Accounting 25th Edition Warren Test Bank Download

Accounting 25th Edition Warren
Full link download at:
Test Bank: https://testbankpack.com/p/test-bank-for-accounting-25th-edition-

warren-reeve-duchac-1133607608-9781133607601/
Solution Manual: https://testbankpack.com/p/solution-manual-for-accounting-

25th-edition-warren-reeve-duchac-1133607608-9781133607601/
Chapter 13--Corporations: Organization, Stock Transactions,

and Dividends
Student: ___________________________________________________________________________
1. Twenty percent of all businesses in the United States are corporations and they account for 80% of the total
business dollars generated.
True False
2. A corporation is a separate entity for accounting purposes but not for legal purposes.
True False
3. The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested
by the stockholder.
True False
4. Under the Internal Revenue Code, corporations are required to pay federal income taxes.
True False
5. Double taxation is a disadvantage of a corporation because the same party has to pay taxes twice on the
income.
True False
6. The initial owners of stock of a newly formed corporation are called directors.
True False
7. While some businesses have been granted charters under state laws, most businesses receive their charters
under federal laws.
True False
8. Organizational expenses are classified as intangible assets on the balance sheet.

True False
9. The two main sources of stockholders' equity are investments contributed by stockholders and net income
retained in the business.
True False
10. Retained earnings represents past net incomes less past dividends, therefore any balance in this account
would be listed on the income statement.
True False
11. The balance in Retained Earnings at the end of the period is created by closing entries.
True False
12. The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.
True False
13. A deficit in Retained Earnings is reported in the stockholders' equity section of the balance sheet.
True False
14. When no-par common stock with a stated value is issued for cash, the common stock account is credited for
an amount equal to the cash proceeds.
True False
15. The par value of common stock must always be equal to its market value on the date the stock is issued.
True False
16. For accounting purposes, stated value is treated the same way as par value.
True False
17. The issuance of common stock affects both paid-in capital and retained earnings.
True False
18. The main source of paid-in-capital is from issuing stock.

True False
19. The number of shares of outstanding stock is equal to the number of shares authorized minus the number of
shares issued.
True False
20. The amount of capital paid in by the stockholders of the corporation is called legal capital.
True False
21. If the dividend amount of preferred stock, $50 par value, is quoted as 8%, then the dividends per share
would be $4.
True False
22. If 50,000 shares are authorized, 41,000 shares are issued, and 2,000 shares are reacquired, the number of
outstanding shares is 43,000.
True False
23. Preferred stockholders must receive their current year dividends before the common stockholders can
receive any dividends.
True False
24. If a corporation is liquidated, preferred stockholders are paid before the creditors and before the common
stockholders.
True False
25. Paid-in capital may originate from real estate donated to the corporation.
True False
26. The par value of stock is an arbitrary per share amount defined in many states as legal capital.
True False
27. A large public corporation normally uses registrars and transfer agents to maintain records of the
stockholders.
True False
28. When common stock is issued in exchange for land, the land should be recorded in the accounts at the par
amount of the stock issued.
True False
29. When a corporation issues stock at a premium, it reports the premium as an other income item on the
income statement.
True False
30. When no-par stock is issued, the Common Stock account is credited for the selling price of the stock issued.
True False
31. A large retained earnings account means that there is cash available to pay dividends.
True False
32. When the board of director's declares a cash or stock dividend, this action decreases retained earnings.
True False
33. If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are held as treasury stock, a cash
dividend of $1 per share would amount to $15,000.
True False
34. Cash dividends are normally paid on shares of treasury stock.

True False
35. The declaration of a cash dividend decreases a corporation's stockholders equity and decreases its assets.
True False
36. One of the prerequisites to paying a cash dividend is sufficient retained earnings.
True False
37. Cash dividends become a liability to a corporation on the date of record.

True False
38. The declaration and issuance of a stock dividend does not affect the total amount of a corporation's assets,
liabilities, or stockholders' equity.
True False
39. The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its
liabilities.
True False
40. Before a stock dividend can be declared or paid, there must be sufficient cash.
True False
41. The day on which the board of directors of the corporation distributes a dividend is called the declaration
date.
True False
42. The stock dividends distributable account is listed in the current liability section of the balance sheet.
True False
43. A prior period adjustment should be reported as an adjustment to the retained earnings balance at the
beginning of the period in which the adjustment was made.
True False
44. The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in
the notes to the financial statements.
True False
45. A restriction/appropriation of retained earnings establishes cash assets that are set aside for a specific
purpose.
True False
46. A 10% stock dividend will increase the number of shares outstanding but the book value per share will
decrease.
True False
47. The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.
True False
48. Under the cost method, when treasury stock is purchased by the corporation, the par value and the price at
which the stock was originally issued are important.
True False
49. If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of
income is reported in the income statement.
True False
50. A sale of treasury stock may result in a decrease in paid-in-capital. All decreases should be charged to the
Paid-In-Capital from Sale of Treasury account.
True False
51. Treasury Stock is listed in the stockholders' equity section on the balance sheet.
True False
52. The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total
stockholders’ equity.
True False
53. The retained earnings statement may be combined with the income statement.
True False
54. If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in-capital in
excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit),
the total stockholders' equity is $880,000.
True False
55. A corporation has 10,000 shares of $100 par value stock outstanding. If the corporation issues a 5-for-1
stock split, the number of shares outstanding after the split will be 40,000.
True False
56. The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage
more investors to enter the market for the company's shares.
True False
57. The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate
number of additional shares, is called a stock split.
True False
58. A corporation has 12,000 shares of $20 par value stock outstanding that has a current market value of
$150. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately
$50.
True False
59. A stock split results in a transfer at market value from retained earnings to paid-in capital.
True False
60. If a company has preferred stock, the preferred stock dividend is added to net income when computing
earnings per common share.
True False
61. Which of the following is not characteristic of a corporation?

A. The financial loss that a stockholder may suffer from owning stock in a public company is limited.
B. Cash dividends paid by a corporation are deductible as expenses by the corporation.
C. A corporation can own property in its name.
D. Corporations are required to file federal income tax returns.
62. Characteristics of a corporation include

A. shareholders who are mutual agents
B. direct management by the shareholders (owners)
C. its inability to own property
D. shareholders who have limited liability
63. One of the main disadvantages of the corporate form is the

A. professional management
B. double taxation of dividends
C. charter
D. corporation must issue stock
64. A disadvantage of the corporate form of business entity is
A. mutual agency for stockholders
B. unlimited liability for stockholders
C. corporations are subject to more governmental regulations
D. the ease of transfer of ownership
65. Under the corporate form of business organization

A. ownership rights are easily transferred.
B. a stockholder is personally liable for the debts of the corporation.
C. stockholders’ acts can bind the corporation even though the stockholders have not been appointed as agents
of the corporation.
D. stockholders wishing to sell their corporation shares must get the approval of other stockholders.
66. Those most responsible for the major policy decisions of a corporation are the
A. management.
B. board of directors.
C. employees.
D. stockholders.
67. Which one of the following would not be considered an advantage of the corporate form of organization?
A. Government regulation
B. Separate legal existence
C. Continuous life
D. Limited liability of stockholders
68. Which of the following is not true of a corporation?

A. It may enter into binding legal contracts in its own name.
B. It may sue and be sued.
C. The acts of its owners bind the corporation.
D. It may buy, own, and sell property.
69. The ability of a corporation to obtain capital is

A. less than a partnership.
B. about the same as a partnership.
C. restricted because of the limited life of the corporation.
D. enhanced because of limited liability and ease of share transferability.
70. Which of the following statements concerning taxation is accurate?
A. Corporations pay federal income taxes but not state income taxes.
B. Corporations pay federal and state income taxes.
C. Only the owners must pay taxes on corporate income.
D. Corporations pay income taxes but their owners do not.
71. The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?
A. Retained Earnings
B. Treasury Stock
C. Organizational Expenses
D. Common Stock
72. Stockholders' equity

A. is usually equal to cash on hand
B. includes paid-in capital and liabilities
C. includes retained earnings and paid-in capital
D. is shown on the income statement
73. The state charter allows a corporation to issue only a certain number of shares of each class of stock. This
amount of stock is called
A. treasury stock
B. issued stock
C. outstanding stock
D. authorized stock
74. Which of the following is not a right possessed by common stockholders of a corporation?
A. the right to vote in the election of the board of directors
B. the right to receive a minimum amount of dividends
C. the right to sell their stock to anyone they choose
D. the right to share in assets upon liquidation
75. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that
40,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares
outstanding?
A. 10,000
B. 40,000
C. 30,000
D. 50,000
76. The par value per share of common stock represents
A. the minimum selling price of the stock established by the articles of incorporation.
B. the minimum amount the stockholder will receive when the corporation is liquidated
C. an arbitrary amount established in the articles of incorporation
D. the amount of dividends per share to be received each year
77. A corporation issues 2,500 shares of common stock for $ 45,000. 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 for
A. $25,000
B. $45,000
C. $20,000
D. $ 5,000
78. The excess of issue price over par of common stock is termed a(n)
A. discount
B. income
C. deficit
D. premium
79. The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of
legal fees for organizing the corporation includes a credit to
A. Organizational Expenses
B. Goodwill
C. Common Stock
D. Cash
80. The price at which a stock can be sold depends upon a number of factors. Which statement below is not
one of those factors?
A. the financial condition, earnings record, and dividend record of the corporation
B. investor expectations of the corporation's earning power
C. how high the par value is
D. general business and economic conditions and prospects
81. The entry to record the issuance of common stock at a price above par includes a debit to
B. Common Stock
C. Cash
D. Paid-In Capital in Excess of Par-Common Stock
82. Merritt Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000
shares of its $5 par common stock. The stock is widely traded and selling for $18 per share. At what amount
should the building be recorded by Merritt Company?
A. $60,000
B. $216,000
C. $210,000
D. $156,000
outstanding?
A. 35,000
B. 70,000
C. 25,000
D. 30,000
84. Par value

A. is the monetary value assigned per share in the corporate charter.
B. represents what a share of stock is worth.
C. represents the original selling price for a share of stock.
D. is established for a share of stock after it is issued.
85. The authorized stock of a corporation

A. must be recorded in a formal accounting entry.
B. only reflects the initial capital needs of the company.
C. is indicated in its by-laws.
D. is indicated in its charter.
86. If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account
A. Common Stock will be credited for $75,000.
B. Paid-in Capital in excess of Par Value will be credited for $5,000.
C. Paid-in Capital in excess of Par Value will be credited for $70,000.
D. Cash will be debited for $70,000.
87. If common stock is issued for an amount greater than par value, the excess should be credited to
A. Retained Earnings.
B. Cash.
C. Legal Capital.
D. Paid-in Capital in Excess of Par Value.
88. The Sneed Corporation issues 10,000 shares of $50 par value preferred stock for cash at $75 per share. The
entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to
A. Preferred Stock for $750,000.
B. Preferred stock for $500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $250,000.
C. Preferred Stock for $500,000 and Retained Earnings for $250,000.
D. Paid-in Capital from Preferred Stock for $750,000.
89. Alma Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is
recorded, credits are made to:
A. Common Stock $14,000.
B. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000.
C. Common Stock $4,000 and Paid-in Capital in Excess of Stated Value $10,000.
D. Common Stock $10,000 and Retained Earnings $4,000.
90. Nexis Corp. issues 1,000 shares of $15 par value common stock at $22 per share. When the transaction is
A. Common Stock $15,000 and Paid-in Capital in Excess of Par Value $7,000.
B. Common Stock $22,000 and Retained Earnings $15,000.
D. Common Stock $22,000.
91. When Bayou Corporation was formed on January 1, 20xx, the corporate charter provided for 100,000 share
of $10 par value common stock. The following transaction was among those engaged in by the corporation
during its first month of operation: The corporation issued 9,000 shares of stock at a price of $23 per share.
The entry to record the above transaction would include a

