Question 1

Carson Packaging Corporation began business in 2015 by issuing 30,000 shares of $3 par common stock for $8 per share and 12,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $12. On its December 31, 2015 balance sheet, Carson Packaging would report

Accepted Answer

A)  Common Stock of $360,000.
B)  Common Stock of $90,000.
C)  Common Stock of $240,000.
D)  Paid-In Capital of $90,000.E) None of the above
F) All of the above

Question 2

The return on common stockholders' equity is computed by dividing net income available to common stockholders by

Accepted Answer

A)  ending total stockholders' equity.
B)  ending common stockholders' equity.
C)  average total stockholders' equity.
D)  average common stockholders' equity.E) A) and D)
F) None of the above

Question 3

On January 1, Soft Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 10% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The entry to record the transaction of June 17 would include a

Accepted Answer

A)  debit to Stock Dividends for $120,000.
B)  credit to Cash for $120,000.
C)  credit to Common Stock Dividends Distributable for $120,000.
D)  credit to Common Stock Dividends Distributable for $40,000.E) None of the above
F) A) and B)

Question 4

The person responsible for maintaining the company's cash position is the

Accepted Answer

A)  controller.
B)  treasurer.
C)  vice-president.
D)  president.E) B) and D)
F) B) and C)

Question 5

The ability of a corporation to obtain capital is

Accepted Answer

A)  enhanced because of limited liability and ease of share transferability.
B)  less than a partnership.
C)  restricted because of the limited life of the corporation.
D)  about the same as a partnership.E) C) and D)
F) A) and D)

Question 6

Bacon Corporation began business by issuing 180,000 shares of $5 par value common stock for $25 per share. During its first year, the corporation sustained a net loss of $30,000. The year-end balance sheet would show

Accepted Answer

A)  Common stock of $900,000.
B)  Common stock of $4,500,000.
C)  Total paid-in capital of $4,470,000.
D)  Total paid-in capital of $930,000.E) A) and B)
F) A) and C)

Question 7

Treasury stock purchased for $25 per share that is reissued at $20 per share, results in a Loss on Sale of Treasury Stock being recognized on the income statement.

Accepted Answer

A) True 
 B)False

Question 8

Under the corporate form of business organization

Accepted Answer

A)  a stockholder is personally liable for the debts of the corporation.
B)  stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation.
C)  the corporation's life is stipulated in its charter.
D)  stockholders wishing to sell their corporation shares must get the approval of other stockholders.E) B) and C)
F) None of the above

Question 9

Cork Inc. declared a $160,000 cash dividend. It currently has 6,000 shares of 6%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Cork distribute to the common stockholders?

Accepted Answer

A)  $88,000.
B)  $72,000.
C)  $124,000.
D)  None of these answers are correct.E) B) and C)
F) A) and D)

Question 10

A corporation has the following account balances: Common stock, $1 par value, $60,000; Paid-in Capital in Excess of Par, $1,300,000. Based on this information, the

Accepted Answer

A)  legal capital is $1,360,000.
B)  number of shares issued are 60,000.
C)  number of shares outstanding are 1,360,000.
D)  average price per share issued is $22.50.E) B) and C)
F) A) and D)

Question 11

New Corp. issues 2,000 shares of $10 par value common stock at $16 per share. When the transaction is recorded, credits are made to

Accepted Answer

A)  Common Stock $20,000 and Paid-in Capital in Excess of Stated Value $12,000.
B)  Common Stock $32,000.
C)  Common Stock $20,000 and Paid-in Capital in Excess of Par $12,000.
D)  Common Stock $20,000 and Retained Earnings $12,000.E) None of the above
F) B) and C)

Question 12

Barr, Inc. reports $4,000,000 of common stock, and $6,000,000 of additional paid-in capital on its balance sheet. The number of common shares issued and outstanding is 500,000 shares. The book value per share is

Accepted Answer

A)  $20.
B)  $12.
C)  $8.
D)  not determinable.E) B) and C)
F) A) and D) D

Question 13

Car and Auto Sisters had retained earnings of $18,000 on the balance sheet but disclosed in the footnotes that $3,000 of retained earnings was restricted for plant expansion and $1,000 was restricted for bond repayments. Cash of $2,000 had been set aside for the plant expansion. How much of retained earnings is available for dividends?

Accepted Answer

A)  $14,000
B)  $15,000
C)  $18,000
D)  $12,000E) A) and D)
F) A) and C)

Question 14

A company would not acquire treasury stock

Accepted Answer

A)  in order to reissue shares to officers.
B)  as an asset investment.
C)  in order to increase trading of the company's stock.
D)  to have additional shares available to use in acquisitions of other companies.E) A) and B)
F) None of the above B

Question 15

The declaration of a stock dividend will

Accepted Answer

A)  increase paid-in capital.
B)  change the total of stockholders' equity.
C)  increase total liabilities.
D)  increase total assets.E) B) and D)
F) A) and C)

Question 16

A typical organization chart showing delegation of authority would show

Accepted Answer

A)  stockholders delegating to the board of directors.
B)  the board of directors delegating to stockholders.
C)  the chief executive officer delegating to the board of directors.
D)  the controller delegating to the chief executive officer.E) A) and D)
F) B) and D)

Question 17

Information that is not generally reported for each class of stock on the balance sheet is

Accepted Answer

A)  the market value.
B)  the par value.
C)  shares authorized.
D)  shares issued.E) None of the above
F) All of the above

Question 18

Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $80 per share. The entry to record the transaction will consist of a debit to Cash for $800,000 and a credit or credits to

Accepted Answer

A)  Preferred Stock for $800,000.
B)  Preferred Stock for $500,000 and Paid-in Capital in Excess of Par-Preferred Stock for $300,000.
C)  Preferred Stock for $300,000 and Paid-in Capital from Preferred Stock for $500,000.
D)  Paid-in Capital from Preferred Stock for $800,000.E) A) and B)
F) None of the above

Question 19

A corporation purchases 30,000 shares of its own $15 par common stock for $30 per share, recording it at cost. What will be the effect on total stockholders' equity?

