on the information provided above, compute the earnings per share of Revival Corporation as of March 31, 2017. (Round any intermediate calculations and your final answer to the nearest cent.) A) $1.22 B) $2.18 C) $1.74 D) $1.46

$1.74 Average Number of Common Shares Outstanding = (294,464 + 195,168 ) / 2 = 244,816.00 Earnings Per Share = Net Income / Average Number of Common Shares Outstanding Earnings Per Share = $425,500 / 244,816.00 = $1.74 Logged

The following information is from the December 31, 2017 balance sheet of Jackson Corporation Preferred Stock, $100 par $270,000 Paid-In Capital in Excess of Par-Preferred 22,000 Common Stock, $1 par 69,000 Paid-In Capital in Excess of Par-Common 206,000 Retained Earnings 56,600 Total Stockholders' Equity $623,600 What is the average issue price of the preferred stock shares? (Round answers to the nearest dollar.) A) $108 B) $100 C) $167 D) $106

$108 Preferred Stock, $100 par = $270,000 No. of Shares = $270,000 / $100 = 2,700 Paid-In Capital in Excess of Par-Preferred $22,000 Average Price = ($270,000 + $22,000 ) / 2,700 $108

Pearland, Inc has 9,000 shares of preferred stock outstanding The preferred stock has a $90 par value, a 14% dividend rate, and is noncumulative. If Pearland has sufficient funds to pay dividends, what is the total amount of dividends that will be paid out to preferred stockholders? A) $32,143 B) $113,400 C) $57,857 D) $8,100

$113,400 The total amount of dividends paid out to preferred stockholders

On June 30, 2017, Roger, Inc showed the following data on the equity section of their balance sheet Stockholders' Equity Common Stock, $1 par; 202,000 shares authorized, 150,000 shares issued and outstanding $150,000 Paid-In Capital in Excess of Par-Common $260,000 Retained Earnings 946,000 Total Stockholder's Equity $1,356,000 On July 1, 2017, the company declared and distributed a 9% stock dividend. The market value of the stock at that time was $20 per share. Following this transaction, what is the balance of Common Stock? A) $163,500 B) $57,180 C) $285,540 D) $357,180

$163,500 Stock dividend $270,000 (150,000 x 20 x .09) Common stock dividend distributable $13,500 ($150,000 x 1 x .09) Paid in capital in xcess- par $256,000 (270,000 - 13,500) 150,000 + 13,500 = 163,500

Happy Farmer, Inc has 44,000 shares of common stock outstanding and 3,000 shares of preferred stock outstanding The common stock is $0.08 par value; the preferred stock is 8% noncumulative with a $100.00 par value. On October 15, 2017, the company declares a total dividend payment of $56,000. What is the total amount of dividends that will be paid to the common stockholders? A) $56,000 B) $32,000 C) $3,520 D) $24,000

$32,000 Dividend paid to the common stockholders = $56,000 - [($100 x 8%) x 3,000] = $32,000

On June 30, 2017, Texas, Inc showed the following data on the equity section of their balance sheet Stockholders' Equity Common Stock, $1 par; 195,000 shares authorized, 149,000 shares issued and outstanding $149,000 Paid-In Capital in Excess of Par-Common $260,000 Retained Earnings 949,000 Total Stockholder's Equity $1,358,000 On July 1, 2017, the company declared and distributed a 11% stock dividend. The market value of the stock at that time was $20 per share. As a result of this stock dividend, what is the balance of Retained Earnings? A) $770,580 B) $951,000 C) $981,780 D) $621,200

$621,200 Stock Dividend = 149,000 x $20 x .11 = $327,800 Balance in Retained Earnings = $949,000 - $327,800 = $621,200

Lerner, Inc had the following transactions in 2017, its first year of operations -Issued 22,000 shares of common stock. The stock has a par value of $3.00 per share and was issued at $16.00 per share. -Issued 1,800 shares of $160 par value preferred stock at par. -Earned net income of $37,000. -Paid no dividends. At the end of 2017, what is total stockholders' equity? A) $677,000 B) $354,000 C) $286,000 D) $640,000

$677,000 Common stock (22,000 x $16 ) $352,000 Preferred stock (1,800 x $160 ) $288,000 Net income $37,000 Total stockholders' equity $677,000

Moretown, Inc had the following transactions in 2017, its first year of operations -Issued 31,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $20.00 per share. -Earned net income of $70,000. -Paid no dividends. At the end of 2017, what is total stockholders' equity? A) $31,000 B) $690,000 C) $620,000 D) $70,000

