ACC Test #1

Colson Inc. declared a $230,000 cash dividend. It currently has 12,000 shares of 5%,$100 par value cumulative preferred stock outstanding. It is one year in arrears on its 0preferred stock. How much cash will Colson distribute to the common stockholders?

$110,000 (take final from shares and x 2 then subtract from cash dividend to find out how much cash to distribute to stockholders)

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. (Look at notebook for explanation)

Manning Company issued 10,000 shares of its $5 par value common stock having a fair-value of $25 per share and 15,000 shares of its $15 par value preferred stock having a fair value of $20 per share for a lump sum of $520,000. How much of the proceeds would be allocated to the common stock?

$250,000 (10000 x 25)

The stockholders' equity section of Gunkel Corporation as of December 31, 2025, was as follows: Common stock, par value $2; authorized 20,000 shares; issued and outstanding 10,000 shares $ 20,000Paid-in capital in excess of par 30,000Retained earnings 85,000 $135,000 On March 1, 2026, the board of directors declared a 15% stock dividend, and accordingly1,500 additional shares were issued. On March 1, 2026, the fair value of the stock was $6per share. For the two months ended February 28, 2026, Gunkel sustained a net loss of$15,000

$61,000 (start with retained earnings, subtract losses and par stuff)

Presented below is information related to Hale Corporation: Common Stock, $1 par $3,500,000Paid-in Capital in Excess of Par—Common Stock 550,0008 1/2% preferred Stock, $50 par 2,000,000Paid-in Capital in Excess of Par—Preferred Stock 400,000Retained Earnings 1,500,000Treasury Common Stock (at cost) 150,000 The total stockholders' equity of Hale Corporation is

$7,800,000. (Add everything together except treasury common stock at cost-subtract that)

On June 30, 2026, when Ermler Co.'s stock was selling at $65 per share, its capital accounts were as follows: Capital stock (par value $50; 60,000 shares issued) $3,000,000. Premium on capital stock 600,000 Retained earnings 4,200,000 If a 100% stock dividend were declared and distributed, capital stock would be

60,000 x $50 + $3,000,000 (capital stock) = $6,000,000

The journal entry at the date of declaration of a small common stock dividend does

A credit to common stock

What effect does the issuance of a 3-for-1 stock split have on each of the following?

Decrease on par; No effect RE

In which of the following transactions is retained earnings capitalized?

Stock dividend

Gannon Company acquired 20,000 shares of its common stock at $20 per share on February 5, 2025, and sold 10,000 of these shares at $27 per share on August 9, 2026. The fair value of Gannon's common stock was $24 per share at December 31, 2025, and $25 per share at December 31, 2026. The cost method is used to record treasury stock transactions. What account(s) should Gannon credit in 2026 to record the sale of 10,000 shares?

Treasury Stock for $200,000 (10000 x 20) Paid-in Capital from Treasury Stock for $70,000

When treasury stock is purchased for more than the par value of the stock and the cost-method is used to account for treasury stock, what account(s) should be debited?

Treasury stock for the purchase price

On July 1, 2025, an interest payment date, $150,000 of Parks Co. bonds were convertedinto 3,000 shares of Parks Co. common stock, each having a par value of $45 and amarket value of $54. There is $6,000 of unamortized discount on the bonds. If the book value method is used, Parks would record

a $9,000 increase in paid-in capital in excess of par (150000- 3000 x 45)-6000

Direct costs incurred to sell stock such as underwriting costs should be accounted for as

a reduction to individual paid in capital

Compensation expense resulting from a compensatory stock option plan is generally

allocated to the periods benefited by the employee's required service

In computing earnings per share, the equivalent number of shares of convertible preferredstock are added as an adjustment to the denominator (number of shares outstanding). If the preferred stock is cumulative, which amount should be added as an adjustment to the numerator (net earnings)?

annual preferred dividend

When computing diluted earnings per share, convertible bonds are

assumed converted only if they are dilutive.

The conversion of bonds is most commonly recorded by the

book value

The declaration and issuance of a stock dividend larger than 25% of the shares previously

decreases retained earnings but does not change total stockholders' equity.

Stockholders' equity is generally classified into two major categories which are

earned capital and contributed capital.

The issuer of a 5% common stock dividend to common stockholders should transfer from retained earnings to paid-in capital an amount equal to the

fair value of the shares issued

The date on which to measure the compensation element in a stock option granted to a corporate employee is ordinarily the date on which the employee

is granted the option.

A dividend which is a return to stockholders of a portion of their original investments is a

liquidating dividend

Cash dividends are paid on the basis of the number of shares

outstanding