A. debit to Cash for $90,000
B. credit to Common Stock for $207,000
C. credit to Paid in Capital in Excess of Par for $117,000
D. debit to Common Stock for $90,000
92. On January 1, 20xx, Swenson Corporation had 40,000 shares of $10 par value common stock issued and
outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, 20xx,
Swenson purchased 4,000 shares of treasury stock for $24 per share and later sold the treasury shares for $21
per share on March 1, 20xx.
The journal entry to record the purchase of the treasury shares on February 1, 20xx, would include a
A. credit to Treasury Stock for $96,000.
B. debit to Treasury Stock for $96,000.
C. debit to a loss account for $120,000
D. credit to a gain account for $120,000.
60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash
dividends to be paid if a $2 per share dividend is declared?
A. $ 60,000
B. $ 20,000
C. $120,000
D. $100,000
A. $80,000
B. $10,000
C. $90,000
D. $100,000
95. The date on which a cash dividend becomes a binding legal obligation is on the
A. declaration date.
B. date of record.
C. payment date.
D. last day of the fiscal year.
96. The cumulative effect of the declaration and payment of a cash dividend on a company’s financial
statements is to
A. decrease total liabilities and stockholders’ equity.
B. increase total expenses and total liabilities.
C. increase total assets and stockholders’ equity.
D. decrease total assets and stockholders’ equity.
97. Which of the following is the appropriate general journal entry to record the declaration of a cash
dividends?
A. Retained earnings
Cash
B. Cash Dividends payable
Cash
C. Paid-in capital
Cash Dividends payable
D. Cash Dividends
Cash Dividends Payable
98. Miriah Inc. has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par
value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock?
A. $50 per share
B. $50,000 in total
C. $10,000 in total
D. $0.50 per share
99. Which of the following is not a prerequisite to paying a cash dividend?

A. formal action by the board of directors
B. market value in excess of par value per share
C. sufficient cash
D. sufficient retained earnings
100. The liability for a dividend is recorded on which of the following dates?
A. the date of record
B. the date of payment
C. the last day of the fiscal year
D. the date of declaration
101. When a stock dividend is declared, which of the following accounts is credited?
A. Common Sock
B. Dividend Payable
C. Stock Dividends Distributable
D. Retained Earnings
102. Treasury stock shares are

A. shares held by the U.S. Treasury Department
B. part of the total outstanding shares but not part of the total issued shares of a corporation
C. unissued shares that are held by the treasurer of the corporation
D. issued shares that have been reacquired by a corporation
103. Which statement below is not a reason for a corporation to buy back its own stock.
A. resale to employees
B. bonus to employees
C. for supporting the market price of the stock
D. to increase the shares outstanding
104. How is treasury stock shown on the balance sheet?
A. as an asset
B. as a decrease in stockholders' equity
C. as an increase in stockholders' equity
D. treasury stock is not shown on the balance sheet
105. The excess of sales price of treasury stock over its cost should be credited to
A. Treasury Stock Receivable
B. Premium on Capital Stock
C. Paid-In Capital from Sale of Treasury Stock
D. Income from Sale of Treasury Stock
106. What is the total stockholders' equity based on the following account balances?
Common Stock $375,000

Paid-In Capital in Excess of Par 90,000
Retained Earnings 190,000
Treasury Stock 15,000
A. $670,000
B. $655,000
C. $640,000
D. $565,000
107. Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions
combined
A. income will be increased by $500
B. stockholders' equity will be increased by $3,500
C. stockholders' equity will be increased by $500
D. stockholders' equity will not change
108. Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The
journal entry to record the reissuance would include a credit to
A. Treasury Stock for $8,500
B. Paid-In Capital from Treasury Stock for $8,500
C. Paid-In Capital in Excess of Par/Common for $2,900
D. Paid-In Capital from Treasury Stock for $2,900
109. A 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?
A. $0
B. $5,000
C. $2,500
D. $10,000
110. A corporation purchases 10,000 shares of its own $10 par common stock for $35 per share, recording it at
cost. What will be the effect on total stockholders' equity?
A. increase, $100,000
B. increase, $350,000
C. decrease, $100,000
D. decrease, $350,000
111. In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be
reported?
A. other expense on income statement
B. intangible asset on balance sheet
C. stockholders' equity on balance sheet
D. other income on income statement
112. Which of the following is not classified as paid-in capital on the balance sheet?
A. common stock
B. common stock distributable
C. donated capital
D. treasury stock
113. All of the following are normally found in a corporation's stockholders' equity section except
A. Common Stock
B. Paid-In Capital in Excess of Par
C. Dividends in Arrears
114. Which of the following amounts should be disclosed in the stockholders' equity section of the balance
sheet?
A. the number of shares of common stock outstanding
B. the number of shares of common stock issued
C. the number of shares of common stock authorized
D. all of the above
115. Significant changes in stockholders' equity are reported in
A. income statement
B. retained earnings statement
C. statement of stockholders' equity
D. statement of cash flows
116. Retained earnings

A. is the same as contributed capital
B. cannot have a debit balance
C. changes are summarized in the retained earnings statement
D. is equal to cash on hand
117. Which of the following would appear as a prior-period adjustment?

A. loss resulting from the sale of fixed assets
B. difference between the actual and estimated uncollectible accounts receivable
C. error in the computation of depreciation expense in the preceding year
D. loss from the restructuring of assets
118. A restriction/appropriation of retained earnings

A. decreases total assets
B. increases total retained earnings
C. decreases total retained earnings
D. has no effect on total retained earnings
119. The Dayton Corporation began the current year with a retained earnings balance of $32,000. During the
year, the company corrected an error made in the prior year, which was a failure to record depreciation expense
of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and
declared cash dividends of $7,000. Compute the year end retained earnings balance.
A. $34,000
B. $37,000
C. $41,000
D. $44,000
120. What is the total stockholders' equity based on the following data?

Excess of Issue Price Over Par 375,000
Retained Earnings (deficit) (65,000)
A. $1,070,000
B. $1,005,000
C. $940,000
D. $565,000
121. Treasury stock should be reported in the financial statements of a corporation as a(n)
A. investment.
B. liability.
C. current asset.
D. deduction from stockholders’s equity.
122. The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is
termed a
A. liquidating dividend
B. stock split
C. stock option
D. preferred dividend
stock split, the number of shares outstanding after the split will be
A. 150,000 shares
B. 50,000 shares
C. 100,000 shares
D. 16,666 shares
124. When a corporation completes a 3-for-1 stock split

A. the ownership interest of current stockholders is decreased
B. the market price per share of the stock is decreased
C. the par value per share is decreased
D. b and c
A. $7.00
B. $112.00
C. $37.50
D. $600.00
126. The primary purpose of a stock split is to
A. increase paid-in capital
B. reduce the market price of the stock per share
C. increase the market price of the stock per share
D. increase retained earnings
127. A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at
$8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a
share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result
of the stock dividend?
A. $3,200
B. $6,400
C. $4,800
D. $8,800
share. The effect of the declaration and issuance of the stock dividend is to
A. decrease retained earnings, increase common stock, and increase paid-in capital
B. increase retained earnings, decrease common stock, and decrease paid-in capital
C. increase retained earnings, decrease common stock, and increase paid-in capital
D. decrease retained earnings, increase common stock, and decrease paid-in capital
share. What is the amount transferred from the Retained Earnings account to Paid-in Capital accounts as a
result of the stock dividend?
A. $12,800
B. $19,200
C. $32,000
D. $48,800
130. Which of the following statements is not true about a 2-for-1 split?
A. Par value per share is reduced to half of what it was before the split.
B. Total contributed capital increases.
C. The market price will probably decrease.
D. A stockholder with ten shares before the split owns twenty shares after the split.
$150. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be
approximately:
A. $25
B. $150
C. $5
D. $30
$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
$120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be:
A. 60,000
B. 10,000
C. 300,000
D. 30,000
134. Earnings per share

A. is the net income per common share
B. must be reported by publicly traded companies
C. helps compare companies of different sizes
D. all of the above
135. Samuels, 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 is
A. $4.00
B. $5.25
C. $6.50
D. $5.00
136. Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50
par common stock. The following amounts were distributed as dividends:
Year 1: $10,000
Year 2: 45,000
Year 3: 90,000
Determine the dividends per share for preferred and common stock for the first year.
A. $0.50 and $0.10

B. $0.00 and $0.10
C. $0.50 and $0.00
D. $2.00 and $0.00
Year 1: $10,000
Year 2: 45,000
Year 3: 90,000
Determine the dividends per share for preferred and common stock for the second year.
A. $2.25 and $0.00
B. $2.25 and $0.45
C. $0.00 and $0.45
D. $2.00 and $0.45
Year 1: $10,000
Year 2: 45,000
Year 3: 90,000
Determine the dividends per share for preferred and common stock for the third year.
A. $4.50 and $0.25
B. $3.25 and $0.25
C. $4.50 and $0.90
D. $2.00 and $0.25
Year 1: $10,000
Year 2: 45,000
Year 3: 90,000
Determine the dividends in arrears for preferred stock for the second year.
A. $25,000
B. $10,000
C. $0
D. $30,000
140. Match the following stockholders equity concepts to the appropriate answer.
1. creditors cannot pursue stockholder’s personal

assets to satisfy claims corporation ____
publicly held
2. responsible for establishing corporate policies corporation ____
3. a legal entity, separate from the people who
create and operate it bylaws ____
4. rules and procedures for corporate conduct of its privately held
affairs corporation ____
5. a company whose shares can be bought and sold articles of
on a stock exchange incorporation ____
6. earnings of a company distributed to
stockholders limited liability ____
7. company whose shares are not bought or sold on
a stock exchange board of directors ____
8. formally creates a corporation dividends ____
141. Match the following stockholders equity concepts to the most appropriate answer.
1. a value that the stock is worth on the stock additional paid in

exchange capital ____
2. a value established for the protection of
creditors par value ____
3. the number of shares currently held by
stockholders outstanding shares ____
4. the number of sharing originally sold to
stockholders preferred stock ____
5. a class of stock that does not provide voting
rights for shareholders authorized shares ____
6. account used when issue price exceeds par value
of stock issued shares ____
7. a class of stock that provides voting rights for
shareholders common stock ____
8. the maximum number of shares a company can
issue to shareholders market price ____
142. Match the following stockholder’s equity concepts to the best answer.
stock dividends
1. this event creates a liability to company distributable ____
2. Shares of common stock re-acquired by a
company treasury stock ____
3. the date that a share of stock must be owned to
receive current dividend preferred stock ____
4. distribution of a company’s earnings to
stockholders cash dividend ____
5. account used when shares are issued for an additional paid in
amount greater than par value capital ____
6. when dividends are actually distributed to
stockholders declaration date ____
7. entitled to receive dividends first record date ____
8. equity account reflecting shares “owed” to
stockholders payment date ____
143. Match the value to the appropriate account. For the year ended 2012 ABC had the following transactions:
- issued 10,000 shares of $2.00 par value common stock for $12.00 per share
- issued 3,000 shares of $50 par value 6% preferred stock for $70 per share
- purchased 1000 shares of previously issued common stock for $15.00 per share
-reported net income of $200,000
- declared and paid a total dividend of $40,000
Assume that retained earnings had a beginning balance of $75,000.
1. 15,000 Preferred Stock ____

