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Exam 12: Corporations: Organization, Stock Transactions, and Dividends

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Question 41

Multiple Choice

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A corporation has 50,000 shares of $25 par stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the par value of the stock after the split will be

A) $5
B) $60
C) $25
D) $24

E) C) and D)
F) A) and B)

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Question 42

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Cash dividends are normally paid on shares of treasury stock.

A) True
B) False

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Question 43

Multiple Choice

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The excess of issue price over par of common stock is termed a(n)

On May 1, 10,000 shares of $10 par common stock were issued at $30, and on May 7, 5,000 shares of $50 par preferred stock were issued at $111. Journalize the entries for May 1 and May 7.

One of the prerequisites to paying a cash dividend is sufficient retained earnings.

The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. Journalize the entry to record the sale.

Nevada Corporation has 30,000 shares of $25 par stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be

Prepare entries to record the following: (a) Issued 1,000 shares of $\$ 10$ par common stock at $\$ 56$ . (b) Issued 1,400 shares of $\$ 10$ par common stock in exchange for equipment with a fair market price of $\$ 21,000$ . (c) Purchased 100 shares of treasury stock at $\$ 25$ . (d) Sold the 100 shares of treasury stock purchased in (c) at $\$ 30$ .

Oregon, Inc. reported net income of $105,000. During the current year, the company had 5,000 shares of $100 par, 5% preferred stock and 10,000 of $5 par common stock outstanding. The company declared and paid all preferred dividends. Oregon's earnings per share is

A corporation has 50,000 shares of $28 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately

On January 1, Year 1, a company had the following transactions: ​ - Issued 10,000 shares of $2.00 par common stock for $12.00 per share. - Issued 3,000 shares of $50 par, 6% cumulative preferred stock for $70 per share. - Purchased 1,000 shares of previously issued common stock for $15.00 per share. - No other shares of stock were issued or outstanding. ​ The company had the following dividend information available: ​ Year 1 - No dividend paid Year 2 - Paid a $2,000 total dividend Year 3 - Paid a $20,000 total dividend Year 4 - Paid a $25,000 total dividend ​ Using the following format, fill in the correct values for each year: ​ ​

On May 1, 10,000 shares of $10 par common stock were issued at $30, and on May 7, 5,000 shares of $50 par preferred stock were issued at $111. What is the amount of the debit to Cash on May 1 and May 7?

The following account balances appear on the balance sheet of Osgood Industries: Common Stock (300,000 shares authorized, $100 par): $10,000,000 Paid-In Capital in Excess of Par-Common Stock: $2,000,000 Retained Earnings: $45,000,000 ​ The board of directors declared a 2% stock dividend when the market price of the stock was $135 a share. ​ Required: (1) Journalize the entries to record (a) the declaration of the dividend, capitalizing an amount equal to market value (b) the issuance of the stock certificates (2) Determine the following amounts before the stock dividend was declared: (a) Total paid-in capital (b) Total retained earnings (c) Total stockholders' equity (3) Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (a) Total paid-in capital (b) Total retained earnings (c) Total stockholders' equity

On June 5, Belen Corporation reacquired 3,300 shares of its own common stock at $45 per share. On July 15, Belen sold 2,000 of the reacquired shares at $48 per share. On August 30, Belen sold the remaining shares at $42 per share. ​ Journalize the transactions of June 5, July 15, and August 30.

The retained earnings statement may be combined with the income statement.

Wonder Sales is authorized to issue 100,000 shares of 2%, $100 par preferred stock and 1,000,000 shares of $10 par common stock. Journalize the following transactions. ​ (a) On January 2, Wonder Sales issues 5,000 shares of preferred stock for $110 per share and 65,000 shares of common stock at $10 per share. ​ ​ (b) On January 25, Wonder Sales issued 250 shares of preferred stock to a Morton Law Firm for settlement of a $36,000 invoice for incorporation services. ​ (c) On January 31, Wonder Sales issues 500 shares of common stock to Setup Inc. for fixtures that have a fair market value of $8,500.

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

The day on which the board of directors of the corporation distributes a dividend is called the declaration date.

Which of the following is not classified as paid-in capital on the balance sheet?

Using the following accounts and balances, prepare the stockholders' equity section of the balance sheet. Fifty thousand shares of common stock are authorized, and 5,000 shares have been reacquired. $\begin{array} { l r } \text { Common Stock, } \$ 50 \text { par } & \$ 1,250,000 \\\text { Paid-In Capital in Excess of Par } & 800,000 \\\text { Paid-In Capital from Sale of Treasury Stock } & 42,000 \\\text { Retained Earnings } & 4,350,000 \\\text { Treasury Stock } & 155,000\end{array}$ What is the total amount of paid-in capital that would be reported on the statement of stockholders' equity?