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Exam 11: Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

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Question 101

Multiple Choice

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Paid-In Capital in Excess of Stated Value

A) is credited when no-par stock does not have a stated value.
B) is reported as part of paid-in capital on the balance sheet.
C) represents the amount of legal capital.
D) normally has a debit balance.

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Question 102

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The market value of a corporation's stock is determined by the number of shares that the corporation has been authorized to issue.

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Question 103

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Assume that all balance sheet amounts for Marley Company represent average balance figures. $\begin{array} { l r } \text { Stockholders' equity-common } & \$ 150,000 \\\text { Total stockholders' equity } & 200,000 \\\text { Sales } & 100,000 \\\text { Net income } & 29,000 \\\text { Number of shares of common stock } & 10,000 \\\text { Common stock dividends } & 10,000 \\\text { Preferred stock dividends } & 4,000\end{array}$ What is the return on common stockholders' equity for Marley?

Dividends in arrears on cumulative preferred stock

If a corporation declares a dividend based upon paid-in capital, it is known as a

Jarrett Company issued 900 shares of no-par common stock for $13,200. Which of the following journal entries would be made if the stock has no stated value? a. $\begin{array}{lrl}\text { Cash } & 13,200 & \\\text { Common Stock } && 13,200\end{array}$ b. $\begin{array}{lr}\text { Cash } & 13,200 \\\text { Common Stock } && 900 \\\text { Paid-in Capital in Excess of Par } & &8,200\end{array}$ c. $\begin{array}{lr}\text { Cash } & 13,200 \\& \\\text { Common Stock } && 900 \\\text { Paid-in Capital in Excess of Stated Value } && 12,300\end{array}$ d. $\begin{array}{lrr} \text { Common Stock } &12,300\\ \text { Cash } &&13,200\\\end{array}$

Treasury stock is generally accounted for by the

The declaration and distribution of a stock dividend will

In published annual reports

If a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends received from that corporation.

A corporation acts under its own name rather than in the name of its stockholders.

A major difference between IFRS and GAAP relates to the

Preferred stockholders have a priority over common stockholders as to

On January 1, Collins Corporation had 800,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 10% stock dividend. Market value of the stock was $15/share. As a result of this event,

When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the

The per share amount normally assigned by the board of directors to a small stock dividend is

On January 1, Sway Corporation had 60,000 shares of $10 par value common stock outstanding. On March 17, the company declared a 15% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The stock was distributed on March 30. The entry to record the transaction of March 30 would include a

Karl Corporation was organized on January 2, 2015. During 2015, Karl issued 40,000 shares at $24 per share, purchased 6,000 shares of treasury stock at $26 per share, and had net income of $600,000. What is the total amount of stockholders' equity at December 31, 2015?

King Corporation had net income of $260,000 and paid dividends of $40,000 to common stockholders and $10,000 to preferred stockholders in 2015. King Corporation's common stockholders' equity at the beginning and end of 2015 was $870,000 and $1,130,000, respectively. There are 100,000 weighted-average shares of common stock outstanding. King Corporation's return on common stockholders' equity was

The trial balance of Houston Inc. includes the following balances: Common Stock, $40,000; Paid-in Capital in Excess of Par, $64,000; Treasury Stock, $6,000; Preferred Stock, $30,000. Capital stock totals