2. 20,000 Additional Paid in Capital - Common Stock ____
3. 60,000 Additional Paid in Capital - Preferred Stock ____
4. 550,000 Common Stock ____
5. 330,000 Retained Earnings ____
6. 235,000 Total Paid in Capital ____
7. $150,000 Total Stockholders Equity ____
8. 100,000 Treasury Stock ____
144. A company had stock outstanding as follows during each of its first three years of operations: 2,500 shares
of $10, $100 par, cumulative preferred stock and 50,000 shares of $10 par common stock. The amounts
distributed as dividends are presented below. Determine the total and per share dividends for each class of
stock for each year by completing the schedule.
Preferred Common
Year Dividends Total Per Share Total Per Share
1 $10,000 _________ _________ _________ _________
2 25,000 _________ _________ _________ _________
3 60,000 _________ _________ _________ _________
145. On April 1, 10,000 shares of $5 par common stock were issued at $22, and on April 7, 5,000 shares of $50
par preferred stock were issued at $104. Journalize the entries for April 1 and 7.
146. On May 10, a company issued for cash 1,500 shares of no-par common stock (with a stated value of $2) at
$14, and on May 15, it issued for cash 2,000 shares of $15 par preferred stock at $58.
Journalize the entries for May 10 and 15, assuming that the common stock is to be credited with the stated
value.
147. On February 1 of the current year, Motor, Inc. issued 700 shares of $2 par common stock to an attorney in
return for preparing and filing the Articles of Incorporation. The value of the services is $9,600. Journalize
this transaction.
148. On April 10, a company acquired land in exchange for 1,000 shares of $20 par common stock with a
current market price of $73. Journalize this transaction.
149. Sabas Company has 20,000 shares of $100 par, 1% non-cumulative preferred stock and 100,000 shares of
$50 par common stock. The following amounts were distributed as dividends:
Year 1: $10,000
Year 2: 15,000
Year 3: 90,000
Determine the dividends per share for preferred and common stock for each year.
Year 1: $10,000
Year 2: 45,000
Year 3: 90,000
151. Sabas Company has 40,000 shares of $100 par, 1% preferred stock and 100,000 shares of $50 par common
stock. The following amounts were distributed as dividends:
Year 1: $ 50,000
Year 2: 90,000
Year 3: 130,000
152. A corporation, which had 18,000 shares of common stock outstanding, declared a 3-for-1 stock split.
(a) What will be the number of shares outstanding after the split?
(b) If the common stock had a market price of $240 per share before the stock split, what would be an approximate market price
per share after the split?
(c) Journalize the entry to record the stock split.
153. 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.
154. The dates of importance in connection with a cash dividend of $50,000 on a corporation’s common stock
are January 15, February 15, and March 15. Journalize the entries required on each date.
155. Vincent Corporation has 100,000 share of $100 par common stock outstanding. On June 30, Vincent
Corporation declared a 5% stock dividend to be issued on July 30 to stockholders of record July 15. The
market price of the stock was $132 a share on June 30. Journalize the entries required on June 30, July 15 and
July 30.
156. On April 2nd a corporation purchased for cash 5,000 shares of its own $10 par common stock at $16 a
share. They sold 3,000 of the treasury shares at $19 a share on June 15th. The remaining 2,000 shares were
sold on November 10th for $12 a share.
(a) Journalize the entries to record the purchase (treasury stock is recorded at cost).
(b) Journalize the entries to record the sale of the stock.
157. On June 5, Belen Corporation reacquired 3,300 shares of its 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.
158. 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.
Common Stock, $50 parommon Stock, $50 par $1,250,000

Paid in Capital from Sale of Treasury Stock 42,000
Retained Earnings 4,350,000
Treasury Stockeasury Stock 155,000
159. Morocco Inc. reported the following results for the year ending April 30, 2014:
Retained earnings, May 1, 2013 $3,750,000

Net income 680,000
Cash dividends declared 80,000
Stock dividends declared 220,000
Prepare a retained earnings statement for the fiscal year ended April 30, 2014.
160. Indicate whether the following actions would (+) increase, (-) decrease, or (0) not affect a company's total
assets, liabilities, and stockholders' equity.
Stockholders'
Assets Liabilities Equity
(1) Declaring a cash dividend _______ _______ _______
(2) Paying the cash dividend declared in (1) _______ _______ _______
(3) Declaring a stock dividend _______ _______ _______
(4) Issuing stock certificates for the stock
dividend declared in (3) _______ _______ _______
161. Macy Company has 10,000 shares of 2% cumulative preferred stock of $50 par and 25,000 shares of $75
Year 1 $30,000
Year 2 6,000
Year 3 80,000
Required:
162. Future Sources, Inc. reported the following results for the year ending July 31, 2012:
Retained earnings, August 1, 2011 $875,000

Net income 260,000
Prepare a retained earnings statement for the fiscal year ended July 31, 2012.
163. Using the following information, prepare the Stockholders’ Equity section of the balance sheet. Seventy
thousand shares of common stock are authorized and 7,000 shares have been reacquired.
Common Stock, $75 par $4,725,000

Paid-in Capital in Excess of Par 679,000
Paid-in Capital from Sale of Treasury Stock 25,200
164. 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. Osgood reported no income or loss for the current year.
Required:
(1) Journ
alize
the
entrie
s to
recor
d
a. the
declarati
on of the
dividend
,
capitaliz
ing an
amount
equal to
market
value;
and
b. the
issuance
of the
stock
certificat
es.
(2) Deter
mine
the
follo
wing
amou
nts
befor
e the
stock
divid
end
was
declar
ed:
a. Total
paid-in
capital;
b. Total
retained
earnings
; and
c. Total
stockhol
ders’
equity.
(3) Deter
mine
the
follo
wing
amou
nts
after
the
stock
divid
end
was
declar
ed
and
closin
g
entrie
s
were
recor
ded at
the
end
of the
year:
a. Total
paid-in
capital;
b. Total
retained
earnings
; and
c. Total
stockhol
ders’
equity.
165. On March 4, of the current year, Barefoot Bay, Inc. reacquired 5,000 shares of its common stock at $89
per share. On August 7, Barefoot Bay sold 3,500 of the reacquired shares at $100 per share. The remaining
1,500 shares were sold at $88 per share on November 29.
Required:
(1) Journalize the transaction of March 4, August 7, and November 29.

(2) What is the balance in Paid-in Capital from Sale of Treasury Stock on December 31, of the current year?
(3) Why might Barefoot Bay Inc. have purchased the treasury stock?
166. Marcos Company, which had 35,000 shares of common stock outstanding, declared a 4-for-1 stock split.
Required:
(1) What will be the number of shares outstanding after the split?
(2) If the common stock had a market price of $280 per share before the stock split, what would be an approximate
market price per share after the split?
167. Selected transactions completed by Breezeway Construction during the current fiscal year are as follows:
February 3 Split the common stock 2 for 1 and reduced the par from $40 to $20 per share. After the split there
were 250,000 common shares outstanding.
April 10 Declared semiannual dividends of $1.50 on 18,000 shares of preferred stock and $0.08 on the common
stock to stockholders of record on May 10, payable on June 9.
June 9 Paid the cash dividends.
October 10 Declared semiannual dividends of $1.50 on the preferred stock and $0.04 on the common stock (before
the stock dividend). In addition, a 2% common stock dividend was declared on the common stock
outstanding. The fair market value of the common stock is estimated at $36.
December 9 Paid the cash dividends and issued the certificates for the common stock dividend.
Required: Journalize the transactions.
168. On February 13, Epperson Company issue for cash 75,000 shares of no-par common stock (with a stated
value of $125) at $140. On September 9, Epperson issued at par 15,000 share of 1%, $60 par preferred stock at
par for cash On November 23, Epperson issued for cash 8,000 shares of 1%, $60 par preferred stock at $70.
Required: Journalize the entries to record the February 13, September 9 and November 23 transactions.
169. Solar Company has 600,000 shares of $75 par common stock outstanding. On February 13, Solar declared
a 3% stock dividend to be issued on April 30 to stockholders of record on March 14. The market price of the
stock was $90 per share on February 13.
Required: Journalize the entries required on February 13, March 14, and April 30.
170. On February 1, Marine Company reacquired 7,500 shares of its common stock at $30 per share. On
March 15, Marine sold 4,500 of the reacquired shares at $34 per share. On June 2, Marine sold the remaining
shares at $28 per share.
Required: Journalize the transaction of February 1, March 15, and June 2.
171. The following transactions took place for the XYZ Corporation;
a. November 12th - Declared a total cash dividend of $45,000 for stockholders of record November 20th
payable on December 1st. Record the journal entry, if necessary, for the following events;
Nov. 12 -
Nov. 20 -
Dec. 1 -
b. Briefly describe the significance of November 20th.

172. A company had the following stockholders equity information available at year end.
- purchased 1,000 shares of previously issued common stock for $15.00 per share
- declared and paid the preferred stock dividend
Calculate the earnings per share for the current year.
173. On January 1, 2011 a company had the following data:
- issued 3,000 shares of $50 par value 6% cumulative preferred stock for $70 per share
The company had the following dividend information available:
2011 - No dividend paid

2012 - Paid a $2,000 total dividend
2014 - paid a $32,000 total dividend
Using the following format, fill in the correct values for each year;
2011 2012 2013 2014

Common stock dividend
Preferred stock dividend
Dividends in arrears
174. A corporation was organized on January 1 of the current year, with an authorization of 20,000 shares of $4
preferred stock, $12 par, and 100,000 shares of $3 par common stock.
The following selected transactions were completed during the first year of operations:
Jan. 3 Issued 15,000 shares of common stock at $23 per share for cash.
31 Issued 200 shares of common stock to an attorney in payment of legal fees for organizing the corporation. The value of
the stock at the time of payment was $25 per share.
Feb. 24 Issued 20,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $65,000
$120,000, and $45,000 respectively.
Mar. 15 Issued 2,000 shares of preferred stock at $56 for cash.
175. Prepare entries to record the following:
(a) Issued 1,000 shares of $15 par common stock at $54 for cash.
(b) Issued 1,400 shares of no-par common stock in exchange for equipment with a fair market price of $24,000.
(c) Purchased 100 shares of treasury stock at $26.
(d) Sold 100 shares of treasury stock purchased in (c) at $29.
176. On April 10, Maranda Corporation issued for cash 11,000 shares of no-par common stock at $25. On May
5, Maranda issued at par 1,000 shares of 4%, $50 par preferred stock for cash. On May 25, Maranda issued for
cash 15,000 shares of 4%, $50 par preferred stock at $55.
Journalize the entries to record the April 10, May 5, and May 25 transactions.
(b) Issued 1,400 shares of common stock in exchange for equipment with a fair market price of $21,000.
(d) Sold 100 shares of treasury stock at $30.
179. Wonder Sales is authorized to issue 100,000 shares of $100 par, 2% preferred stock and 1,000,000 shares
of $10 par common stock.
(a) On January 2nd, Wonder Sales issues 5,000 shares of preferred stock for $110 per share and 65,000 shares
of common stock at $10 per share. Journalize this issuance.
(b) On January 25th, Wonder Sales issued 250 shares of preferred stock to a Morton Law Firm for settlement of
an invoice for incorporation services. The invoice was for $36,000. Journalize this issuance.
(c) On January 31st, Wonder Sales issues 500 shares of common stock to Setup Inc. for fixtures. The fixtures
have a fair market value of $8,500. Journalize this issuance.
180. Carmen Company a publicly traded company with preferred and common stock issued. As of January 1st,
it had 50,000 shares of $100 par, 2% preferred stock outstanding and 250,000 shares of $10 par common stock
outstanding.
(a) On January 31st, the Board of Directors issues a requirement to purchase 5,000 shares of its common stock
at market price. The shares are purchased at a market price of $22 per share. Journalize the purchase utilizing
the cost concept.
(b) On March 15th, Carmen declares a dividend on preferred stock of $2.75 per share. The date of record is
March 25th and the date of payment is March 31st. Journalize these events.
(c) On December 1st, Carmen declares a cash dividend on common stock of $0.12 per share. The date of record
is December 15th and the date of payment is December 21st. Journalize these events.
(d) On December 27th the board orders that 2,500 shares of treasury stock be sold. The sale price is $25 per
share. Journalize this event.
181. A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the
following:
(a) Purchased 1,000 shares of treasury stock at $12. The treasury stock is accounted for by the cost method.
(b) Sold 500 shares of treasury stock at $15.
(c) Purchased equipment for $75,000, paying $25,000 in cash and issuing 4,000 shares of common stock for the remaining.
following:
(b) Sold 1,000 shares of treasury stock at $19.
183. Journalize the following selected transactions completed during the current fiscal year:
Jan. 3 The board of directors declared a stock split which reduced the par of common shares from $100 to $20. This action increased
the number of outstanding shares to 400,000.
22 Declared a dividend of $1.75 per share on the outstanding shares of common stock.
Feb. 8 Paid the dividend declared on January 22.
Sep. 1 Declared a 5% stock dividend on the common stock outstanding (the fair market value of the stock to be issued is $30).
Oct. 1 Issued the certificates for the common stock dividend declared on September 1.
184. Prepare entries to record the following selected transactions completed during the current fiscal year:
Feb. 1 The board of directors declared a stock split which reduced the par of common shares from $100 to $20. This action increased
11 Purchased 25,000 shares of own stock at $44, recording the treasury stock at cost.
May 1 Declared a dividend of $2.50 per share on the outstanding shares of common stock.
15 Paid the dividend declared on May 1.
Oct. 19 Declared a 2% stock dividend on the common stock outstanding (the fair market value of the stock to be issued is $55).
Nov. 12 Issued the certificates for the common stock dividend declared on October 19.
185. At December 31st, the Jeter Company had the following ending balances;
Retained Earnings - $100,000