Accepted Answer

A)  Increase by $450,000
B)  Decrease by $900,000
C)  Increase by $900,000
D)  Decrease by $450,000E) None of the above
F) A) and B) B

Question 20

Under the cost method, Treasury Stock is debited at the price paid to reacquire the shares, and the same amount is credited to Treasury Stock when the shares are sold.

Accepted Answer

A) True 
 B)False

Exam 11: Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Correct Answer
verified

The return on common stockholders' equity is computed by dividing net income available to common stockholders by

Correct Answer
verified

On January 1, Soft Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 10% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The entry to record the transaction of June 17 would include a

Correct Answer
verified

The person responsible for maintaining the company's cash position is the

Correct Answer
verified

The ability of a corporation to obtain capital is

Correct Answer
verified

Bacon Corporation began business by issuing 180,000 shares of $5 par value common stock for $25 per share. During its first year, the corporation sustained a net loss of $30,000. The year-end balance sheet would show

Correct Answer
verified

Treasury stock purchased for $25 per share that is reissued at $20 per share, results in a Loss on Sale of Treasury Stock being recognized on the income statement.

Correct Answer
verified

Under the corporate form of business organization

Correct Answer
verified

Cork Inc. declared a $160,000 cash dividend. It currently has 6,000 shares of 6%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Cork distribute to the common stockholders?

Correct Answer
verified

A corporation has the following account balances: Common stock, $1 par value, $60,000; Paid-in Capital in Excess of Par, $1,300,000. Based on this information, the

Correct Answer
verified

New Corp. issues 2,000 shares of $10 par value common stock at $16 per share. When the transaction is recorded, credits are made to

Correct Answer
verified

Barr, Inc. reports $4,000,000 of common stock, and $6,000,000 of additional paid-in capital on its balance sheet. The number of common shares issued and outstanding is 500,000 shares. The book value per share is

Correct Answer
verified
D

Correct Answer
verified

A company would not acquire treasury stock

Correct Answer
verified
B

The declaration of a stock dividend will

Correct Answer
verified

A typical organization chart showing delegation of authority would show

Correct Answer
verified

Information that is not generally reported for each class of stock on the balance sheet is

Correct Answer
verified

Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $80 per share. The entry to record the transaction will consist of a debit to Cash for $800,000 and a credit or credits to

Correct Answer
verified

A corporation purchases 30,000 shares of its own $15 par common stock for $30 per share, recording it at cost. What will be the effect on total stockholders' equity?

Correct Answer
verified
B

Under the cost method, Treasury Stock is debited at the price paid to reacquire the shares, and the same amount is credited to Treasury Stock when the shares are sold.

Correct Answer
verified

Exam 11: Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Correct AnswerverifiedShow Answer

The return on common stockholders' equity is computed by dividing net income available to common stockholders by

Correct AnswerverifiedShow Answer

On January 1, Soft Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 10% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The entry to record the transaction of June 17 would include a

Correct AnswerverifiedShow Answer

The person responsible for maintaining the company's cash position is the

Correct AnswerverifiedShow Answer

The ability of a corporation to obtain capital is

Correct AnswerverifiedShow Answer

Bacon Corporation began business by issuing 180,000 shares of $5 par value common stock for $25 per share. During its first year, the corporation sustained a net loss of $30,000. The year-end balance sheet would show

Correct AnswerverifiedShow Answer

Treasury stock purchased for $25 per share that is reissued at $20 per share, results in a Loss on Sale of Treasury Stock being recognized on the income statement.

Correct AnswerverifiedShow Answer

Under the corporate form of business organization

Correct AnswerverifiedShow Answer

Cork Inc. declared a $160,000 cash dividend. It currently has 6,000 shares of 6%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Cork distribute to the common stockholders?

Correct AnswerverifiedShow Answer

A corporation has the following account balances: Common stock, $1 par value, $60,000; Paid-in Capital in Excess of Par, $1,300,000. Based on this information, the

Correct AnswerverifiedShow Answer

New Corp. issues 2,000 shares of $10 par value common stock at $16 per share. When the transaction is recorded, credits are made to

Correct AnswerverifiedShow Answer

Barr, Inc. reports $4,000,000 of common stock, and $6,000,000 of additional paid-in capital on its balance sheet. The number of common shares issued and outstanding is 500,000 shares. The book value per share is

Correct AnswerverifiedD

Correct AnswerverifiedShow Answer

A company would not acquire treasury stock

Correct AnswerverifiedB

The declaration of a stock dividend will

Correct AnswerverifiedShow Answer

A typical organization chart showing delegation of authority would show

Correct AnswerverifiedShow Answer

Information that is not generally reported for each class of stock on the balance sheet is

Correct AnswerverifiedShow Answer

Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $80 per share. The entry to record the transaction will consist of a debit to Cash for $800,000 and a credit or credits to

Correct AnswerverifiedShow Answer

A corporation purchases 30,000 shares of its own $15 par common stock for $30 per share, recording it at cost. What will be the effect on total stockholders' equity?

Correct AnswerverifiedB

Under the cost method, Treasury Stock is debited at the price paid to reacquire the shares, and the same amount is credited to Treasury Stock when the shares are sold.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified