Chapter 18 Part C

A restriction of retained earnings signifies that Multiple choice question. retained earnings is negative. a portion of retained earnings is not available for dividends. cash may not be used for stock repurchases. no cash is available for investment purchases.

a portion of retained earnings is not available for dividends.

The ex-dividend date is usually 1 day before the payment date. before the declaration date. before the date of record. after the declaration date.

before the date of record.

A corporation's accumulated income that has not been distributed as dividends to shareholders is referred to as ________________

retained earnings

Miles Corp. declares and distributes a 3-for-1 stock split effected in the form of a 200% stock dividend. Miles had 10,000 shares of $1 par value common stock valued at $8 per share before the stock split. If Miles wishes to capitalize retained earnings, the journal entry required to record the stock split would include a debit to Multiple choice question. common stock $20,000. retained earnings $30,000. retained earnings $20,000. paid-in capital in excess of par $20,000. stock investment $30,000.

retained earnings $20,000.

A corporation's accumulated, undistributed net income or loss is referred as Multiple choice question. accumulated comprehensive income. retained earnings. comprehensive income. corporate dividends.

retained earnings.

A small stock dividend is usually less than Blank______% of the number of shares of stock outstanding. Multiple choice question. 5 50 25 10

25

Which of the following describe the ways in which companies may record stock splits effected in the form of dividends? (Select all that apply.) Multiple select question. Increase the treasury stock account. Reduce the paid-in capital in excess of par account. Capitalize retained earnings. Record the stock dividend at fair value and recognize a gain.

Reduce the paid-in capital in excess of par account. Capitalize retained earnings.

Royce has 100,000 shares of $10 par issued and outstanding. Royce declares a 2-for-1 stock split in the form of a stock dividend. Which of the following are true? (Select all that apply) Multiple select question. Treasury stock increases. A loss is recorded for the amount of the stock dividend. The par value will not change. The number of shares outstanding increases.

The par value will not change. The number of shares outstanding increases.

When does a dividend become a liability to a corporation? At the end of each quarter On the last day of the fiscal year When it is declared by the board of directors On the ex-dividend date

When it is declared by the board of directors

A restriction of retained earnings signifies that Multiple choice question. cash may not be used for stock repurchases. no cash is available for investment purchases. retained earnings is negative. a portion of retained earnings is not available for dividends

a portion of retained earnings is not available for dividends.

A restriction of retained earnings (select all that apply) Multiple select question. signifies cash may not be used for stock repurchases. communicates the portion of retained earnings not available for dividends. indicates management's intention to withhold assets for a specified purpose. indicates that cash has been set aside for future dividends.

communicates the portion of retained earnings not available for dividends. indicates management's intention to withhold assets for a specified purpose.

The date on which a cash dividend becomes a liability to a corporation is the Multiple choice question. record date. payment date. declaration date. ex-dividend date.

declaration date.

A company that is distributing liquidating dividends tends to be in the process of: reorganizing dissolving starting up

dissolving

A distribution of assets to shareholders is referred to as a(n) _________

dividend

When a corporation distributes assets of the company to its investors, it is referred to as a(n) Multiple choice question. expense. dividend. warrant. option.

dividend

A liquidating dividend means that Multiple choice question. dividends are paid on treasury stock. net income exceeds dividends. dividends exceed net income for the period. dividends exceed retained earnings.

dividends exceed retained earnings.

Property dividends are valued at Multiple choice question. net present value. net realizable value. book value. fair value.

fair value.

The most likely reason for a company to declare a reverse stock split is to Multiple choice question. increase the number of shares outstanding. decrease the future price of the stock. decrease the par value of the shares. increase the market value of the shares.

increase the market value of the shares.

A property dividend (Select all that apply.) Multiple select question. is the issuance of common stock to investors. reduces the common stock account. is a noncash distribution to owners. reduces retained earnings.

is a noncash distribution to owners. reduces retained earnings.

