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

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Question 21

Multiple Choice

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Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2015. There were no dividends declared in 2014. The board of directors declares and pays a $250,000 dividend in 2015. What is the amount of dividends received by the common stockholders in 2015?

A) $0
B) $150,000
C) $250,000
D) $100,000

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Question 22

Multiple Choice

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Hsu, Inc. issued 10,000 shares of stock at a stated value of $8/share. The total issue of stock sold for $15 per share. The journal entry to record this transaction would include a

A) debit to Cash for $80,000.
B) credit to Common Stock for $80,000.
C) credit to Paid-in Capital in Excess of Par for $150,000.
D) credit to Common Stock for $150,000.

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Question 23

Multiple Choice

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If a stockholder cannot attend a stockholder's meeting, he may delegate his voting rights by means of

A detailed stockholders' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

Seven thousand shares of treasury stock of Marker, Inc., previously acquired at $14 per share, are sold at $20 per share. The entry to record this transaction will include a

A corporate board of directors does not generally

S. Lamar performed legal services for E. Garr. Due to a cash shortage, an agreement was reached whereby E. Garr. would pay S. Lamar a legal fee of approximately $12,000 by issuing 3,000 shares of its common stock (par $1). The stock trades on a daily basis and the market price of the stock on the day the debt was settled is $4.50 per share. Given this information, the journal entry for E. Garr. to record this transaction is: a. $\begin{array}{lll}\text { Legal Expense }&12,000 \\\text { Common Stock }&12,000\end{array}$ b. $\begin{array}{lll}\text { Legal Expense } & 13,500 & \\\quad \text { Common Stock } & 13,500\end{array}$ c. $\begin{array}{lrl}\text { Legal Expense } & 12,000 & \\\text { Common Stock } & & 3,000 \\\text { Paid-in Capital in Excess of Par - Common } && 9,000\end{array}$ d. $\begin{array}{lr}\text { Legal Expense } & 13,500 \\\quad \text { Common Stock } & 3,000 \\\text { Paid-in Capital in Excess of Par - Common } & 10,500\end{array}$

Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock outstanding at December 31, 2015. No dividends have been paid on this stock for 2014 or 2015. Dividends in arrears at December 31, 2015 total

Which of the following is not a right or preference associated with preferred stock?

Under the corporate form of business organization

If Vickers Company issues 5,000 shares of $5 par value common stock for $175,000,

Additional paid-in capital includes all of the following except the amounts paid in

On January 1, Soft Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 10% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The stock was distributed on June 30. The entry to record the transaction of June 30 would include a

A corporation must be incorporated in each state in which it does business.

Which of the following statements concerning taxation is accurate?

Retained earnings is increased by each of the following except

What is ordinarily the first step in the formation of a corporation?

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000. The bill was for services performed in helping the company incorporate. Crain should record this transaction by debiting

The retained earnings statement

The stockholders' equity statement shows the changes in each stockholders' equity account and in total stockholders' equity during the year.