Intermediate Accounting 2 - Chapter 15 Multiple Choice

The stockholders' equity section of Gunkel Corporation as of December 31, 2017, was as follows:Common stock, par value $2, authorized 20,000 shares; issued and outstanding 10,000 shares$ 20,000 Paid-in capital in excess of par $30,000 Retained earnings$ 85,000 Total $135,000 On March 1, 2018, the board of directors declared a 15% stock dividend, and accordingly 1,500 additional shares were issued. On March 1, 2018, the fair value of the stock was $6 per share. For the two months ended February 28, 2018, Gunkel sustained a net loss of $15,000.What amount should Gunkel report as retained earnings as of March 1, 2015? - $61,000. - $67,000. - $71,000. - $77,000.

- $61,000.

Hernandez Company has 560,000 shares of $10 par value common stock outstanding. During the year, Hernandez declared a 15% stock dividend when the market price of the stock was $30 per share. Four months later Hernandez declared a $.50 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by - $2,842,000. - $1,260,000. - $462,000. - $420,000.

- $2,842,000.

Sosa Co.'s stockholders' equity at January 1, 2018 is as follows:Common stock, $10 par value; authorized 300,000 shares; Outstanding 225,000 shares $2,250,000 Paid-in capital in excess of par $800,000 Retained earnings $2,190,000 Total $5,240,000 During 2018, Sosa had the following stock transactions:Acquired 6,000 shares of its stock for $270,000.Sold 3,600 treasury shares at $50 a share.Sold the remaining treasury shares at $41 per share.No other stock transactions occurred during 2018. Assuming Sosa uses the cost method to record treasury stock transactions, the total amount of all additional paid-in capital accounts at December 31, 2018 is - $791,600. - $770,000. - $808,400. - $827,600.

- $808,400.

On July 1, 2018, Nall Co. issued 2,500 shares of its $10 par common stock and 5,000 shares of its $10 par convertible preferred stock for a lump sum of $140,000. At this date Nall's common stock was selling for $24 per share and the convertible preferred stock for $18 per share. Assuming that those prices are reliable, the amount of the proceeds allocated to Nall's preferred stock should be - $70,000. - $84,000. - $90,000. - $77,000.

- $84,000.

The preemptive right allows stockholders the right to vote for directors of the company. - True - False

- False

What effect does the issuance of a 2-for-1 stock split have on each of the following? - Par Value per Share Retained Earnings No effect No effect - Par Value per Share Retained Earnings Increase No effect - Par Value per Share Retained Earnings Decrease No effect - Par Value per Share Retained Earnings Decrease Decrease

- Par Value per Share Retained Earnings Decrease No effect

Quirk Corporation issued a 100% stock dividend of its common stock which had a par value of $10 before and after the dividend. At what amount should retained earnings be capitalized for the additional shares issued? - There should be no capitalization of retained earnings. - Par value - Fair value on the declaration date - Fair value on the payment date

- Par value

Companies should record stock issued for services or noncash property at either the fair value of the stock issued or the fair value of the consideration received, whichever is more clearly determinable. - True - False

- True

Cash dividends are paid on the basis of the number of shares - authorized. - issued. - outstanding. - outstanding less the number of treasury shares.

- outstanding.

At the date of the financial statements, common stock shares issued would exceed common stock shares outstanding as a result of the - declaration of a stock split. - declaration of a stock dividend. - purchase of treasury stock. - payment in full of subscribed stock.

- purchase of treasury stock.