Learnsmart #11

Zinc, Inc. has 10,000 shares of $5 par, 5% preferred stock, and 5,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $15,000 dividend, the payments to preferred shareholders will total _________.

10,000 shares x $5 x .05 = $2,500.

Blink, Inc. has 1,000 shares of $10 par, 5% preferred stock, and 20,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $20,000 dividend, the payment to common shareholders will total $

19500

Identify the advantages of the corporate form of business. (Check all that apply.)

Limited liability of stockholders Ease of capital accumulation Continuous life

Jose Garcia agrees to contribute land with a fair market value of $10,000 in exchange for 200 shares of Damian Inc.'s common stock with a par value of $10 per share. The journal entry to record this transaction in the books of Damian, Inc., will include a credit to _________ in the amount of _______.

Paid-in Capital, in Excess of Par; $8,000

On January 1, the board of directors of Shante, Inc. declared a 10% stock dividend. On this date, there were 10,000 shares of $1 par value stock issued and outstanding and the market value was $5 per share. The entry to record this transaction would include a debit to _____ in the amount of ______. Multiple choice question.

Retained earnings

On May 25, Tyler, Inc. issues 100 shares of $10 par value preferred stock for $5,000 cash. The entry to record this transaction would include a (debit/credit) ________ to the preferred stock account in the amount of _______.

The preferred stock account is credited for the par value of $10 per share. The excess is credited to the Paid-In Capital account.

True or false: Stockholders do not have the power to bind the corporation to contracts. This is referred to as lack of mutual agency

True

(?) stock is the number of shares that a corporation's charter allows it to sell.

authorized

When all authorized shares of stock have the same rights and characteristics, the stock is called _______ stock.

common

Darby, Inc. has 25,000 shares of stock issued and outstanding. All the shares of stock have the same rights and characteristics; therefore, the stock is called

common stock

On August 20, Max, Inc. issues 100 shares of $1 par value preferred stock for $3,000 cash. The entry to record this transaction would include a

credit to preferred stock for 100

The ______ value per share is the price at which a stock is bought and sold

market

Stock that typically includes preference for receiving dividends and for distribution of corporate assets during a liquidation is called

preferred stock

Two of the biggest disadvantages of the corporate form of business are government regulation and corporate

taxation

A corporation is created by obtaining a charter from:

the state government