Preferred Stock ($100 par, 7% cumulative, 10,000 authorized, 5,000 issued and outstanding) - 500,000
Treasury stock - $35,000
Additional paid in capital - common stock - 400,000
Additional paid in capital - preferred stock - 50,000
Common stock ($5.00 par value, 100,000 shares authorized, 60,000 issued) - 300,000
Prepare the stockholders equity section of the balance sheet in good form with all of the required disclosures. .
186. The Torre Company has the following balances in stockholders equity on December 31st.
Common Stock - $5.00 par, 60,000 issued $300,000

Additional paid in capital - common 600,000
Preferred stock - $100 par, 5,000 issued 500,000
Additional paid in capital - preferred 100,000
Retained earnings 200,000
Treasury stock (cost - $12.00 per share) 60,000
Answer the following questions:
1. How many shares of treasury stock are owned?
2. What was the average market price per share at which common stock was issued?
3. What was the average market price per share at which preferred stock was issued?
4. What is the total value of the Paid in Capital portion of stockholders equity?
5. What is the total value of stockholders equity?
6. How many shares of common stock are outstanding?
7. If net income for the year was $75,000 and a preferred stock dividend of $20,000 was paid,
what was the beginning value of retained earnings? How much is earnings per share for
the year?
Chapter 13--Corporations: Organization, Stock Transactions, and
Dividends Key
1. Twenty percent of all businesses in the United States are corporations and they account for 80% of the total
business dollars generated.
FALSE
2. A corporation is a separate entity for accounting purposes but not for legal purposes.
FALSE
3. The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested
by the stockholder.
TRUE
4. Under the Internal Revenue Code, corporations are required to pay federal income taxes.
TRUE
5. Double taxation is a disadvantage of a corporation because the same party has to pay taxes twice on the
income.
FALSE
6. The initial owners of stock of a newly formed corporation are called directors.
FALSE
7. While some businesses have been granted charters under state laws, most businesses receive their charters
under federal laws.
FALSE
8. Organizational expenses are classified as intangible assets on the balance sheet.
FALSE
9. The two main sources of stockholders' equity are investments contributed by stockholders and net income
retained in the business.
TRUE
10. Retained earnings represents past net incomes less past dividends, therefore any balance in this account
would be listed on the income statement.
FALSE
11. The balance in Retained Earnings at the end of the period is created by closing entries.
TRUE
12. The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.
FALSE
13. A deficit in Retained Earnings is reported in the stockholders' equity section of the balance sheet.
TRUE
14. When no-par common stock with a stated value is issued for cash, the common stock account is credited for
an amount equal to the cash proceeds.
FALSE
15. The par value of common stock must always be equal to its market value on the date the stock is issued.
FALSE
16. For accounting purposes, stated value is treated the same way as par value.
TRUE
17. The issuance of common stock affects both paid-in capital and retained earnings.
FALSE
18. The main source of paid-in-capital is from issuing stock.

TRUE
19. The number of shares of outstanding stock is equal to the number of shares authorized minus the number of
shares issued.
FALSE
20. The amount of capital paid in by the stockholders of the corporation is called legal capital.
FALSE
21. If the dividend amount of preferred stock, $50 par value, is quoted as 8%, then the dividends per share
would be $4.
TRUE
22. If 50,000 shares are authorized, 41,000 shares are issued, and 2,000 shares are reacquired, the number of
outstanding shares is 43,000.
FALSE
23. Preferred stockholders must receive their current year dividends before the common stockholders can
receive any dividends.
TRUE
24. If a corporation is liquidated, preferred stockholders are paid before the creditors and before the common
stockholders.
FALSE
25. Paid-in capital may originate from real estate donated to the corporation.
TRUE
26. The par value of stock is an arbitrary per share amount defined in many states as legal capital.
TRUE
27. A large public corporation normally uses registrars and transfer agents to maintain records of the
stockholders.
TRUE
28. When common stock is issued in exchange for land, the land should be recorded in the accounts at the par
amount of the stock issued.
FALSE
29. When a corporation issues stock at a premium, it reports the premium as an other income item on the
income statement.
FALSE
30. When no-par stock is issued, the Common Stock account is credited for the selling price of the stock issued.
TRUE
31. A large retained earnings account means that there is cash available to pay dividends.
FALSE
32. When the board of director's declares a cash or stock dividend, this action decreases retained earnings.
TRUE
33. If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are held as treasury stock, a cash
dividend of $1 per share would amount to $15,000.
FALSE
34. Cash dividends are normally paid on shares of treasury stock.

FALSE
35. The declaration of a cash dividend decreases a corporation's stockholders equity and decreases its assets.
FALSE
36. One of the prerequisites to paying a cash dividend is sufficient retained earnings.
TRUE
37. Cash dividends become a liability to a corporation on the date of record.

FALSE
38. The declaration and issuance of a stock dividend does not affect the total amount of a corporation's assets,
liabilities, or stockholders' equity.
TRUE
39. The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its
liabilities.
FALSE
40. Before a stock dividend can be declared or paid, there must be sufficient cash.
FALSE
41. The day on which the board of directors of the corporation distributes a dividend is called the declaration
date.
FALSE
42. The stock dividends distributable account is listed in the current liability section of the balance sheet.
FALSE
43. A prior period adjustment should be reported as an adjustment to the retained earnings balance at the
beginning of the period in which the adjustment was made.
TRUE
44. The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in
the notes to the financial statements.
TRUE
45. A restriction/appropriation of retained earnings establishes cash assets that are set aside for a specific
purpose.
FALSE
46. A 10% stock dividend will increase the number of shares outstanding but the book value per share will
decrease.
TRUE
47. The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.
TRUE
48. Under the cost method, when treasury stock is purchased by the corporation, the par value and the price at
which the stock was originally issued are important.
FALSE
49. If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of
income is reported in the income statement.
FALSE
50. A sale of treasury stock may result in a decrease in paid-in-capital. All decreases should be charged to the
Paid-In-Capital from Sale of Treasury account.
FALSE
51. Treasury Stock is listed in the stockholders' equity section on the balance sheet.
TRUE
52. The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total
stockholders’ equity.
TRUE
53. The retained earnings statement may be combined with the income statement.
TRUE
54. If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in-capital in
excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit),
the total stockholders' equity is $880,000.
FALSE
stock split, the number of shares outstanding after the split will be 40,000.
FALSE
56. The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage
more investors to enter the market for the company's shares.
FALSE
57. The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate
number of additional shares, is called a stock split.
TRUE
$50.
FALSE
59. A stock split results in a transfer at market value from retained earnings to paid-in capital.
FALSE
60. If a company has preferred stock, the preferred stock dividend is added to net income when computing
earnings per common share.
FALSE
61. Which of the following is not characteristic of a corporation?
A. The financial loss that a stockholder may suffer from owning stock in a public company is limited.
B. Cash dividends paid by a corporation are deductible as expenses by the corporation.
C. A corporation can own property in its name.
D. Corporations are required to file federal income tax returns.
62. Characteristics of a corporation include

A. shareholders who are mutual agents
B. direct management by the shareholders (owners)
C. its inability to own property
D. shareholders who have limited liability
63. One of the main disadvantages of the corporate form is the

A. professional management
B. double taxation of dividends
C. charter
D. corporation must issue stock
64. A disadvantage of the corporate form of business entity is

A. mutual agency for stockholders
B. unlimited liability for stockholders
C. corporations are subject to more governmental regulations
D. the ease of transfer of ownership
65. Under the corporate form of business organization

A. ownership rights are easily transferred.
B. a stockholder is personally liable for the debts of the corporation.
C. stockholders’ acts can bind the corporation even though the stockholders have not been appointed as agents
of the corporation.
D. stockholders wishing to sell their corporation shares must get the approval of other stockholders.
66. Those most responsible for the major policy decisions of a corporation are the
A. management.
B. board of directors.
C. employees.
D. stockholders.
67. Which one of the following would not be considered an advantage of the corporate form of organization?
A. Government regulation
B. Separate legal existence
C. Continuous life
D. Limited liability of stockholders
68. Which of the following is not true of a corporation?

A. It may enter into binding legal contracts in its own name.
B. It may sue and be sued.
C. The acts of its owners bind the corporation.
D. It may buy, own, and sell property.
69. The ability of a corporation to obtain capital is

A. less than a partnership.
B. about the same as a partnership.
C. restricted because of the limited life of the corporation.
D. enhanced because of limited liability and ease of share transferability.
70. Which of the following statements concerning taxation is accurate?

A. Corporations pay federal income taxes but not state income taxes.
B. Corporations pay federal and state income taxes.
C. Only the owners must pay taxes on corporate income.
D. Corporations pay income taxes but their owners do not.
71. The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?
A. Retained Earnings
B. Treasury Stock
C. Organizational Expenses
D. Common Stock
72. Stockholders' equity

A. is usually equal to cash on hand
B. includes paid-in capital and liabilities
C. includes retained earnings and paid-in capital
D. is shown on the income statement
73. The state charter allows a corporation to issue only a certain number of shares of each class of stock. This
amount of stock is called
A. treasury stock
B. issued stock
C. outstanding stock
D. authorized stock
74. Which of the following is not a right possessed by common stockholders of a corporation?
A. the right to vote in the election of the board of directors
B. the right to receive a minimum amount of dividends
C. the right to sell their stock to anyone they choose
D. the right to share in assets upon liquidation
outstanding?
A. 10,000
B. 40,000
C. 30,000
D. 50,000
76. The par value per share of common stock represents

A. the minimum selling price of the stock established by the articles of incorporation.
B. the minimum amount the stockholder will receive when the corporation is liquidated
C. an arbitrary amount established in the articles of incorporation
D. the amount of dividends per share to be received each year
77. A corporation issues 2,500 shares of common stock for $ 45,000. 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 for
A. $25,000
B. $45,000
C. $20,000
D. $ 5,000
78. The excess of issue price over par of common stock is termed a(n)
A. discount
B. income
C. deficit
D. premium
79. The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of
legal fees for organizing the corporation includes a credit to
B. Goodwill
C. Common Stock
D. Cash
80. The price at which a stock can be sold depends upon a number of factors. Which statement below is not
one of those factors?
A. the financial condition, earnings record, and dividend record of the corporation
B. investor expectations of the corporation's earning power
C. how high the par value is
D. general business and economic conditions and prospects
81. The entry to record the issuance of common stock at a price above par includes a debit to
B. Common Stock
C. Cash
D. Paid-In Capital in Excess of Par-Common Stock
82. Merritt Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000
shares of its $5 par common stock. The stock is widely traded and selling for $18 per share. At what amount
should the building be recorded by Merritt Company?
A. $60,000
B. $216,000
C. $210,000
D. $156,000
outstanding?
A. 35,000
B. 70,000
C. 25,000
D. 30,000
84. Par value
A. is the monetary value assigned per share in the corporate charter.
B. represents what a share of stock is worth.
C. represents the original selling price for a share of stock.
D. is established for a share of stock after it is issued.
85. The authorized stock of a corporation

A. must be recorded in a formal accounting entry.
B. only reflects the initial capital needs of the company.
C. is indicated in its by-laws.
D. is indicated in its charter.
86. If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account
A. Common Stock will be credited for $75,000.
B. Paid-in Capital in excess of Par Value will be credited for $5,000.
C. Paid-in Capital in excess of Par Value will be credited for $70,000.
D. Cash will be debited for $70,000.
87. If common stock is issued for an amount greater than par value, the excess should be credited to
A. Retained Earnings.
B. Cash.
C. Legal Capital.
D. Paid-in Capital in Excess of Par Value.
88. The Sneed Corporation issues 10,000 shares of $50 par value preferred stock for cash at $75 per share. The
entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to
A. Preferred Stock for $750,000.
B. Preferred stock for $500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $250,000.
C. Preferred Stock for $500,000 and Retained Earnings for $250,000.
D. Paid-in Capital from Preferred Stock for $750,000.
89. Alma Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is
A. Common Stock $14,000.
B. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000.
D. Common Stock $10,000 and Retained Earnings $4,000.
90. Nexis Corp. issues 1,000 shares of $15 par value common stock at $22 per share. When the transaction is
A. Common Stock $15,000 and Paid-in Capital in Excess of Par Value $7,000.
B. Common Stock $22,000 and Retained Earnings $15,000.
D. Common Stock $22,000.
91. When Bayou Corporation was formed on January 1, 20xx, the corporate charter provided for 100,000 share
of $10 par value common stock. The following transaction was among those engaged in by the corporation
during its first month of operation: The corporation issued 9,000 shares of stock at a price of $23 per share.
The entry to record the above transaction would include a

A. debit to Cash for $90,000
B. credit to Common Stock for $207,000
C. credit to Paid in Capital in Excess of Par for $117,000
D. debit to Common Stock for $90,000
92. On January 1, 20xx, Swenson Corporation had 40,000 shares of $10 par value common stock issued and
outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, 20xx,
Swenson purchased 4,000 shares of treasury stock for $24 per share and later sold the treasury shares for $21
per share on March 1, 20xx.
The journal entry to record the purchase of the treasury shares on February 1, 20xx, would include a
A. credit to Treasury Stock for $96,000.
B. debit to Treasury Stock for $96,000.
C. debit to a loss account for $120,000
D. credit to a gain account for $120,000.
A. $ 60,000
B. $ 20,000
C. $120,000
D. $100,000
A. $80,000
B. $10,000
C. $90,000
D. $100,000
95. The date on which a cash dividend becomes a binding legal obligation is on the
A. declaration date.
B. date of record.
C. payment date.
D. last day of the fiscal year.
96. The cumulative effect of the declaration and payment of a cash dividend on a company’s financial
statements is to
A. decrease total liabilities and stockholders’ equity.
B. increase total expenses and total liabilities.
C. increase total assets and stockholders’ equity.
D. decrease total assets and stockholders’ equity.
97. Which of the following is the appropriate general journal entry to record the declaration of a cash
dividends?
A. Retained earnings
Cash
B. Cash Dividends payable
Cash
C. Paid-in capital
Cash Dividends payable
D. Cash Dividends
Cash Dividends Payable
98. Miriah Inc. has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par
value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock?
A. $50 per share
B. $50,000 in total
C. $10,000 in total
D. $0.50 per share
99. Which of the following is not a prerequisite to paying a cash dividend?
A. formal action by the board of directors
B. market value in excess of par value per share
C. sufficient cash
D. sufficient retained earnings
100. The liability for a dividend is recorded on which of the following dates?
A. the date of record
B. the date of payment
C. the last day of the fiscal year
D. the date of declaration
101. When a stock dividend is declared, which of the following accounts is credited?
A. Common Sock
B. Dividend Payable
C. Stock Dividends Distributable
102. Treasury stock shares are

A. shares held by the U.S. Treasury Department
B. part of the total outstanding shares but not part of the total issued shares of a corporation
C. unissued shares that are held by the treasurer of the corporation
D. issued shares that have been reacquired by a corporation
103. Which statement below is not a reason for a corporation to buy back its own stock.
A. resale to employees
B. bonus to employees
C. for supporting the market price of the stock
D. to increase the shares outstanding
104. How is treasury stock shown on the balance sheet?

A. as an asset
B. as a decrease in stockholders' equity
C. as an increase in stockholders' equity
D. treasury stock is not shown on the balance sheet
105. The excess of sales price of treasury stock over its cost should be credited to
A. Treasury Stock Receivable
B. Premium on Capital Stock
C. Paid-In Capital from Sale of Treasury Stock
D. Income from Sale of Treasury Stock
106. What is the total stockholders' equity based on the following account balances?

Retained Earnings 190,000
A. $670,000
B. $655,000
C. $640,000
D. $565,000
107. Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions
combined
A. income will be increased by $500
B. stockholders' equity will be increased by $3,500
C. stockholders' equity will be increased by $500
D. stockholders' equity will not change
108. Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The
journal entry to record the reissuance would include a credit to
A. Treasury Stock for $8,500
B. Paid-In Capital from Treasury Stock for $8,500
C. Paid-In Capital in Excess of Par/Common for $2,900
D. Paid-In Capital from Treasury Stock for $2,900
109. A 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?
A. $0
B. $5,000
C. $2,500
D. $10,000
110. A corporation purchases 10,000 shares of its own $10 par common stock for $35 per share, recording it at
cost. What will be the effect on total stockholders' equity?
A. increase, $100,000
B. increase, $350,000
C. decrease, $100,000
D. decrease, $350,000
111. In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be
reported?
A. other expense on income statement
B. intangible asset on balance sheet
C. stockholders' equity on balance sheet
D. other income on income statement
112. Which of the following is not classified as paid-in capital on the balance sheet?
A. common stock
B. common stock distributable
C. donated capital
D. treasury stock
113. All of the following are normally found in a corporation's stockholders' equity section except
A. Common Stock
B. Paid-In Capital in Excess of Par
C. Dividends in Arrears
114. Which of the following amounts should be disclosed in the stockholders' equity section of the balance
sheet?
A. the number of shares of common stock outstanding
B. the number of shares of common stock issued
C. the number of shares of common stock authorized
D. all of the above
115. Significant changes in stockholders' equity are reported in

A. income statement
B. retained earnings statement
C. statement of stockholders' equity
D. statement of cash flows
116. Retained earnings
A. is the same as contributed capital
B. cannot have a debit balance
C. changes are summarized in the retained earnings statement
D. is equal to cash on hand
117. Which of the following would appear as a prior-period adjustment?

A. loss resulting from the sale of fixed assets
B. difference between the actual and estimated uncollectible accounts receivable
C. error in the computation of depreciation expense in the preceding year
D. loss from the restructuring of assets
118. A restriction/appropriation of retained earnings

A. decreases total assets
B. increases total retained earnings
C. decreases total retained earnings
D. has no effect on total retained earnings
119. The Dayton Corporation began the current year with a retained earnings balance of $32,000. During the
year, the company corrected an error made in the prior year, which was a failure to record depreciation expense
of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and
declared cash dividends of $7,000. Compute the year end retained earnings balance.
A. $34,000
B. $37,000
C. $41,000
D. $44,000
120. What is the total stockholders' equity based on the following data?

Excess of Issue Price Over Par 375,000
Retained Earnings (deficit) (65,000)
A. $1,070,000
B. $1,005,000
C. $940,000
D. $565,000
121. Treasury stock should be reported in the financial statements of a corporation as a(n)
A. investment.
B. liability.
C. current asset.
D. deduction from stockholders’s equity.
122. The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is
termed a
A. liquidating dividend
B. stock split
C. stock option
D. preferred dividend
stock split, the number of shares outstanding after the split will be
A. 150,000 shares
B. 50,000 shares
C. 100,000 shares
D. 16,666 shares
124. When a corporation completes a 3-for-1 stock split

A. the ownership interest of current stockholders is decreased
B. the market price per share of the stock is decreased
C. the par value per share is decreased
D. b and c
A. $7.00
B. $112.00
C. $37.50
D. $600.00
126. The primary purpose of a stock split is to

A. increase paid-in capital
B. reduce the market price of the stock per share
C. increase the market price of the stock per share
D. increase retained earnings
share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result
of the stock dividend?
A. $3,200
B. $6,400
C. $4,800
D. $8,800
share. The effect of the declaration and issuance of the stock dividend is to
A. decrease retained earnings, increase common stock, and increase paid-in capital
B. increase retained earnings, decrease common stock, and decrease paid-in capital
C. increase retained earnings, decrease common stock, and increase paid-in capital
D. decrease retained earnings, increase common stock, and decrease paid-in capital
share. What is the amount transferred from the Retained Earnings account to Paid-in Capital accounts as a
result of the stock dividend?
A. $12,800
B. $19,200
C. $32,000
D. $48,800
130. Which of the following statements is not true about a 2-for-1 split?
A. Par value per share is reduced to half of what it was before the split.
B. Total contributed capital increases.
C. The market price will probably decrease.
D. A stockholder with ten shares before the split owns twenty shares after the split.
$150. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be
approximately:
A. $25
B. $150
C. $5
D. $30
$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
$120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be:
A. 60,000
B. 10,000
C. 300,000
D. 30,000
134. Earnings per share

A. is the net income per common share
B. must be reported by publicly traded companies
C. helps compare companies of different sizes
D. all of the above
135. Samuels, 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 is
A. $4.00
B. $5.25
C. $6.50
D. $5.00
Year 1: $10,000
Year 2: 45,000
Year 3: 90,000
Determine the dividends per share for preferred and common stock for the first year.
A. $0.50 and $0.10

