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Exam 21: Corporate Earnings and Capital Transactions

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Question 21

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A corporation has paid estimated income taxes of $89,800 during the year 2016.At the end of the year,the corporation's tax bill is computed to be $83,000.Record the entry to adjust the Income Tax Expense account on page 6 of a general journal.Omit the description.

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Question 22

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An appropriation of retained earnings reduces the amount of retained earnings available for dividend declarations.

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Question 23

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To be entitled to receive a cash dividend,an investor must be listed as an owner of the stock on the ____________________ date.

Which of the following statements is not correct?

The Deferred Income Tax account represents postponement of taxes payable to a future period.

On the worksheet for the current year ended Dec 31,column totals in the Income Statement section are debit,$220,000 and credit $285,000.Assuming income and deductions for tax purposes are the same as those for financial reporting and the company has paid estimated taxes of $10,000 to date.Tax rates remain 15% for the first $50,000;25% on the next 25,000;34% on the next $25,000 and 39% on the excess over $100,000.Prepare the adjusting entry for income taxes.

The Stockholders' Equity section of the balance sheet reports contributed capital separate from corporate retained earnings.

A 3-for-2 stock split will triple the reported dollar amount of stockholders' equity.

When a previously declared stock dividend is distributed,the accountant makes an entry debiting Common Stock Dividend Distributable and crediting ___________________.

A corporation had 50,000 shares of $20 par value common stock outstanding on November 1 with no preferred stock issued or outstanding.The company's retained earnings was $200,000 and total stockholders' equity was $500,000.Later that day,the board declared a 10% stock dividend when the market value of each share was $25.Shortly after declaration,the market value fell to $22.50 per share.Sam Lewis owned 200 shares of stock prior to the declaration.After the stock dividend,the total book value of Lewis' stock after receiving additional shares was:

Although the balance of the Retained Earnings account is decreased,a(n)____________________ dividend will not result in a decrease in total stockholders' equity.

Treasury Stock is often purchased for all of the following reasons except:

The entry to record the distribution of a stock dividend includes a credit to Common Stock Dividend Distributable.

The declaration of a cash dividend will result in a decrease in:

A corporation reported a net income of $120,000 for its fiscal year and declared and paid cash dividends of $60,000.A stock dividend recorded at $40,000 was also distributed during the year.If the ending balance of the Retained Earnings account was $200,000,the beginning balance was

____________,represents the amount of capital acquired from capital stock transactions and is another name for contributed capital.

The Retained Earnings Appropriated-Treasury Stock account is shown in the ____________________ section of the balance sheet.

The Dividends Payable accounts appear on the balance sheet as a current liability.

After all revenue and expense accounts,other than Income Tax Expense,have been extended to the Income Statement section of the worksheet of Genexo Corporation,the net income is determined to be $200,000.Using the following corporate income tax rates,compute the corporation's federal income taxes payable.(Assume that the firm's taxable income is the same as its income for financial accounting purposes. )

Company covenants (contracts,borrowing arrangements)may prevent the company from distributing profits to its shareholders.