$690,000 Common stock (31,000 x $20 ) $620,000 Net income $70,000 Total stockholders' equity $690,000

On March 31, 2017, Park Place, Inc shows the following data on its balance sheet Stockholders' Equity Common Stock, $1 Par, 1,180,000 shares authorized 240,000 shares issued, 230,000 shares outstanding $240,000 Paid-In Capital in Excess of Par-Common 2,560,000 Retained Earnings 4,790,000 Treasury stock, 15,000 shares at $40 -600,000 Total Stockholder's Equity $6,990,000 Assume that Park Place sells 1,500 shares of treasury stock at $33 per share. What is total stockholders' equity after this transaction? A) $6,940,500 B) $7,039,500 C) $6,979,500 D) $7,000,500

$7,039,500 Total stockholder's equity $6,990,000 Sale of treasury stock 49,500 (1,500 x 33) Total equity after the sale of stock $7,039,500

Sanella Corporation reported the following equity section on its current balance sheet The common stock is currently selling for $18.25 per share. Common Stock, $14 Par, 129,000 shares authorized,48,000 shares issued and outstanding $672,000 Paid-in Capital in Excess of Par-Common 167,000 Retained Earnings 350,000 Total Stockholders' Equity $1,189,000 What would be the balance in the Common Stock account after the issuance of a 10% stock dividend? A) $334,000 B) $604,800 C) $739,200 D) $672,000

$739,200 Stock dividend $87,600 (48,000 x 18.25 x .10) Common stock dividend distributable $67,200 ($14 x 48,000 x .10) Paid in capital in xcess- par $20,000 $672,000 + 67,200 = $739,200

Castle, Inc had the following transactions in 2017, its first year of operations -Issued 20,000 shares of common stock. The stock has a par value of $3.00 per share and was issued at $19.00 per share. -Issued 2,000 shares of $200 par value preferred stock at par. -Earned net income of $40,000. -Paid no dividends. At the end of 2017, what is the total amount of paid-in capital? A) $820,000 B) $460,000 C) $380,000 D) $780,000

$780,000 Common stock (20,000 x $19 ) $380,000 Preferred stock (2,000 x $200 ) $400,000 Total paid-in capital $780,000

The following information is from the December 31, 2017 balance sheet of Tudor Corporation Preferred Stock, $100 par $390,000 Paid-In Capital in Excess of Par-Preferred 25,000 Common Stock, $1 par 152,000 Paid-In Capital in Excess of Par-Common 346,000 Retained Earnings 83,900 Total Stockholders' Equity $996,900 What was the total paid-in capital as of December 31, 2017? A) $736,000 B) $996,900 C) $913,000 D) $888,000

$913,000 Preferred Stock, $100 par $390,000 Paid-In Capital in Excess of Par-Preferred 25,000 Common Stock, $1 par 152,000 Paid-In Capital in Excess of Par-Common 346,000 Total Paid in Capital $913,000

The 2017 balance for Mason Electronics reported the following items — with 2016 figures given for comparison Mason Electronics Balance Sheet As of December 31,2017 December 31,2016 Total Assets $571,000 $494,000 Total Liabilities 330,000 284,000 Total Stockholders' Equity (all common) 241,000 210,000 Total Liabilities and Stockholders' Equity $571,000 $494,000 Net income for 2016 was $25,000. Compute the rate of return on common stockholders' equity for 2016. (Round to two decimal places. Show your computations.) A) 4.38% B) 10.37% C) 11.09% D) 4.69%

11.09% Rate of return on common stockholders' equity: (Net income - Preferred dividends) / Average common stockholders' equity ($25,000 - 0 ) / ($241,000 + $210,000 ) / 2 $25,000 / $225,500 = 11.09%

Assume the following information for Petra Sales, Inc -Common Stock, $1.00 par, 232,000 shares issued, 186,000 shares outstanding -Paid-In Capital in Excess of Par-Common: $1,770,000 -Retained Earnings: $2,450,000 -Treasury Stock: 26,000 shares purchased at $12 per share If Petra Sales purchases an additional 13,000 shares of treasury stock at $18 per share, what number of shares will be shown as issued and outstanding? A) 18 issued; 186,000 outstanding B) 219,000 issued; 186,000 outstanding C) 232,000 issued; 173,000 outstanding D) 232,000 issued; 186,000 outstanding

232,000 issued; 173,000 outstanding Total no. of shares outstanding = 186,000 - 13,000 = 173,000 shares

Peterson, Inc. issued 4,000 shares of preferred stock for $240,000. The stock has a par value of $60 per share. Prepare the journal entry for this transaction.