When stock splits or stock dividends result in fractional shares, the situation is handled by Multiple choice question. issuing the fractional shares as redeemable preferred stock. retiring the stock in proportion to the amount not distributed. issuing an additional share of stock. issuing cash payments for the fractional shares.

issuing cash payments for the fractional shares.

A reverse stock split requires Multiple choice question. a credit to other comprehensive income. a debit to retained earnings. no journal entry. a debit to treasury stock.

no journal entry.

Miles Corp. declares and distributes a 3-for-1 stock split effected in the form of a 200% stock dividend. Miles had 10,000 shares of $1 par value common stock valued at $8 per share before the stock split. If Miles does not capitalize retained earnings, the journal entry required to record the split would include a debit to Multiple choice question. common stock $20,000. paid-in capital in excess of par $20,000. retained earnings $30,000. stock investment $30,000.

paid-in capital in excess of par $20,000.

Fantastic Gold Inc. declares and distributes to its shareholders 1 gram of gold in lieu of a cash dividend. Fantastic Gold is distributing a(n) Multiple choice question. stock dividend inventory dividend fair value dividend property dividend.

property dividend.

The date on which a company determines the registered owners of the stock who will receive a dividend is referred to as the Multiple choice question. declaration date. payment date. record date. ex-dividend date.

record date.

Reynolds Corp. has 100,000 shares of $1 par value common stock issued and outstanding. Reynolds declares a 20% stock dividend when the fair value of the stock is $8 per share. The debit to retained earnings for the stock dividend is Multiple choice question. $20,000. $140,000. $10,000. $160,000.

$160,000. Stock dividend = Outstanding shares*Stock dividend rate*Market price per share = 100000*20%*8 Stock dividend = 160000 So answer is d) $160000

Canton has 60,000 shares of $10 par issued and outstanding. Canton declares a 2-for-1 stock split. What is the par value and number of shares outstanding after the stock split? Multiple choice question. $5 par; 60,000 shares $5 par; 120,000 shares $10 par; 60,000 shares $10 par; 120,000 shares

$5 par; 120,000 shares

When a property dividend is declared, a gain or loss is recognized for Multiple choice question. the net book value of the dividend. the difference between the fair value and the book value of the assets distributed. the book value of the assets distributed. the fair value of the asset distributed.

the difference between the fair value and the book value of the assets distributed.

Farley Corp. has 50,000 shares of $1 par value common stock issued and outstanding. Farley declares a 10% stock dividend when the fair value of the stock is $9 per share. Which of the following entries will be included in the entries required to record the declaration and payment of the stock dividend? (Select all that apply.) Multiple select question. Credit additional paid-in capital $40,000. Debit retained earnings $5,000. Credit common stock $5,000. Credit common stock $45,000. Debit retained earnings $45,000.

Credit additional paid-in capital $40,000. Credit common stock $5,000. Debit retained earnings $45,000.

On March 1, Fresh Corp. declared a dividend of $3,000. The record date is March 20, and the payment date is April 1. The journal entry required on March 1, will include which of the following entries? (Select all that apply.) Multiple select question. Credit dividends payable $3,000. Credit cash $3,000. Debit cash $3,000. Debit retained earnings $3,000.

Credit dividends payable $3,000. Debit retained earnings $3,000.

On April 1, Rawlings declares a dividend of $0.30 per share. Rawlings has 100,000 shares authorized, and 40,000 issued and outstanding. The date of record is April 28, and the payment date is May 15. Which of the following entries is included in the journal entry on April 1? Multiple choice question. Debit retained earnings $12,000. Debit retained earnings $30,000. Credit cash $12,000. Credit dividends payable $30,000.

Debit retained earnings $12,000.

Declaration date - Date that the corporate board of directors announces a dividend Record date - Date that a determination is made as to recipients of a dividend

Ex-dividend date - Date before which investors must purchase stock in order to receive a dividend Payment Date - Date that corporate assets are transferred to shareholders

A stock split effected in the form of a large stock dividend (select all that apply) Multiple select question. reduces paid in capital - excess of par. increases retained earnings by the fair value of the dividend. decreases the par value of the stock. has no effect on the par value of the stock.

reduces paid in capital - excess of par. has no effect on the par value of the stock.

