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

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Question 61

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The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

A) True
B) False

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Question 62

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A restriction/appropriation of retained earnings establishes cash assets that are set aside for a specific purpose.

A) True
B) False

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Question 63

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Stockholders' equity

On February 1 of the current year, Motor, Inc. issued 700 shares of $2 par common stock to an attorney in return for preparing and filing the Articles of Incorporation. The value of the services is $9,600. Journalize this transaction.

Sabas Company has 20,000 shares of $100 par, 2% cumulative 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 the second year.

Which of the following is the appropriate general journal entry to record the declaration of a cash dividends?

The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split.

If the dividend amount of preferred stock, $50 par value, is quoted as 8%, then the dividends per share would be $4.

Significant changes in stockholders' equity are reported in

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Determine the dividends in arrears for preferred stock for the second year.

Which of the following would appear as a prior-period adjustment?

What is the total stockholders' equity based on the following account balances?

The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial statements.

The primary purpose of a stock split is to

Indicate whether the following actions would (+) increase, (-) decrease, or (0) not affect a company's total assets, liabilities, and stockholders' equity.

The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a

On April 2nd a corporation purchased for cash 5,000 shares of its own $10 par common stock at $16 a share. They sold 3,000 of the treasury shares at $19 a share on June 15th. The remaining 2,000 shares were sold on November 10th for $12 a share.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding?

A company had the following stockholders equity information available at year end. - issued 11,000 shares of $2.00 par value common stock for $12.00 per share - issued 5,000 shares of $50 par value 6% preferred stock for $70 per share - purchased 1,000 shares of previously issued common stock for $15.00 per share -reported net income of $200,000 - declared and paid the preferred stock dividend Calculate the earnings per share for the current year.

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?