Cash 240,000 Preferred Stock-$60 Par Value 240,000

ANS, Inc has 50,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding The common stock has a $1.00 par value. The preferred stock has a $100 par value, a 5% dividend rate, and is noncumulative. On October 31, 2017, the company declares the annual preferred dividend and dividends of $0.25 per share for common. Prepare the journal entry for the declaration of dividends. What will be an ideal response

Cash Dividend 22,500 Dividends Payable-Preferred 10,000 (2,000 x 100 x .5 = 10,000) Dividends Payable-Common 12,500 (50,000 x $0.25 = $12,500)

On November 1, 2017, Roosevelt, Inc. declared a dividend of $3.00 per share. Roosevelt, Inc. has 20,000 shares of common stock outstanding and no preferred stock. Prepare the journal entry to record this transaction.

Cash Dividends 60,000 Dividends Payable-Common 60,000

A corporation declares a dividend of .50 per share on 18,000 shares of common stock. Which of the following is included un the entry of the declaration? A) Cash Dividends is debited for $9,000. B) Dividends Payable-Common is debited for $9,000. C) Cash Dividends is credited for $9,000. D) Paid-In Capital in Excess of Par-Common is credited for $9,000.

Cash Dividends is debited for $9,000.

Which of the following is included in the entry to record the issuance of 14,000 shares of $7 par value common stock at $21 per share cash? A) Cash is debited for $294,000. B) Common Stock is debited for $98,000. C) Common Stock is credited for $294,000. D) Paid-In Capital in Excess of Par-Common is debited for $196,000.

Cash is debited for $294,000. Cash (14,000 x $21 ) 294,000 Common Stock ($7 x 14,000 ) 98,000 Paid-In Capital in Excess of Par-Common (($21 - $7 ) x 14,000 ) 196,000

Bradley Corporation received cash from issuing 17,000 shares of common stock at par on January 1, 2017. The stock has a par value of $0.05 per share. Which is the correct journal entry to record this transaction? A) Cash is debited for $850, and Common Stock-$0.05 Par Value is credited for $850. B) Cash is credited for $17,000 and Common Stock-$0.05 Par Value is debited for $17,000. C) Paid-In Capital in Excess of Par-Common is debited for $16,150, and Common Stock-$0.05 Par Value is credited for $16,150. D) Cash is debited for $17,000, Common Stock-$0.05 Par Value is credited for $850, and Paid-In Capital in Excess of Par-Common credited for $16,150.

Cash is debited for $850, and Common Stock-$0.05 Par Value is credited for $850.

A corporation reported the following equity section on its current balance sheet The common stock is currently selling for $15.00 per share. Common Stock, $6 par, 106,000 shares authorized,57,000 shares issued and outstanding $342,000 Paid in Capital in Excess of Par 150,000 Retained Earnings 500,000 Total Stockholders' Equity $992,000 Which of the following would be included in the entry to record the distribution of a 15% stock dividend? A) Common Stock-$6 Par Value would be credited for $51,300. B) Stock Dividends would be debited for $95,400. C) Paid-In Capital in Excess of Par-Common is debited for $95,400. D) Stock Dividends would be credited for $51,300.

Common Stock-$6 Par Value would be credited for $51,300. Common Stock 57,000 shares x .15 x $6 = $51,300

Which of the following statements is true of a corporation? A) Shareholders are authorized to sign contracts or make business commitments on behalf of the corporation. B) Shareholders can be required to pay debts of the corporation. C) Shares of stock cannot be readily purchased and sold by investors on an organized stock exchange. D) Corporations pay income tax on corporate earnings, and shareholders pay income tax or corporate dividends.

Corporations pay income tax on corporate earnings, and shareholders pay income tax or corporate dividends.

On November 1, 2017, Oster, Inc. declared a dividend of $4.50 per share. Oster, Inc. has 23,000 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? A) Debit Dividends Payable-Common $103,500, and credit Retained Earnings $103,500. B) Debit Cash Dividends $103,500, and credit Cash $103,500. C) Debit Cash Dividends $103,500, and credit Dividends Payable-Common $103,500. D) Debit Cash $103,500, and credit Dividends Payable-Common $103,500.