B. $0.00 and $0.10
C. $0.50 and $0.00
D. $2.00 and $0.00
Year 1: $10,000
Year 2: 45,000
Year 3: 90,000
Determine the dividends per share for preferred and common stock for the second year.
A. $2.25 and $0.00
B. $2.25 and $0.45
C. $0.00 and $0.45
D. $2.00 and $0.45
Year 1: $10,000
Year 2: 45,000
Year 3: 90,000
Determine the dividends per share for preferred and common stock for the third year.
A. $4.50 and $0.25
B. $3.25 and $0.25
C. $4.50 and $0.90
D. $2.00 and $0.25
Year 1: $10,000
Year 2: 45,000
Year 3: 90,000
Determine the dividends in arrears for preferred stock for the second year.
A. $25,000
B. $10,000
C. $0
D. $30,000
140. Match the following stockholders equity concepts to the appropriate answer.
1. creditors cannot pursue stockholder’s personal

assets to satisfy claims corporation 3
publicly held
2. responsible for establishing corporate policies corporation 5
3. a legal entity, separate from the people who create
and operate it bylaws 4
4. rules and procedures for corporate conduct of its privately held
affairs corporation 7
5. a company whose shares can be bought and sold on articles of
a stock exchange incorporation 8
6. earnings of a company distributed to stockholders limited liability 1
7. company whose shares are not bought or sold on a
stock exchange board of directors 2
8. formally creates a corporation dividends 6
141. Match the following stockholders equity concepts to the most appropriate answer.
1. a value that the stock is worth on the stock additional paid in

exchange capital 6
2. a value established for the protection of creditors par value 2
3. the number of shares currently held by stockholders outstanding shares 3
4. the number of sharing originally sold to
stockholders preferred stock 5
5. a class of stock that does not provide voting rights
for shareholders authorized shares 8
6. account used when issue price exceeds par value of
stock issued shares 4
7. a class of stock that provides voting rights for
shareholders common stock 7
8. the maximum number of shares a company can
issue to shareholders market price 1
142. Match the following stockholder’s equity concepts to the best answer.
stock dividends
1. this event creates a liability to company distributable 8
2. Shares of common stock re-acquired by a
company treasury stock 2
3. the date that a share of stock must be owned to
receive current dividend preferred stock 7
4. distribution of a company’s earnings to
stockholders cash dividend 4
5. account used when shares are issued for an amount additional paid in
greater than par value capital 5
6. when dividends are actually distributed to
stockholders declaration date 1
7. entitled to receive dividends first record date 3
8. equity account reflecting shares “owed” to
stockholders payment date 6
143. Match the value to the appropriate account. For the year ended 2012 ABC had the following transactions:
- purchased 1000 shares of previously issued common stock for $15.00 per share
- declared and paid a total dividend of $40,000
Assume that retained earnings had a beginning balance of $75,000.
1. 15,000 Preferred Stock 7

2. 20,000 Additional Paid in Capital - Common Stock 8
3. 60,000 Additional Paid in Capital - Preferred Stock 3
4. 550,000 Common Stock 2
5. 330,000 Retained Earnings 6
6. 235,000 Total Paid in Capital 5
7. $150,000 Total Stockholders Equity 4
8. 100,000 Treasury Stock 1
144. A company had stock outstanding as follows during each of its first three years of operations: 2,500 shares
of $10, $100 par, cumulative preferred stock and 50,000 shares of $10 par common stock. The amounts
distributed as dividends are presented below. Determine the total and per share dividends for each class of
stock for each year by completing the schedule.
Preferred Common
1 $10,000 _________ _________ _________ _________
2 25,000 _________ _________ _________ _________
3 60,000 _________ _________ _________ _________
Preferred Common
1 $10,000 $10,000 $ 4.00 None None
2 25,000 25,000 10.00 None None
3 60,000 40,000 16.00 $20,000 $ .40
145. On April 1, 10,000 shares of $5 par common stock were issued at $22, and on April 7, 5,000 shares of $50
par preferred stock were issued at $104. Journalize the entries for April 1 and 7.
Apr. 1 Cash 220,000

Common Stock 50,000
Paid-In Capital in Excess of Par-
Common Stock 170,000
7 Cash 520,000
Preferred Stock 250,000
146. On May 10, a company issued for cash 1,500 shares of no-par common stock (with a stated value of $2) at
$14, and on May 15, it issued for cash 2,000 shares of $15 par preferred stock at $58.
Journalize the entries for May 10 and 15, assuming that the common stock is to be credited with the stated
value.
May 10 Cash 21,000

Common Stock 3,000
Paid-In Capital in Excess of Stated
Value-Common Stock 18,000
15 Cash 116,000
147. On February 1 of the current year, Motor, Inc. issued 700 shares of $2 par common stock to an attorney in
return for preparing and filing the Articles of Incorporation. The value of the services is $9,600. Journalize
this transaction.
Feb. 1 Organizational Expenses 9,600

Common Stock 1,400
Paid-In Capital in Excess of Par - Common Stock 8,200
148. On April 10, a company acquired land in exchange for 1,000 shares of $20 par common stock with a
current market price of $73. Journalize this transaction.
Apr. 10 Land 73,000

Common Stock 20,000
149. Sabas Company has 20,000 shares of $100 par, 1% non-cumulative preferred stock and 100,000 shares of
$50 par common stock. The following amounts were distributed as dividends:
Year 1: $10,000
Year 2: 15,000
Year 3: 90,000
Year 1 Year 2 Year 3

Amount distributed $10,000 $15,000 $90,000
Preferred dividend (20,000 shares) 10,000 15,000 20,000
Common dividend (100,000 shares) $ 0 $ 0 $70,000
Dividends per share:

Preferred stock $0.50 $0.75 $1.00
Common stock 0 0 $0.70
Year 1: $10,000
Year 2: 45,000
Year 3: 90,000

Common dividend (100,000 shares) $ 0 $ 0 $25,000

Common stock 0 0 $0.25
Current year preferred dividend in arrears $30,000 $25,000 $0
151. Sabas Company has 40,000 shares of $100 par, 1% preferred stock and 100,000 shares of $50 par common
stock. The following amounts were distributed as dividends:
Year 1: $ 50,000
Year 2: 90,000
Year 3: 130,000

Common dividend (100,000 shares) $10,000 $50,000 $90,000

Common stock $0.10 $0.50 $0.90
152. A corporation, which had 18,000 shares of common stock outstanding, declared a 3-for-1 stock split.
(a) What will be the number of shares outstanding after the split?
(b) If the common stock had a market price of $240 per share before the stock split, what would be an approximate market price
per share after the split?
(c) Journalize the entry to record the stock split.
(a) 54,000 shares

(b) $80 per share
(c) no entry
153. 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.
May 1 Cash 300,000

7 Cash 555,000
154. The dates of importance in connection with a cash dividend of $50,000 on a corporation’s common stock
are January 15, February 15, and March 15. Journalize the entries required on each date.
Jan. 15 Cash Dividends 50,000

Cash Dividends Payable 50,000
Feb. 15 No entry required
Mar. 15 Cash Dividends Payable 50,000

Cash 50,000
155. Vincent Corporation has 100,000 share of $100 par common stock outstanding. On June 30, Vincent
Corporation declared a 5% stock dividend to be issued on July 30 to stockholders of record July 15. The
market price of the stock was $132 a share on June 30. Journalize the entries required on June 30, July 15 and
July 30.
June 30 Stock Dividends (100,000 ´ 5% ´ $132) 660,000

Stock Dividends Distributable (5,000 ´ $100) 500,000
Paid-in Capital in Excess of Par—Common Stock 160,000
July 15 No entry required
July 30 Stock Dividends Distributable 500,000

156. On April 2nd a corporation purchased for cash 5,000 shares of its own $10 par common stock at $16 a
share. They sold 3,000 of the treasury shares at $19 a share on June 15th. The remaining 2,000 shares were
sold on November 10th for $12 a share.
(a) Journalize the entries to record the purchase (treasury stock is recorded at cost).
(b) Journalize the entries to record the sale of the stock.
(a) April 2nd
Treasury Stock (5,000 x $16) 80,000

Cash 80,000
(b) June 15th

Cash (3,000 x $19) 57,000
Paid-In Capital from Sale of Treasury Stock(3,000 x [$16 - $19]) 9,000
November 10th
Cash (2,000 x $12) 24,000
Paid-In Capital from Sale of Treasury Stock (2,000 x [$16 - $12]) 8,000
157. On June 5, Belen Corporation reacquired 3,300 shares of its 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.
June 5 Treasur148,500
y Stock
(3,300
´ $45)
Cash 148,500
July 15 Cash 96,000

(2,000 ´
$48)
Treasury 90,000
Stock
(2,000 ´
$45)
Paid-in
Capital 6,000
from
Sale of
Treasury
Stock
[2,000 ´
($48-
$45)]
August 30 Cash 54,600
(1,300 ´
$42)
Paid-in
Capital 3,900
from
Sale of
Treasury
Stock
[1,300 ´
($45-
$42)]
Treasury 58,500
Stock
(1,300 ´
$45)
158. 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.
Common Stock, $50 parommon Stock, $50 par $1,250,000

Paid in Capital from Sale of Treasury Stock 42,000
Treasury Stockeasury Stock 155,000
Stockholde
rs’ Equity
Paid-in
capital
Common
stock, $50 $1,250,000
par
(50,000
shares
authorized,
25,000
issued)
Excess of 800,000 $2,050,000
issue price
over par
From sale of 42,000
treasury
stock
Total paid-in $2,092,000
capital
Retained 4,350,000
earnings
Total $6,442,000
Deduct 155,000
treasury
stock (5,00
0 shares at
cost)
Total $6,287,000
stockholders
’ equity
159. Morocco Inc. reported the following results for the year ending April 30, 2014:

Net income 680,000
Prepare a retained earnings statement for the fiscal year ended April 30, 2014.
Morocco Inc.
Retained Earnings Statement
For the Year Ended April 30, 2014

Net income $680,000
Less dividends declared 300,000
Increase in retained earnings 380,000
Retained earnings, April 30, 2014 $4,130,000
160. Indicate whether the following actions would (+) increase, (-) decrease, or (0) not affect a company's total
assets, liabilities, and stockholders' equity.
Stockholders'
(1) Declaring a cash dividend _______ _______ _______
(2) Paying the cash dividend declared in (1) _______ _______ _______
(3) Declaring a stock dividend _______ _______ _______
dividend declared in (3) _______ _______ _______
Stockholders'
(1) Declaring a cash dividend 0 + -
(2) Paying the cash dividend declared in (1) - - 0
(3) Declaring a stock dividend 0 0 0
dividend declared in (3) 0 0 0
161. Macy Company has 10,000 shares of 2% cumulative preferred stock of $50 par and 25,000 shares of $75
Year 1 $30,000
Year 2 6,000
Year 3 80,000
Required:
Year 1 Year 2 Y
e
ar
3
Amoun $30,000 $6,000 $

t 8
distribu 0,
ted 0
0
0
Preferr 10,000 6,000 1
ed 4,
dividen 0
d 0
(10,00 0
0 *
shares)
Comm $ 20,000 $ 0 $
on 6
dividen 6,
d 0
(25,00 0
0 0
shares)
*($4,0
00 +
$10,00
0)
Divide
nds per
share:
Preferred stock $1.00 $ $1.40
0.
6
0
Common stock $0.80 N $2.64
o
n
e
162. Future Sources, Inc. reported the following results for the year ending July 31, 2012:
Retained earnings, August 1, 2011 $875,000

Net income 260,000
Prepare a retained earnings statement for the fiscal year ended July 31, 2012.
Future Sources Inc.

