A company with 100,000 authorized shares of $4 par common stock

Question 1A 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?Answer$12,800$19,200$32,000$48,800
Question 2A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $150. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately:Answer$25$150$5$30
Question 3A corporation has 50,000 shares of $25 par value 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:Answer$5$60$25$24
Question 4A corporation issues 1,500 shares of common stock for $ 32,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock forAnswer$15,000$32,000$17,000$2,000
Question 5A corporation purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale?Answer$0$5,000$2,500$10,000
Question 6A disadvantage of the corporate form of business entity isAnswermutual agency for stockholdersunlimited liability for stockholderscorporations are subject to more governmental regulationsthe ease of transfer of ownership
Question 7A restriction/appropriation of retained earnings Answerdecreases total assetsincreases total retained earningsdecreases total retained earningshas no effect on total retained earnings
Question 8Characteristics of a corporation includeAnswershareholders who are mutual agentsdirect management by the shareholders (owners)its inability to own propertyshareholders who have limited liability
Question 9Earnings per shareAnsweris the net income per common sharemust be reported by publicly traded companieshelps compare companies of different sizesall of the above
Question 10How is treasury stock shown on the balance sheet?Answeras an assetas a decrease in stockholders’ equityas an increase in stockholders’ equitytreasury stock is not shown on the balance sheet
Question 11If common stock is issued for an amount greater than par value, the excess should be credited toAnswerRetained Earnings.Cash.Legal Capital.Paid-in Capital in Excess of Par Value.
Question 12Miriah Inc. has 6,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2012. What is the annual dividend on the preferred stock?Answer$50 per share$30,000 in total$300 in total$0.50 per share
Question 13One of the main disadvantages of the corporate form is theAnswerprofessional managementdouble taxation of dividendschartercorporation must issue stock
Question 14Samuels, Inc. reported net income for 2011 is $105,000. During 2011 the company had 5,000 shares of $100 par, 5% preferred stock and 20,000 of $5 par common stock outstanding. Samuels’ earnings per share for 2011 isAnswer$4.00$5.25$6.50$5.00
Question 15Stockholders’ equityAnsweris usually equal to cash on handincludes paid-in capital and liabilitiesincludes retained earnings and paid-in capitalis shown on the income statement
Question 16The authorized stock of a corporationAnswermust be recorded in a formal accounting entry.only reflects the initial capital needs of the company.is indicated in its by-laws.is indicated in its charter.
Question 17The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?Answer5,00045,00040,00050,000
Question 18The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $1 per share dividend is declared?Answer$60,000$5,000$100,000$55,000
Question 19The date on which a cash dividend becomes a binding legal obligation is on theAnswerdeclaration date.date of record.payment date.last day of the fiscal year end.
Question 20The excess of issue price over par of common stock is termed a(n)Answerdiscountincomedeficitpremium
Question 21The liability for a dividend is recorded on which of the following dates?Answerthe date of recordthe date of paymentthe date of announcementthe date of declaration
Question 22The par value per share of common stock representsAnswerthe minimum selling price of the stock established by the articles of incorporation.the minimum amount the stockholder will receive when the corporation is liquidatedan arbitrary amount established in the articles of incorporationthe amount of dividends per share to be received each year
Question 23Which of the following is not a right possessed by common stockholders of a corporation?Answerthe right to vote in the election of the board of directorsthe right to receive a minimum amount of dividendsthe right to sell their stock to anyone they choosethe right to share in assets upon liquidation
Question 24What is the total stockholders’ equity based on the following account balances?Common Stock $450,000Paid-In Capital in Excess of Par 90,000Retained Earnings 190,000Treasury Stock 10,000Answer$740,000$730,000$720,000$640,000
Question 25Those most responsible for the major policy decisions of a corporation are theAnswermanagement.board of directors.employees.stockholders.

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