Debit Cash Dividends $103,500, and credit Dividends Payable-Common $103,500. Dividends Payable = Dividends per share x No. of shares = $4.50 x 23,000 = $103,500

On November 1, 2017, McEwing, Inc declared a dividend of $5.00 per share. McEwing, Inc has 20,000 shares of common stock outstanding and no preferred stock. The date of record is November 15, and the payment date is November 30, 2017. Which of the following is the journal entry needed on November 30, 2017? A) Debit Cash Dividends $100,000, and credit Dividends Payable-Common $100,000. B) Debit Dividends Payable-Common $100,000, and credit Cash $100,000. C) Debit Cash $100,000, and credit Dividends Payable-Common $100,000. D) Debit Cash Dividends $100,000, and credit Cash $100,000.

Debit Dividends Payable-Common $100,000, and credit Cash $100,000. Dividends Payable = Dividends per share x No. of shares = $5.00 x 20,000 = $100,000

Madison Company earned net income of $75,000 during the year ended December 31, 2016 On December 20, Madison declared the annual cash dividend on its 8% preferred stock (par value, $150,000 ) and a $0.50 per share cash dividend on its common stock (45,000 shares). Madison then paid the dividends on January 10, 2017. Prepare the journal entries to record the declaration and the distribution of the dividends. Explanations are not required. What will be an ideal response

Dec. 20 2016 Cash Dividends 34,500 ($12,000 + $22,500 ) Dividends Payable-Preferred 12,000 (.8 x $150,000 ) Dividends Payable-Common 22,500 ($0.50 per share x 45,000 ) Jan. 10 2017 Dividends Payable-Preferred 12,000 Dividends Payable-Common 22,500 Cash 34,500

On November 1, 2017, Pink Rose, Inc. declared a dividend of $3.00 per share. Pink Rose, Inc. has 20,000 shares of common stock outstanding and no preferred stock. The date of record is November 15, and the payment date is November 30, 2017. Provide the journal entry needed on November 30.

Dividends Payable-Common 60,000 Cash 60,000

Which of the following is true of dividends? A) Dividends increase assets and decrease total stockholders' equity of a corporation. B) Dividends are a distribution of cash, stock, or other property to stockholders. C) Dividend payments increase stockholders' equity. D) Dividend payments decrease paid-in capital.

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

If treasury shares are sold for less than their cost, the difference is recorded as a loss.

False

If treasury stock is resold for more than cost, the difference is debited to the account Paid-In Capital from Treasury Stock Transactions.

False

No journal entry is made on the dividend declaration date.

False

A corporation issues 16,000 shares of its $3 stated value common shares. The issue price is $9 per share. The credit to the Common Stock account is $144,000.

False Cash (16,000 x 9 ) 144,000 Common Stock (16,000x 3 ) 48,000 Paid-In Capital in Excess of Par-Common (144,000 - 48,000 ) 196,000

The account Paid-In Capital from Treasury Stock Transactions has a credit balance of $2,000. The corporation resells 450 shares of its treasury stock. These shares were acquired for $10 per share and sold for $3 per share. The entry to record the sale of treasury stock includes a debit to Retained Earnings of $3,150.

False Cash 1,350 (450 x 3) Paid-In Capital from Treasury Stock Transactions 2,000 Retained earnings 1,150 Treasury stock 4,500

Micro Electronics completed the following stock issuance transactions June 7 -Issued 4,000 shares of $3 par value common stock for cash of $12 per share Aug. 16 -Issued 400 shares of no-par preferred stock for $25,000 cash Sept. 19 -Received equipment with a market value of $75,000 in exchange for 5,000 shares of the $3 par value common stock Prepare the journal entries to record these transactions. Explanations are not required.

June 7 Cash 48,000 Common Stock-$3 Par Value ($3 per share x 4,000 shares) 12,000 Paid-In Capital in Excess of Par-Common ($48,000 - $12,000 ) 36,000 Aug. 16 Cash 25,000 Preferred Stock-No-Par Value 25,000 Sept. 19 Land 75,000 Common Stock-$3 Par Value ($3 per share x 5,000 shares) 15,000 Paid-In Capital in Excess of Par-Common ($75,000 - $15,000 ) 60,000

Supermart, Inc completed the following treasury stock transactions in 2016 Mar. 3 Purchased 1,800 shares of the company's $ 3 par value common stock as treasury stock, paying cash of $ 10 per share. Mar. 17 Sold 400 shares of the treasury stock for cash of $ 12 per share. Mar. 25 Sold 600 shares of the treasury stock for cash of $ 7 per share. (Assume the balance in Paid-In Capital from Treasury Stock Transactions on March 24 is $ 1,200.) Journalize these transactions. Explanations are not required. How will Supermart, Inc report treasury stock on its balance sheet as of December 31, 2016?

Mar. 3 Treasury Stock-Common ($10 per share x 1,800 shares) 18,000 Cash 18,000 Mar. 17 Cash ($12 per share x 400 shares) 4,800 Treasury Stock-Common ($10 per share x 400 shares) 4,000 Paid-In Capital from Treasury Stock Transactions ($2 x 400 shares) 800 Mar. 25 Cash ($7 per share x 600 shares) 4,200 Paid-In Capital from Treasury Stock Transaction 1,200 Retained Earnings 600 Treasury Stock-Common ($10 per share x 600 shares) 6,000 Supermart, Inc. will report treasury stock beneath retained earnings on the balance sheet as a reduction to total stockholders' equity.

On November 1, 2017, President, Inc. declared a dividend of $3.00 per share. President, Inc. has 10,000 shares of common stock outstanding and 20,000 of preferred. The date of record is November 15, and the payment date is November 30, 2017. Regarding the date of record, which of the following statements is true? A) Cash is disbursed to shareholders on the date of record. B) The company transfers cash to the brokerage firm on the date of record. C) The liability must be recorded on the date of record. D) No journal entry is made on the date of record.

No journal entry is made on the date of record.

Jenkins Realty, Inc. issued 7,000 shares of $9 stated value common stock for $16 per share. The journal entry to record this transaction includes a credit to ________. A) Common Stock for $112,000 B) Paid-In Capital in Excess of Stated -Common for $63,000 C) Common Stock-$9 Stated Value for $49,000 D) Paid-In Capital in Excess of Stated-Common for $49,000

Paid-In Capital in Excess of Stated-Common for $49,000 Cash (7,000 x 16 ) 112,000 Common Stock (7,000 x 9 ) 63,000 Paid-In Capital in Excess of Par-Common (112,000 - 63,000 ) 49,000

On December 1, 2017, Galahad, Inc had 200,000 shares of $1 par value common stock issued and outstanding. The next day Galahad declared and distributed a 50% stock dividend. The market value of the stock on December 2, 2017 was $9 per share. Prepare the journal entry for the transaction. What will be an ideal response

Stock Dividend 100,000 Common Stock 100,000 (200,000 x .50 x $1)

A company originally issued 14,000 shares of $5 par value common stock at $12 per share. The board of directors declares an 14% stock dividend when the market price of the stock is $25 a share. Which of the following is included in the entry to record the declaration of a stock dividend? A) Stock Dividends is debited for $24,500. B) Common Stock-$5 Par Value is credited for $47,040. C) Common Stock is credited for $49,000. D) Stock Dividends is debited for $49,000.

Stock Dividends is debited for $49,000. Stock Dividends (14,000 shares x .14 x $25 market price) = $49,000

Lack of mutual agency is best described as which of the following? A) The liabilities of the corporation cannot be extended to the personal assets of the stockholder. B) Shares of stock can be readily purchased and sold by investors on an organized stock exchange. C) Stockholders are not authorized to sign contracts or make business commitments on behalf of the corporation. D) Corporations pay income tax on corporate earnings, and shareholders pay income tax on corporate dividends.

Stockholders are not authorized to sign contracts or make business commitments on behalf of the corporation.

Which of the following is a basic right of stockholders? A) Stockholders may sell their stock back to the company if they wish. B) Stockholders may authorize a business contract on behalf of the corporation. C) Stockholders may receive dividends from corporate earnings. D) Stockholders may determine the issue price of common stock.

Stockholders may receive dividends from corporate earnings.

Which of the following is a true statement? A) Stockholders may determine the issue price of common stock. B) Stockholders are guaranteed annual dividends C) Stockholders may authorize a business contract on behalf of the corporation. D) Stockholders receive their proportionate share of any assets remaining after the corporation pays its debts and liquidates.

