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Exam 13: Accounting for Corporations

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Question 21

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Rights to purchase common stock at a fixed price over a specified period are:

A) Preferred stocks.
B) Class B stocks.
C) Stock options.
D) Stock restrictions.
E) Preemptive rights.

F) B) and E)
G) B) and C)

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Question 22

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Growth stocks generally pay large dividends on a regular basis.

A) True
B) False

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Question 23

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A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

The following data were reported by a corporation: The number of outstanding shares is:

On September 20,Fletcher Corporation issued 25,000 shares of no-par common stock for equipment having a market value of $85,000.Prepare the general journal entry to record this transaction.

Gracey's Department Stores has $200,000 of 6% noncumulative,nonparticipating,preferred stock outstanding.Gracey's also has $600,000 of common stock outstanding.During its first year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

Underwood Company's only treasury stock transactions for the current year follow: (1)2,000 shares of its common stock were purchased on June 1 for $80,000; (2)On July 1 it reissued 500 of these shares at $45 per share; (3)On August 1 it reissued an additional 500 treasury shares at $38 per share. 1)Prepare the journal entries required to record these transactions. 2)Calculate the balance in Paid-in Capital,Treasury Stock,on September 1 assuming its beginning-year balance is zero.

All of the following regarding accounting for Treasury Stock under U.S.GAAP and IRFS is true except:

Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

The least amount that the buyers of stock must contribute to the corporation or be subject to paying at a future date is called ____________________________.

Eastline 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:

A corporation's minimum legal capital is established by recording the par or stated value of the number of shares:

Percy Corporation was formed on January 1.The corporate charter authorized 100,000 shares of $10 par value common stock.During the first month of operation,the corporation issued 400 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation.The entry to record this transaction would include:

The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

On August 1,a company's board of directors declared a 10% stock dividend to be distributed on September 1 to the stockholders of record on August 20.The company had 1,000,000 shares of $2.50 par value common stock outstanding with a market value of $23 per share.Prepare the journal entries required on August 1,August 20,and September 1.

Prior period adjustments are reported in the:

Prior to June 30,a company has never had any treasury stock transactions.A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share.On July 20,it reissued 50 of these shares at $46 per share.On August 1,it reissued 20 of the shares at $38 per share.What is the journal entry necessary to record the repurchase of stock on June 30?

The term restricted retained earnings refers to statutory but not contractual restrictions.

A corporation had the following stock outstanding when the company's board of directors declared a $55,000 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.