If a company wishes to increase its stock price, it might declare a(n) _________________ stock split

reverse

When a company decreases its outstanding shares of stock by exchanging 1 share of stock for 10 shares, this is referred to as a(n) Multiple choice question. treasury stock repurchase. reverse dividend. equity revaluation. reverse stock split.

reverse stock split.

A Blank______ stock dividend is less than 25% of the outstanding shares of stock. Multiple choice question. large intermediary treasury small

small

Distributions of stock to current shareholders of a corporation are called what type of distribution? Multiple choice question. treasury stock cash dividend stock dividend property dividend

stock dividend

Distributions of stock to current shareholders of a corporation are called what type of distribution? Multiple choice question. treasury stock stock dividend cash dividend property dividend

stock dividend

Which of the following dividends has no effect on total owners' equity? Multiple choice question. property dividend stock dividend cash dividend

stock dividend

Which type of dividend does not reduce the assets of the firm or create a liability? Multiple choice question. stock dividend property dividend cash dividend

stock dividend

When a property dividend is declared, a gain or loss is recognized for Multiple choice question. the net book value of the dividend. the fair value of the asset distributed. the book value of the assets distributed. the difference between the fair value and the book value of the assets distributed.

the difference between the fair value and the book value of the assets distributed.

A property dividend is recorded at Multiple choice question. the fair value of the assets at the dividend declaration date. the book value of the assets at the date of distribution. the fair value of the assets at the date of distribution. the fair value of the assets at the record date.

the fair value of the assets at the dividend declaration date.

A 2-for-1 stock split increases the marketability of the stock because Multiple choice question. the new shares are restricted. investors have twice as many shares to sell. the market price per share decreases. shareholders receive cash.

the market price per share decreases.

Which of the following transactions are classified as a stock dividend? Multiple choice question. A distribution of shares of stock held as an investment to stockholders of the corporation. A distribution of additional shares of a corporation's stock to current shareholders of the corporation. A distribution of stock to corporate executives as an inducement to extend their contract with the corporation. A distribution of stock options to current employees as incentive compensation.

A distribution of additional shares of a corporation's stock to current shareholders of the corporation.

Which of the following transactions are classified as a stock dividend? Multiple choice question. A distribution of stock options to current employees as incentive compensation. A distribution of shares of stock held as an investment to stockholders of the corporation. A distribution of additional shares of a corporation's stock to current shareholders of the corporation. A distribution of stock to corporate executives as an inducement to extend their contract with the corporation.

A distribution of additional shares of a corporation's stock to current shareholders of the corporation.

What are the effects of a stock split? (Select all that apply.) Multiple select question. The number of shares outstanding decreases. The number of shares outstanding increases. Par value increases. Par value decreases.

The number of shares outstanding increases. Par value decreases.

When stock splits or stock dividends result in fractional shares, companies issue __________________ , Incorrect Unavailable payments along with the additional shares to compensate for the fractions.

cash

A frequent reason for a stock split is to Multiple choice question. shift amounts from retained earnings to other equity accounts. issue more shares of stock so investors have more value. give the investors an extra dividend for the year. cause the market price per share to decline.

cause the market price per share to decline.

The journal entry to record a stock split effected in the form of dividends may include which of the following? (Select all that apply.) Multiple select question. debit to paid-in-capital credit to common stock debit to retained earnings credit to paid-in-capital debit to common stock

debit to paid-in-capital credit to common stock debit to retained earnings

In order to receive a dividend, investors must purchase shares of stock before the Multiple choice question. treasury date. payment date. ex-dividend date.

ex-dividend date.

Property dividends are valued at Multiple choice question. net realizable value. book value. fair value. net present value.

fair value.