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

Saturn Corporation has 13,000 shares of 14%, $84 par noncumulative preferred stock outstanding and 20,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $180,000. How is the dividend allocated between preferred and common stockholders? A) The dividend is allocated $8,107 to preferred stockholders and $109,091 to common stockholders. B) The dividend is allocated $152,880 to preferred stockholders and $27,120 to common stockholders. C) The dividend is allocated $70,909 to preferred stockholders and $109,091 to common stockholders. D) The dividend is allocated $235,200 to preferred stockholders and $55,200 to common stockholders.

The dividend is allocated $152,880 to preferred stockholders and $27,120 to common stockholders. Dividend allocated to preferred stockholders: $84 x .14 x 13,000 shares = $152,880 Dividend allocated to common stockholders: $180,000 - $152,880 = $27,120

A corporation has 18,000 shares of 13%, $50 par cumulative preferred stock outstanding and 34,000 shares of no-par common stock outstanding. Dividends of $22,000 are in arrears. At the end of the current year, the corporation declares a dividend of $208,000. What is the dividend per share for preferred stock and for common stock? (Round your answer to the nearest cent.) A) The dividend per share is $5.00 to preferred stock and $6.65 per share to common stock. B) The dividend per share is $11.56 to preferred stock and $0 per share to common stock. C) The dividend per share is $7.72 to preferred stock and $2.03 per share to common stock. D) The dividend per share is $11.56 to preferred stock and $2.03 per share to common stock.

The dividend per share is $7.72 to preferred stock and $2.03 per share to common stock. Total amount paid to preferred shareholders: ($50 x .13 x 18,000 shares current year) + $22,000 in arrears = $139,000 Dividend per preferred share = $139,000 / 18,000 shares = $7.72 Dividend per common share: $208,000 - $139,000 = $69,000.00 / 34,000 shares = $2.03

A corporation originally issued $8 par value common stock for $10 per share. It purchased the stock for $13 per share. Which of the following is included in the entry to record the sale of 70 shares of treasury stock for $14 per share? A) Paid-In Capital From Treasury Stock Transactions is credited for$980. B) Treasury Stock- Common is credited for $910. C) Paid-In Capital From Treasury Stock Transactions is debited for $70. D) Treasury Stock- Common is credited for $980.

Treasury Stock- Common is credited for $910.

Ross Corporation reported the following: Common Stock, $5 par, 206,000 shares authorized, 165,000 shares issued $825,000 Paid in capital in Excess of Par- Common $214,000 Retained Earnings $222,00 Total stockholders equity $1,261,000 Which of the following is included in the entry to record the corporation's purchase of 40,000 shares of its common stock for $10.00 per share? A) Retained Earnings is debited for $400,000. B) Treasury Stock- Common is debited for $400,000 C) Paid-In Capital From Treasury Stock Transactions is credited for 25,000. D) Common Stock- $5 Par Value is credited for $200,000.

Treasury Stock- Common is debited for $400,000 40,000 x 10 = 400,000

A corporation originally issued $13 par value common stock for $15 per share. Which of the following is included in the entry to record the purchase of 300 shares of treasury stock for $11 per share? A) Treasury Stock-Common is debited for $3,300. B) Treasury Stock-Common is credited for $45. C) Retained Earnings is debited for $1,650. D) Treasury Stock-Common is debited for $1,650.

Treasury Stock-Common is debited for $3,300.

Rimsone, Inc. purchased 8,500 shares of the company's own $6 par common stock for $8 per share. Journalize the transaction.

Treasury stock- common 68,000 (8,500 x 8) cash 68,000

A 3-for-1 stock split of a $3 par value share will result in three shares of $1 par value being issued for each share of $3 par value stock.

True

A corporation is a separate legal entity that is organized independently of its owners.

True

A deficit occurs when a company has reoccurring losses and/or dividends in excess of retained earnings.

True

A stock split decreases par value per share, whereas stock dividends do not affect par value per share.

True

Cash dividends cause a decrease in both assets and stockholders' equity of the corporation.

True

Companies can report a negative amount in retained earnings.

True

If stock is issued for assets other than cash, the transaction recorded at the market value of the stock issued or the market of the assets received, whichever is more clearly determinable?

True

Legal capital refers to the portion of stockholders' equity that cannot be used for dividends.

True

Memorandum entry is an entry in the journal that notes a significant event but has no debit or credit amount.

True

Most corporations set par value low and issue common stock at a premium.

True

Preferred stockholders receive a dividend preference over common stockholders.

