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Exam 13: Accounting for Corporations

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Question 71

Multiple Choice

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A company issued 60 shares of $100 par value stock for $7,000 cash.The total amount of paid-in capital is:

A) $ 100.
B) $ 600.
C) $1,000.
D) $6,000.
E) $7,000.

F) C) and E)
G) C) and D)

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Question 72

Multiple Choice

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The costs of bringing a corporation into existence,including legal fees,promoter fees,and amounts paid to obtain a charter are called:

A) Minimum legal capital.
B) Stock subscriptions.
C) Organization expenses.
D) Selling expenses.
E) Prepaid fees.

F) C) and D)
G) A) and B)

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Question 73

Multiple Choice

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Stock that was reacquired and is still held by the issuing corporation is called:

A company has 500,000 common shares authorized,400,000 common shares issued,and 15,000 common shares in treasury stock at the current year-end.It paid $0.24 per share in cash dividends during the year.The year-end market price of the stock is $15.Calculate (1)the total dividends paid and (2)the dividend yield.

Book value per share:

A stock dividend reduces a corporation's assets and its stockholders' equity.

A corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares.At the time of the stock dividend,the market value per share was $12.The entry to record this dividend is:

The _______________________ protects stockholders' proportional interest in a corporation by allowing them to purchase their proportional share of any common stock later issued by the corporation.

A corporation had the following stock outstanding when the company's board of directors declared a $95,000 cash dividend during the current year: Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is cumulative and nonparticipating and dividends are one year in arrears.

Organization expenses of a corporation often include legal fees and promoter fees.

Recording of a stock dividend does not result in a liability being recorded.

The date of record is the date that directors vote to pay a cash dividend to shareholders.

The stockholders' equity section of a corporation's balance sheet follows: (1)Assuming that the preferred stock is not callable and no dividends are in arrears,compute the book values per preferred share and per common share. (2)Assuming that the preferred stock has a call price of $30 per share and one year of cumulative preferred dividends is in arrears,compute the book values per preferred share and per common share.

A corporation sold 14,000 shares of its $10 par value common stock at a cash price of $13 per share.The entry to record this transaction would include:

A company had a beginning balance in retained earnings of $43,000.It had net income of $6,000 and paid out cash dividends of $5,625 in the current period.The ending balance in retained earnings equals:

A company has $2,400,000 in stockholders' equity that includes 500 shares of $50 par value noncallable preferred stock outstanding and 250,000 shares of common stock outstanding.Calculate the book value per (1)preferred share,and (2)common share.

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

When no-par stock is not assigned a stated value,the total amount received is recorded as Common Stock.

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

Corporations often buy back their own stock: