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Exam 11: Proprietorships,partnerships,and Corporations

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Question 51

True/False

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The stock market crash in 1929 led to the beginning of extensive regulation of corporations.

A) True
B) False

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Question 52

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Which of the following is not normally a preference given to the holders of preferred stock?

A) The right to receive a specified amount of dividends prior any being paid to common stockholders.
B) The right to vote before the common stockholders at the corporation's annual meeting.
C) The right to receive preference over common stockholders as to the distribution of assets during a liquidation process.
D) All of these are preferences given to preferred stock.

E) A) and D)
F) A) and C)

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Question 53

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What is treasury stock?

Indicate whether each of the following statements about stockholders' equity is true or false. _____ a)The balance in the treasury stock account increases total stockholders' equity. _____ b)A company may acquire treasury stock in an effort to increase the market price of its stock. _____ c)The declaration and distribution of a stock dividend reduces retained earnings. _____ d)A 2-for-1 stock split probably will double the monetary value of each investor's holdings on the date the split takes effect. _____ e)If treasury stock that had been acquired by a company for $50 per share is resold for $40 per share,total assets and stockholders' equity will decrease.

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.Use only one letter for each element.You do not need to enter amounts. -Wheaton Company reissued 100 shares of treasury stock.The treasury stock had been purchased by Wheaton at $18 per share.The shares were reissued at a price of $20 per share.

A corporation is a legal entity created by the authority of a state government,separate and distinct from its owners.

Turner Corporation has 150,000 shares of $12 par value common stock issued and outstanding.If Turner Corporation issued a 3-for-1 stock split,what dollar amount would be shown for common stock on the balance sheet after the stock split?

Which answer would represent the financial statement presentation of stockholders' equity after the following transactions? 1)Issued 200 shares of $20 par value common stock for $50 a share.Five hundred shares are authorized. 2)Purchased 75 shares of treasury stock at $44 a share.

With respect to the current ratio,the declaration of a cash dividend will:

The declaration and issuance of a stock dividend will

Which form of business organization is established as a legal entity separate from its owners?

Which of the following is a negative or contra stockholders' equity account?

The corporate charter of Pinkston Corporation authorizes the issuance of 25,000 shares of 5% cumulative,preferred stock,$20 par,and 200,000 shares of $10 par common stock.At the end of the current year,the titles and balances of stockholders' equity accounts are as follows: Pinkston declared dividends of $120,000 for the current year. Required: a)What is the amount of the annual dividend per share for preferred stock? b)If there are two years of preferred dividends in arrears at the beginning of the current year,what total amount of dividends will be paid to the preferred shareholder? c)What total amount will be paid to the common shareholder if there are two years of preferred dividends in arrears at the beginning of the year? d)Prepare the entry to record the declaration of the dividend.

Seymore Corp.has the following number of shares of stock outstanding: Seymore will distribute $80,000 to the two classes of stockholders this year.Not counting the current year,the preferred stock dividends are one year in arrears.Indicate whether each of the following statements is true or false. _____ a)Preferred stockholders will receive $16,000 of cash dividends in the current year. _____ b)After all required preferred dividends are paid,preferred and common stockholders will share the remaining dividend. _____ c)Common stockholders will receive $48,000 of cash dividend in the current year. _____ d)The amount of common dividends per share that stockholders will receive in the current year is $6.40. _____ e)The amount of dividends in arrears is zero after the $80,000 of dividends have been paid.

Use the following to answer questions Gilligan Corporation was established on February 15,2014.Gilligan is authorized to issue 500,000 shares of $6.00 par value common stock.As of December 2016,Gilligan's stockholders' equity accounts report the following balances: At the end of 2016,Gilligan decides to issue a 5% stock dividend. At the time of issue,the market price of the stock was $22 per share. -Determine the dollar value of the stock dividend issued by Gilligan Corporation.

Wheeler Corporation was authorized to issue 100,000 shares of $6 par common stock.During 2016 Wheeler issued 20,000 shares at a market price of $9 per share.On December 1,2016 Wheeler declared a cash dividend of $1.25 per share payable on December 30 to stockholders of record as of December 15. Required: a)Prepare the journal entry for the issuance of the 20,000 shares of stock.Assume an issue date of June 30,2016. b)Prepare the journal entries necessary on the dividend: (1)declaration date. (2)date of record. (3)payment date.

Which type of stock,common or preferred,must all corporations have?

A corporation might buy some of its own stock to help keep the market price from falling.

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.Use only one letter for each element.You do not need to enter amounts. -Moreno Company appropriated $12,000,000 of retained earnings for the purpose of building a new office building.

Garber Corporation had 40,000 shares of $10 par common stock outstanding on January 1,2016.On June 1,2016 Garber purchased 5,000 shares of its own stock on the open market for $22 per share and held it as treasury stock.On October 1,2016 Garber declared and issued a 10% stock dividend.The market value of Garber's stock was $24 per share on October 1.Garber's board of directors declared and paid a cash dividend of $57,750 on December 15,2016. a)Prepare the journal entry for the treasury stock purchase. b)Prepare the journal entry for the stock dividend. c)Prepare the journal entry for the cash dividend. d)What was the per-share cash dividend paid on December 15?