True

Stated value stock is no-par stock that has been assigned an amount similar to par value.

True

Stock dividends are distributed to stockholders in proportion to the number of shares that stockholders already own.

True

Stock dividends have no effect on total stockholders' equity.

True

Stockholders of a corporation are not personally liable for the corporation's debt.

True

The rate of return on common stockholders' equity shows the relationship between net income available to common stockholders and their average common equity invested in the company.

True

The statement of retained earnings reports how the company's retained earnings balance changed from the beginning of the period to the end of the period.

True

Treasury stock is a contra equity account.

True

Treasury stock is recorded at cost, without reference to par value.

True

When a corporation retires its shares of treasury stock, the stock certificates are canceled.

True

Outstanding stock represents shares of stock that ________. A) are held by the stockholders B) are sold for the highest price C) have been authorized by state law D) have been issued but may or may not be held by stockholders

are held by the stockholders

Prior period adjustments ________. A) always increase the beginning balance of retained earnings B) are shown on the statement of retained earnings as corrections to the beginning balance C) can be ignored because the financial statements have already been issued D) must be recorded in the period in which the error occurred

are shown on the statement of retained earnings as corrections to the beginning balance

When a stockholder contributes cash to a corporation in exchange for stock, ________. A) one asset is increased and another asset is decreased B) assets and liabilities are increased C) liabilities and stockholders' equity are increased D) assets and stockholders' equity are increased

assets and stockholders' equity are increased

Which of the following actions will decrease the amount of Total Stockholders' Equity? A) cash dividend declared B) stock split C) stock dividend declared D) repayment of bond principal

cash dividend declared

Define treasury stock and provide two reasons why a corporation would purchase treasury stock.

corporations own stock that it has required corporation can re-sell or issue to stockholders

On December 2, 2017, Ewell, Inc purchases land. In payment for the land, Ewell, Inc issues 6,000 shares of common stock with $6 par value. The land has been appraised at a market value of $430,000. Which of the following is included in the journal entry to record this transaction? A) debit Common Stock-$6 Par Value for $36,000 and debit Paid-In Capital in Excess of Par-Common $394,000 B) credit Common Stock-6 Par Value for $36,000 and credit Paid-In Capital in Excess of Par-Common $394,000 C) credit Common Stock-$6 Par Value for $430,000 D) debit Cash $430,000

credit Common Stock-6 Par Value for $36,000 and credit Paid-In Capital in Excess of Par-Common $394,000

Dallkin Corporation issued 10,000 shares of common stock on January 1, 2017. The stock has no par value and was issued at $17 per share. The journal entry for this transaction includes a ________. A) debit to Cash for $170,000 and a credit to Common Stock-No-Par Value for $170,000 B) debit to Cash for $170,000 and a credit to Paid-In Capital in Excess of Par-Common for $170,000 C) credit to Cash for $170,000 and a debit to Common Stock-No-Par Value for $170,000 D) credit to Cash for $170,000, a debit to Paid-In Capital in Excess of Par-Common for $10,000, and a debit to Common Stock-No-Par Value for $160,000

debit to Cash for $170,000 and a credit to Common Stock-No-Par Value for $170,000

The entry to record the payment of a previously declared dividend of $0.25 per share on 18,500 shares of common stock includes a ________. A) debit to Cash Dividends for $4,625 B) debit to Cash $4,625 C) credit to Cash Dividends for $4,625 D) debit to Dividends Payable for $4,625

debit to Dividends Payable for $4,625 Dividend per share $0.25 No. of shares 18,500 Total dividend payment $4,625

On the ________, cash dividends become a liability of a corporation. A) declaration date B) date of record C) last day of the fiscal year D) payment date

declaration date

The purchases of treasury stock ________________. A) decreases assets and increases stockholders equity B) decreases assets and stockholders equity C) increases assets and decreases stockholders' equity D) increases assets and stockholders' equity

decreases assets and stockholders equity

Treasury stock _____________. A) decreases the number of shares outstanding B) decreases the number of shares issued C) increases the number of shares issued D) increases the number of shares outstanding

decreases the number of shares outstanding

On the date of record for a dividend, the company ________. A) issues new shares of stock on that date B) disburses dividend payments to stockholders on that date C) records the dividend payable amount on that date D) determines who owns the shares of stock on that date

determines who owns the shares of stock on that date

The distribution of a stock dividend ________. A) decreases both assets and liabilities B) decreases assets and increase liabilities C) effects only stockholder's equity accounts D) increases both dividends payable and cash