Retained Earnings Statement
For the Year Ended July 31, 2012
Beginning retained earnings $875,000
Net income $260,000
Less dividends declared 220,000
Increase in retained earnings 40,000
Retained earnings, July 31, 2012 $ 915,000
163. Using the following information, prepare the Stockholders’ Equity section of the balance sheet. Seventy
thousand shares of common stock are authorized and 7,000 shares have been reacquired.
Common Stock, $75 par $4,725,000

Paid-in Capital in Excess of Par 679,000
Stock
holde
rs’
Equit
y
Paid-
in
capita
l:
Com
mon
stock,
$75
par
(70,0
00
share
s
autho
rized
63,00 $4,72
0 5,000
share
s
issue
d and
56,00
0
share
outsta
nding
)
Paid- 679,0 $ 5,404,000
in 00
Capit
al in
Exces
s of
Par
Paid- 25,200
in
Capit
al
from
Sale
of
Treas
ury
Stock
Total paid-in capital $ 5,429,200
Retai 2,032,800
ned
earni
ngs
Total $ 7,462,000
Dedu 600,000
ct
treasu
ry
stock
Total $ 6,862,000
stock
holde
rs’
equit
y
164. 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. Osgood reported no income or loss for the current year.
Required:
(1) Journ
alize
the
entrie
s to
recor
d
a. the
declarati
on of the
dividend
,
capitaliz
ing an
amount
equal to
market
value;
and
b. the
issuance
of the
stock
certificat
es.
(2) Deter
mine
the
follo
wing
amou
nts
befor
e the
stock
divid
end
was
declar
ed:
a. Total
paid-in
capital;
b. Total
retained
earnings
; and
c. Total
stockhol
ders’
equity.
(3) Deter
mine
the
follo
wing
amou
nts
after
the
stock
divid
end
was
declar
ed
and
closin
g
entrie
s
were
recor
ded at
the
end
of the
year:
a. Total
paid-in
capital;
b. Total
retained
earnings
; and
c. Total
stockhol
ders’
equity.
(1) (a) Stock 270,000*
Divid
ends
Stock Dividends Distributable (2,000 ´ $100) 200,000
Paid-In Capital in Excess of Par—
Common Stock 70,000
*[($1
0,000,
000/$
100) ´
$135]
´ 2%
(b) Stock 200,000

Divid
ends
Distri
butabl
e
(2) (a) $12,0

00,00
0
($10,
000,0
00 +
$2,00
0,000
)
(b) $45,0
00,00
0
(c) $57,0
00,00
0
($12,
000,0
00 +
$45,0
00,00
0)
(3) (a) $12,2

70,00
0
($12,
000,0
00 +
$270,
000)
(b) $44,7
30,00
0
($45,
000,0
00 –
$270,
000)
(c) $57,0
00,00
0
($12,
270,0
00 +
$44,7
30,00
0)
165. On March 4, of the current year, Barefoot Bay, Inc. reacquired 5,000 shares of its common stock at $89
per share. On August 7, Barefoot Bay sold 3,500 of the reacquired shares at $100 per share. The remaining
1,500 shares were sold at $88 per share on November 29.
Required:
(1) Journalize the transaction of March 4, August 7, and November 29.

(2) What is the balance in Paid-in Capital from Sale of Treasury Stock on December 31, of the current year?
(3) Why might Barefoot Bay Inc. have purchased the treasury stock?
(1) Mar. 4 Trea 445,000
sury
Stoc
k
Cas 445,000
h
Aug. 7 Cas 350,000

h
Treasury 311,500
Stock
(3,500 ´
$89)
Paid-In 38,500
Capital
from
Sale of
Treasury
Stock
Nov. 29 Cas 132,000

h
Paid 1,500
-In
Capi
tal
from
Sale
of
Trea
sury
Stoc
k
Treasury 133,500
Stock
(1,500 ´
$89)
(2) $37,000
credit
(3) Barefoot Bay

may have
purchased
the stock to
support the
market price
of the stock,
to provide
shares for
resale to
employees,
or for
reissuance to
employees as
a bonus
according to
stock
purchase
agreements.
166. Marcos Company, which had 35,000 shares of common stock outstanding, declared a 4-for-1 stock split.
Required:
(1) What will be the number of shares outstanding after the split?
(2) If the common stock had a market price of $280 per share before the stock split, what would be an approximate
market price per share after the split?
(1) 140,000 shares (35,000 ´ 4)
(2) $70 per share ($280/4)
167. Selected transactions completed by Breezeway Construction during the current fiscal year are as follows:
February 3 Split the common stock 2 for 1 and reduced the par from $40 to $20 per share. After the split there
were 250,000 common shares outstanding.
April 10 Declared semiannual dividends of $1.50 on 18,000 shares of preferred stock and $0.08 on the common
stock to stockholders of record on May 10, payable on June 9.
June 9 Paid the cash dividends.
October 10 Declared semiannual dividends of $1.50 on the preferred stock and $0.04 on the common stock (before
the stock dividend). In addition, a 2% common stock dividend was declared on the common stock
outstanding. The fair market value of the common stock is estimated at $36.
December 9 Paid the cash dividends and issued the certificates for the common stock dividend.
Feb. 3 No entry required. The stockholders ledger would be revised to record the increased number of shares held by each
stockholder.
Apr. 10 Cash 4
Divid 7,
ends 0
0
0
*
C 47,000
a
s
h
D
iv
id
e
n
d
s
P
a
y
a
bl
e
*
[(
1
8,
0
0
0
s
h
ar
e
s
´
$
1.
5
0
)
+
(
2
5
0,
0
0
0
s
h
ar
e
s
´
$
0.
0
8
)]
=
$
2
7,
0
0
0
+
$
2
0,
0
0
0
=
$
4
7,
0
0
0
June 9 Cash 4
Divid 7,
ends 0
Payab 0
le 0
C 47,000
a
s
h
Oct. 10 Cash 3
Divid 7,
ends 0
0
0
*
C 37,000
a
s
h
D
iv
id
e
n
d
s
P
a
y
a
bl
e
*
[(
1
8,
0
0
0
s
h
ar
e
s
´
$
1.
5
0
)
+
(
2
5
0,
0
0
0
s
h
ar
e
s
´
$
0.
0
4
)]
=
$
2
7,
0
0
0
+
$
1
0,
0
0
0
=
$
3
7,
0
0
0
10 Stock 1
Divid 8
ends 0,
0
0
0
*
*
S 100,000
to
c
k
D
iv
id
e
n
d
s
D
is
tr
ib
ut
a
bl
e
(
5,
0
0
0
´
$
2
0
)
P 80,000
ai
d
-
I
n
C
a
pi
ta
l
in
E
x
c
e
ss
o
f
P
ar
—
C
o
m
m
o
n
S
to
c
k
*
*
(
2
5
0,
0
0
0
s
h
ar
e
s
´
2
%
´
$
3
6
)
=
$
1
8
0,
0
0
0
Dec. 9 Cash 3
Divid 7,
ends 0
Payab 0
le 0
C 37,000
a
s
h
9 Stock 1
Divid 0
ends 0,
Distri 0
butabl 0
e 0
C 100,000
o
m
m
o
n
S
to
c
k
168. On February 13, Epperson Company issue for cash 75,000 shares of no-par common stock (with a stated
value of $125) at $140. On September 9, Epperson issued at par 15,000 share of 1%, $60 par preferred stock at
par for cash On November 23, Epperson issued for cash 8,000 shares of 1%, $60 par preferred stock at $70.
Required: Journalize the entries to record the February 13, September 9 and November 23 transactions.
Feb. 13 Cash 10,5

(75,0 00,0
00 00
shares
´
$140)
Com9,375,000
mon
Stoc
k
Paid 1,125,000
-In
Capi
tal
in
Exc
ess
of
Stat
ed
Valu
e
[75,000 shares ´ ($140-125)].
Sept. 9 Cash 900,

000
Pref 900,000
erre
d
Stoc
k
(15,000 shares ´ $60).
Nov. 23 Cash 560,

000
Pref 480,000
erre
d
Stoc
k
Paid 80,000
-In
Capi
tal
in
Exc
ess
of
Par
[8,000 shares ´ ($70-60)].
169. Solar Company has 600,000 shares of $75 par common stock outstanding. On February 13, Solar declared
a 3% stock dividend to be issued on April 30 to stockholders of record on March 14. The market price of the
stock was $90 per share on February 13.
Required: Journalize the entries required on February 13, March 14, and April 30.
Feb. 13 Stoc 1,620,000

k
Divi
dend
s
(600
,000
´ 3%
´
$90)
Stock Dividends Distributable (18,000 ´ $75) 1,350,000
Paid-In Capital in Excess of Par—
Common Stock ($1,620,000 – $1,350,000) 270,000
Mar. 14 No
entr
y
requ
ired.
Apr. 30 Stoc 1,350,000

k
Divi
dend
s
Dist
ribut
able
Common Stock 1,350,000
170. On February 1, Marine Company reacquired 7,500 shares of its common stock at $30 per share. On
March 15, Marine sold 4,500 of the reacquired shares at $34 per share. On June 2, Marine sold the remaining
shares at $28 per share.
Required: Journalize the transaction of February 1, March 15, and June 2.
Feb. 1 Treas 225,000

ury
Stock
(7,50
0´
$30)
Cash 225,000
Mar. 15 Cash 153,000

(4,50
0´
$34)
Treasury Stock (4,500 ´ $30) 135,000
Paid-In Capital from Sale of
Treasury Stock [4,500 ´ ($34 – $30)] 18,000
June 2 Cash 84,000

(3,00
0´
$28)
Paid-
In
Capit
al
from
Sale
of
Treas 6,000
ury
Stock
[3,00
0´
($30
–
$28)]
Treasury Stock (3,000 ´ $30) 90,000
171. The following transactions took place for the XYZ Corporation;
a. November 12th - Declared a total cash dividend of $45,000 for stockholders of record November 20th
payable on December 1st. Record the journal entry, if necessary, for the following events;
Nov. 12 -
Nov. 20 -
Dec. 1 -
b. Briefly describe the significance of November 20th.
a. Nov. 12 Cash Dividends 45,000

Nov. 20 - no journal entry
Dec. 1 Cash Dividends Payable 45,000

Cash 45,000
b. The stock must be owned on or before November 20 in order to receive this dividend
172. A company had the following stockholders equity information available at year end.
- declared and paid the preferred stock dividend
Calculate the earnings per share for the current year.
($200,000 - $15,000)/10,000 common shares = $18.50 EPS

173. On January 1, 2011 a company had the following data:
- issued 3,000 shares of $50 par value 6% cumulative preferred stock for $70 per share
The company had the following dividend information available:
2011 - No dividend paid

2014 - paid a $32,000 total dividend
Using the following format, fill in the correct values for each year;
2011 2012 2013 2014

Common stock dividend
Preferred stock dividend
Dividends in arrears
2011 2012 2013 2014

Common stock dividend` None None None $15,000
Preferred stock dividend None $2,000 $17,000 $17,000
Dividends in arrears $9,000 $16,000 $8,000 None
174. A corporation was organized on January 1 of the current year, with an authorization of 20,000 shares of $4
preferred stock, $12 par, and 100,000 shares of $3 par common stock.
The following selected transactions were completed during the first year of operations:
Jan. 3 Issued 15,000 shares of common stock at $23 per share for cash.
31 Issued 200 shares of common stock to an attorney in payment of legal fees for organizing the corporation. The value of
the stock at the time of payment was $25 per share.
Feb. 24 Issued 20,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $65,000
$120,000, and $45,000 respectively.
Mar. 15 Issued 2,000 shares of preferred stock at $56 for cash.

