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

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Question 31

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The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 30,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

A) 35,000
B) 70,000
C) 25,000
D) 30,000

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Question 32

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When a corporation completes a 3-for-1 stock split

A) the ownership interest of current stockholders is decreased
B) the market price per share of the stock is decreased
C) the par value per share is decreased
D) b and c

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Question 33

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The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.

A corporation, which had 18,000 shares of common stock outstanding, declared a 3-for-1 stock split.

Prepare entries to record the following:

Characteristics of a corporation include

Preferred stockholders must receive their current year dividends before the common stockholders can receive any dividends.

The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors?

The number of shares of outstanding stock is equal to the number of shares authorized minus the number of shares issued.

On January 1, 20xx, Swenson Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, 20xx, Swenson purchased 4,000 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1, 20xx. The journal entry to record the purchase of the treasury shares on February 1, 20xx, would include a

Sabas Company has 40,000 shares of $100 par, 1% preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Determine the dividends per share for preferred and common stock for each year.

Which of the following is not a prerequisite to paying a cash dividend?

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

Under the corporate form of business organization

Retained earnings represents past net incomes less past dividends, therefore any balance in this account would be listed on the income statement.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

For accounting purposes, stated value is treated the same way as par value.

If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in-capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit), the total stockholders' equity is $880,000.

Which of the following is not characteristic of a corporation?

Treasury Stock is listed in the stockholders' equity section on the balance sheet.