effects only stockholder's equity accounts

In the event of a corporate liquidation preferred stockholders _______________. A) are guaranteed to receive the par value of the preferred stock B) have first claim on remaining corporate assets after debts are paid C) are guaranteed to receive a full refund of the stock purchase price D) may retain their proportionate share of voting rights

have first claim on remaining corporate assets after debts are paid

The retained earnings of a corporation is ______________. A) internally generated equity that is received from employee stock purchases B) internally generated equity that is earned by profitable operations that is not distributed to stockholders C) externally generated equity that is acquired from banks and other creditors D) externally generated equity that is contributed by shareholders

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

When a previously declared dividend is paid, which of the following occurs? A) assets increase B) stockholders' equity increases C) liabilities decrease D) assets remain unchanged

liabilities decrease

Which of the following is an advantage of the corporate form of business? A) less degree of government regulation B) limited liability of stockholders C) separation of ownership and management D) low start-up costs

limited liability of stockholders

ABC has 61,000 shares of $16.00 par common stock outstanding. ABC announces a stock split of 4-for-1. What is the effect of the split? A) par stays at $16.00; total shares increase to 15,250 B) par drops to $8.00; total shares stay at 61,000 C) par drops to $4.00; total shares increase to 244,000 D) par goes to $64.00; total shares increase to 244,000

par drops to $4.00; total shares increase to 244,000

Dividends in arrears are ________. A) a liability on the balance sheet B) passed dividends on noncumulative preferred stock C) passed dividends on cumulative preferred stock D) passed dividends on common stock

passed dividends on cumulative preferred stock

Which of the following types of stock has less investment risk? A) common stock B) par value stock C) no-par stock D) preferred stock

preferred stock

Preferred stock holders ______________. A) receive a dividend preference over common stockholders B) have more investment risk compared to common stockholders C) are guaranteed that they will not have a loss on their investment D) generally have voting rights

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 ________. A) will decrease B) can increase or decrease C) will increase D) remains unchanged

remains unchanged

The statement of stockholders' equity ________. A) reports the number of shares and any changes during the year in preferred, common, and treasury stock B) is required to be presented along with the statement of retained earnings C) is not required by IFRS D) does not show the changes to the Retained Earnings account because that information is provided in the statement of retained earnings

reports the number of shares and any changes during the year in preferred, common, and treasury stock

Which of the following best describes the appropriation of retained earnings? A) restricting part of retained earnings for expansion or contingencies B) setting cash aside for expansion C) limiting company transactions in order to boost earnings D) designating certain amounts of retained earnings for cash dividends that are required to be paid to shareholders

restricting part of retained earnings for expansion or contingencies

Which of the following actions will decrease Retained Earnings? A) repayment of bond principal B) stock split C) stock dividend declared D) purchase of treasury stock

stock dividend declared

Which of the following occurs when a cash dividend is declared? A) liabilities remain unchanged B) stockholders' equity decreases C) liabilities decrease D) assets increase

stockholders' equity decreases

Preferred stock is stock ________. A) that sells for a high price B) that is distributed to employees as annual bonuses C) that is distributed by corporations to avoid liquidation D) that gives its owners certain advantages over common stockholders

that gives its owners certain advantages over common stockholders

The par value of stock is _______________. A) the current selling price of stock B) the price paid if the corporation purchases its own stock back C) the highest price which a share can sell D) the amount assigned by a company to a share of its stock

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

When 1,000 shares of $3 stated value common stock is issued at $18 per share, _____________. A)the difference between the issue price and the stated value is credited to Paid-In Capital in Excess of Stated B) the accounting is exactly the same as the accounting for par value stock C)the account titled Paid-In Capital in Excess of Stated is used to record the issue price of the stock D) Common Stock- $3 Stated is credited for $ 18,000

the difference between the issue price and the stated value is credited to Paid-In Capital in Excess of Stated

Which of the following is a reason for a company to announce a stock split? A) to decrease the market price at which the stock is trading B)to provide the shareholders with something of value, when the company cannot afford a cash dividend C) to reward investors D) to increase total stockholders' equity

to decrease the market price at which the stock is trading

If a company retires preferred stock, ________. A) total stockholders' equity will decrease B) total stockholders' equity will increase C) the company can record a gain or loss on retirement of stock D) the number of outstanding shares will increase

total stockholders' equity will decrease