Jan. 3 Cash 345,000

Common Stock 45,000
31 Organizational Expense 5,000

Common Stock 600
Feb. 24 Land 65,000

Buildings 120,000
Equipment 45,000
Common Stock 60,000
Paid-In Capital in Excess of Par-Common Stock 170,000
Mar. 15 Cash 112,000

Paid-In Capital in Excess of Par-Preferred Stock 88,000
(b) Issued 1,400 shares of no-par common stock in exchange for equipment with a fair market price of $24,000.
(d) Sold 100 shares of treasury stock purchased in (c) at $29.
(a)
Cash 54,000
Common Stock ($15 par) 15,000
(b)
Equipment 24,000
Common Stock (no-par) 24,000
(c)
Cash 2,600
(d)
Cash 2,900
Paid-In Capital from Sale of Treasury Stock 300
176. On April 10, Maranda Corporation issued for cash 11,000 shares of no-par common stock at $25. On May
5, Maranda issued at par 1,000 shares of 4%, $50 par preferred stock for cash. On May 25, Maranda issued for
cash 15,000 shares of 4%, $50 par preferred stock at $55.
Journalize the entries to record the April 10, May 5, and May 25 transactions.
April 10 Cash 275,000

(11,000 ´ $25)
May 5 Cash 50,000

(1,000 ´ $50)
May 25 Cash 825,000

Paid-in Capital in Excess of Par [15,000 ´ ($55 - 50)] 75,000
(a)
Cash 56,000
Common Stock 10,000
(b)
Equipment 21,000
Common Stock 14,000
Paid-in Capital - Common Stock 7,000
(c)
Cash 2,500
(d)
Cash 3,000
(a)
Cash 59,000
Common Stock 10,000
(b)
Equipment 60,000
Common Stock 14,000
Paid-in Capital in excess of Par - Common Stock 46,000
(c)
Cash 3,200
(d)
Cash 4,200
Paid-In Capital from Sale of Treasury Stock 1,000
179. Wonder Sales is authorized to issue 100,000 shares of $100 par, 2% preferred stock and 1,000,000 shares
of $10 par common stock.
(a) On January 2nd, Wonder Sales issues 5,000 shares of preferred stock for $110 per share and 65,000 shares
of common stock at $10 per share. Journalize this issuance.
(b) On January 25th, Wonder Sales issued 250 shares of preferred stock to a Morton Law Firm for settlement of
an invoice for incorporation services. The invoice was for $36,000. Journalize this issuance.
(c) On January 31st, Wonder Sales issues 500 shares of common stock to Setup Inc. for fixtures. The fixtures
have a fair market value of $8,500. Journalize this issuance.
(a) Jan 2nd Cash 1,200,000

Preferre 5
d Stock 0
0,
0
0
0
Paid-in 5
Capital 0,
in 0
Excess 0
of Par - 0
P/S
Commo 6
n Stock 5
0,
0
0
0
(b) Jan 25th Organiz 36,000

ational
Expense
Preferre 2
d Stock 5,
0
0
0
Paid-in 1
Capital 1,
in 0
Excess 0
of Par - 0
P/S
(c) Jan 31st Fixtures 8,500

Commo 5,
n Stock 0
0
0
Paid-in 3,
Capital 5
in 0
Excess 0
of Par -
C/S
180. Carmen Company a publicly traded company with preferred and common stock issued. As of January 1st,
it had 50,000 shares of $100 par, 2% preferred stock outstanding and 250,000 shares of $10 par common stock
outstanding.
(a) On January 31st, the Board of Directors issues a requirement to purchase 5,000 shares of its common stock
at market price. The shares are purchased at a market price of $22 per share. Journalize the purchase utilizing
the cost concept.
(b) On March 15th, Carmen declares a dividend on preferred stock of $2.75 per share. The date of record is
March 25th and the date of payment is March 31st. Journalize these events.
(c) On December 1st, Carmen declares a cash dividend on common stock of $0.12 per share. The date of record
is December 15th and the date of payment is December 21st. Journalize these events.
(d) On December 27th the board orders that 2,500 shares of treasury stock be sold. The sale price is $25 per
share. Journalize this event.
(a) Jan 31st Treasury Stock - C/S 110,000

Cash 110,000
(b) Mar 15th Cash Dividends - P/S 137,500

Mar 25th - date of record - no journal entry - “ownership day”
Mar 31st Cash Dividends Payable 137,500

Cash 137,500
(c) Dec 1st Cash Dividends - C/S 29,400

Note: While there are 250,000 shares of common stock issued, only 245,000 are outstanding due to the 5,000
shares of C/S held in treasury.
Dec 15th - date of record - no journal entry - “ownership day”
Dec 21st Cash Dividends Payable 29,400

Cash 29,400
(d) Dec 27th Cash 62,500

Treasury Stock - C/S 55,000 (2,500 ´ $22)
Paid-in Capital - T/S 7,500 (2,500 ´ $3)
following:
(b) Sold 500 shares of treasury stock at $15.
(a)

Cash 12,000
(b)
Cash 7,500
Paid-In Capital from Sale of Treasury Stock [500 sh. ´ ($15 -12)] 1,500
Treasury Stock (500 sh. ´ $12) 6,000
(c)
Equipment 75,000
Cash 25,000
Common Stock 40,000
(d)
Cash 5,500
following:
(b) Sold 1,000 shares of treasury stock at $19.
(a)

Cash 24,000
(b)
Cash 19,000
Paid-In Capital from Sale of Treasury Stock 3,000
(c)
Equipment 80,000
Cash 25,000
Common Stock 40,000
(d)
Cash 7,000
183. Journalize the following selected transactions completed during the current fiscal year:
Jan. 3 The board of directors declared a stock split which reduced the par of common shares from $100 to $20. This action increased
22 Declared a dividend of $1.75 per share on the outstanding shares of common stock.
Feb. 8 Paid the dividend declared on January 22.
Sep. 1 Declared a 5% stock dividend on the common stock outstanding (the fair market value of the stock to be issued is $30).
Oct. 1 Issued the certificates for the common stock dividend declared on September 1.
Jan. 3 No entry required
22 Cash Dividends 700,000

Feb. 8 Cash Dividends Payable 700,000

Cash 700,000
Sep. 1 Stock Dividends 600,000

Stock Dividends Distributable 400,000
Paid-In Capital in Excess of
Par-Common Stock 200,000
Oct. 1 Stock Dividends Distributable 400,000

184. Prepare entries to record the following selected transactions completed during the current fiscal year:
Feb. 1 The board of directors declared a stock split which reduced the par of common shares from $100 to $20. This action increased
11 Purchased 25,000 shares of own stock at $44, recording the treasury stock at cost.
May 1 Declared a dividend of $2.50 per share on the outstanding shares of common stock.
15 Paid the dividend declared on May 1.
Oct. 19 Declared a 2% stock dividend on the common stock outstanding (the fair market value of the stock to be issued is $55).
Nov. 12 Issued the certificates for the common stock dividend declared on October 19.
Feb. 1 No entry required
11 Treasury Stock 1,100,000

Cash 1,100,000
May 1 Cash Dividends 1,187,500

Cash Dividends Payable 1,187,500
15 Cash Dividends Payable 1,187,500

Cash 1,187,500
Oct. 19 Stock Dividends 522,500

Stock Dividends Distributable 190,000
Paid-In Capital in Excess of
Par-Common Stock 332,500
Nov. 12 Stock Dividends Distributable 190,000

185. At December 31st, the Jeter Company had the following ending balances;
Retained Earnings - $100,000

Preferred Stock ($100 par, 7% cumulative, 10,000 authorized, 5,000 issued and outstanding) - 500,000
Treasury stock - $35,000
Additional paid in capital - common stock - 400,000
Additional paid in capital - preferred stock - 50,000
Common stock ($5.00 par value, 100,000 shares authorized, 60,000 issued) - 300,000
Prepare the stockholders equity section of the balance sheet in good form with all of the required disclosures. .
Stockholder’s Equity
Preferred stock - $100 par, 7% cumulative, 10,000 authorized, 5,000 issued $500,000
Common stock - $5.00 par, 100,000 authorized, 60,000 issued 300,000
Additional paid in capital -common 400,000
Total paid in capital $1,250,000
Treasury stock (35,000)
Total Stockholders Equity $ 1,315,000
186. The Torre Company has the following balances in stockholders equity on December 31st.
Common Stock - $5.00 par, 60,000 issued $300,000

Additional paid in capital - common 600,000
Preferred stock - $100 par, 5,000 issued 500,000
Treasury stock (cost - $12.00 per share) 60,000
Answer the following questions:
1. How many shares of treasury stock are owned?
2. What was the average market price per share at which common stock was issued?
3. What was the average market price per share at which preferred stock was issued?
4. What is the total value of the Paid in Capital portion of stockholders equity?
5. What is the total value of stockholders equity?
6. How many shares of common stock are outstanding?
7. If net income for the year was $75,000 and a preferred stock dividend of $20,000 was paid,
what was the beginning value of retained earnings? How much is earnings per share for
the year?
1. 5,000 shares ($60,000 / $12)
2. $15.00 per share ($900,000 / 60,000)
3. $120.00 per share ($600,000 / 5,000)
4. $1,500,000 paid in capital ($300,000 + $600,000 + $500,000 + $100,000)
5. $1,640,000 total stockholders equity ($1,500,000 + $200,000 - $60,000)
6. 55,000 shares of common stock outstanding (60,000 - 5,000 shares of treasury stock)
7. $145,000 beginning retained earnings ($200,000 + $20,000 - $75,000)

($75,000 - $20,000) / 55,000 = $1.00 earnings per share

Accounting 25th Edition Warren Test Bank Download

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Accounting 25th Edition Warren Test Bank Download

Uploaded by

Copyright:

Available Formats

Accounting 25th Edition Warren

Full link download at:

Test Bank: https://testbankpack.com/p/test-bank-for-accounting-25th-edition-

Solution Manual: https://testbankpack.com/p/solution-manual-for-accounting-

Chapter 13--Corporations: Organization, Stock Transactions,

8. Organizational expenses are classified as intangible assets on the balance sheet.

18. The main source of paid-in-capital is from issuing stock.

34. Cash dividends are normally paid on shares of treasury stock.

37. Cash dividends become a liability to a corporation on the date of record.

61. Which of the following is not characteristic of a corporation?

62. Characteristics of a corporation include

63. One of the main disadvantages of the corporate form is the

65. Under the corporate form of business organization

68. Which of the following is not true of a corporation?

69. The ability of a corporation to obtain capital is

72. Stockholders' equity

84. Par value

85. The authorized stock of a corporation

The entry to record the above transaction would include a

99. Which of the following is not a prerequisite to paying a cash dividend?

102. Treasury stock shares are

Common Stock $375,000

116. Retained earnings

117. Which of the following would appear as a prior-period adjustment?

118. A restriction/appropriation of retained earnings

Common Stock $630,000

124. When a corporation completes a 3-for-1 stock split

134. Earnings per share

A. $0.50 and $0.10

1. creditors cannot pursue stockholder’s personal

1. a value that the stock is worth on the stock additional paid in

Assume that retained earnings had a beginning balance of $75,000.

1. 15,000 Preferred Stock ____

Journalize the transactions of June 5, July 15, and August 30.

Common Stock, $50 parommon Stock, $50 par $1,250,000

Retained earnings, May 1, 2013 $3,750,000

Retained earnings, August 1, 2011 $875,000

Common Stock, $75 par $4,725,000

(1) Journalize the transaction of March 4, August 7, and November 29.

Required: Journalize the transactions.

Required: Journalize the transaction of February 1, March 15, and June 2.

b. Briefly describe the significance of November 20th.

Calculate the earnings per share for the current year.

173. On January 1, 2011 a company had the following data:

The company had the following dividend information available:

2011 - No dividend paid

2011 2012 2013 2014

Mar. 15 Issued 2,000 shares of preferred stock at $56 for cash.

Required: Journalize the transactions.

175. Prepare entries to record the following:

177. Prepare entries to record the following:

178. Prepare entries to record the following:

Feb. 8 Paid the dividend declared on January 22.

15 Paid the dividend declared on May 1.

Retained Earnings - $100,000

Common Stock - $5.00 par, 60,000 issued $300,000

Answer the following questions:

1. How many shares of treasury stock are owned?

5. What is the total value of stockholders equity?

6. How many shares of common stock are outstanding?

18. The main source of paid-in-capital is from issuing stock.

34. Cash dividends are normally paid on shares of treasury stock.

37. Cash dividends become a liability to a corporation on the date of record.

62. Characteristics of a corporation include