Acct 2301 Chapter 11 Quiz

A company issued 100 shares of $100 par value common stock for $11,800 cash. The total amount of paid-in capital in excess of par is:

18,000 Total par value of issued common stock = 100 shares X $100 = $10000. Issue value of 100 shares = $11800 Excess value i.e. paid in capital in excess of par = $11800 - $10000 = $1800.

A corporation issued 290 shares of its $5 par value common stock in payment of a $3,700 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include:

A $2,250 credit to Paid-in Capital in Excess of Par Value, Common Stock. Dr- Organization Expenses A/c $3,700 Cr- Common Stock A/c {290 Shares × $5 per Share} = $1,450 Cr- To Additional Paid in Capital in Excess of Par Value, Common stock {$3,700 - $1,450} = $2,250

Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 280 shares to its attorneys in payment of a $4,800 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

A debit to Organization Expenses for $4,800. Common Stock=Number of Shares X Value per share= 280×$10=$2,800

A corporation sold 11,000 shares of its $10 par value common stock at a cash price of $14 per share. The entry to record this transaction would include:

Credit to Common Stock for $110,000 11,000 (10 par value)= 110,000

A corporation issued 3,500 shares of its no par common stock at a cash price of $13 per share. The entry to record this transaction would be:

Debit Cash $45,500; credit Common Stock $45,500.

A company issued 50 shares of $100 par value common stock for $7,200 cash. The journal entry to record the issuance is:

Debit Cash $7,200; credit Common Stock $5,000; credit Paid-in Capital in Excess of Par Value, Common Stock $2,200. Common Stock Credit = 50 Shares × $100 = $5,000 Paid in capital in excess of par, common stock = $7,200 - $5,000 = $2,200.

On September 1, Ziegler Corporation had 51,000 shares of $5 par value common stock, and $153,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

No entry is made for this transaction. A Stock split does not require an entry in books of accounts. A Stock split only increases the number of shares outstanding.

Gracey's Department Stores has $214,000 of 5% noncumulative, preferred stock outstanding. Gracey's also has $614,000 of common stock outstanding. During its first year, the company paid cash dividends of $44,000. This dividend should be distributed as follows:

Preferred shareholders: $214,000 x 5% = $10,050 Common shareholders: $614,000 x 30% = $184,200 $44,000 - $10,700 = $33,00

Sweet Company's outstanding stock consists of 1,200 shares of cumulative 4% preferred stock with a $100 par value and 10,200 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $2,200 Year 2 $6,200 Year 3 $33,000 The total amount of dividends paid to preferred and common shareholders over the three-year period is:

WRONG $11,800 preferred; $29,600 common. Total value of the preferred shares = 1,200 x $100 = $120,000 Annual preferred dividend = $120,000 x 4% = $4,800 Until $4,800 is not paid in dividends to the preferred shareholders, no dividends will be paid to the common stockholders. Also, the preferred stock is non-cumulative. That means if no preferred dividends are paid in any year or preferred dividends of less than $4,800 is paid in any year, the balance of the preferred dividends will not be carried to next year. Therefore, Preferred dividends paid = $2,200 + $4,800 + $4,800 = $11,800 Common dividends paid = ($2,200 + $6,400 + $33,000) - $11,800 = $29,800

Halverstein Company's outstanding stock consists of 12,950 shares of cumulative 5% preferred stock with a $10 par value and 5,550 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $0 Year 2 $11,100 Year 3 $46,000

$11,100 preferred; $0 common. Preferred dividend/year=(12,950*10)*5%=$6475/year Since Preferred dividend is cumulative; Preferred dividend not paid for in one year is paid for in the coming years. Any balance left over is paid to common stockholders. Preferred dividend in arrear for year 1=$6475 Hence Preferred dividend for year 2 that can be paid=$11,100. (Since to be paid Preferred dividend was= ($6475*2)= $12,950).

Sweet Company's outstanding stock consists of 1,800 shares of cumulative 4% preferred stock with a $100 par value and 10,800 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1$ 2,800 Year 2$ 6,800 Year 3$ 36,000

$12,000 preferred; $24,000 common. Total amount of preferred stock for year 3 = 1,800*100*4% = 7200*3 years = 21,600 As the shares are cumulative year 1 and year 2 dividends should be deducted from 21,600 -then dividends Paid to preferred stock = 21,600-2,800-6,800 = $ 12,000 The amount of dividends Paid to common stock = 36,000-12000 = 24,000

Sweet Company's outstanding stock consists of 1,800 shares of noncumulative 5% preferred stock with a $100 par value and 11,800 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & PaidYear 1$ 3,800Year 2$ 9,600Year 3$ 41,000

$21800 Preferred, $32600 Common Preferred Stock = 1800 x $100 = $180000 Non Cumulative Dividend = 5% of $180000 i.e. $9000 Since Dividend is non cumulative, Dividend is first paid to Preference stock holders, but will not be cumulated if total dividend is less than preferred dividend. Preferred Dividend Common Dividend Total Year 1 PD $3,800 = Tt $3,800 Year 2 PD $9,000 CD $600 Tt $9,600 Year 3 PD$9,000 CD $32,000 Tt$41,000 Total PD $21,800, Total CS$32,600, All Tts$54,400

Mayan Company had net income of $33,180. The weighted-average common shares outstanding were 8,400. The company has no preferred stock. The company's basic earnings per share is:

$3.95 Earnings per Share = (Net Income − Preferred Dividends)/Weighted-Average Common Shares Outstanding Earnings per Share = ($33,180 − $0) / 8,400 = $3.95

Fargo Company's outstanding stock consists of 800 shares of noncumulative 5% preferred stock with a $10 par value and 3,400 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid year 1$ 24,000 year 2$ 7,000 year 3$ 33,000

$400 preferred; $23,600 common. 1) Dividends declared and paid in year 1 = $24,000 Preferred dividend = $800 * $10 * 5% = $400 Common dividend = $24,000 - $400 = $23,600

Torino Company has 1,300 shares of $50 par value, 6.0% cumulative preferred stock and 13,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $3,500 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

$4300 Amount of dividend that was payable during first yr of operations = 6%*1300*50 = $3900 Dividend paid = $3500 Since the preferred shares are cumulative in nature, amount of dividend payable to preferred share holders during 2nd yr = $(3900+400) = $4300

A company's board of directors votes to declare a cash dividend of $.90 per share of common stock. The company has 18,000 shares authorized, 13,000 issued, and 12,500 shares outstanding. The total amount of the cash dividend is:

11,250 The total Cash Dividend is calculated on Shares Outstanding Cash Dividend = 12500 X $.90 = $11,250

Aviation Incorporated has 129,000 shares authorized, 119,000 shares issued and no treasury stock. Determine the number of shares outstanding:

119,000 Authorized shares are maximum number of shares a company can issue as per there legal documents and when a company issues shares and raises fund, the issued shares are called outstanding shares.

The following data has been collected about Keller Company's stockholders' equity accounts: Common stock $10 par value 28,000 shares authorized, 14,000 shares issued, and 1,800 shares outstanding $140,000 Paid-in capital in excess of par value, common stock 58,000 Retained earnings 33,000 Treasury stock 22,140 Assuming the treasury shares were all purchased at the same price, the number of shares of treasury stock is:

12,200. TOTAL TREASURY SHARES = total common stock shares issued - outstanding common stock = 14,000-1,800 = 12,200 treasury shares

National Insurance Company has 200,000 shares authorized, 178,000 shares issued, and 42,000 shares of treasury stock. The number of shares outstanding is:

136,000 Shares issued 178,000 Less: Treasury Stock-42,000 Number of shares outstanding 136,000

The following data were reported by a corporation: Authorized shares 29,000 Issued shares 24,000 Treasury shares 8,000 The number of outstanding shares is:

16,000 Number of outstanding shares = Issued shares - Treasury shares = 24,000 - 8,000 = 16,000 shares