FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 11: Corporations: Organization, Stock Transactions

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 91

Essay

Review LaterAdd Note

Review Later

Identify at least six characteristics of the corporate form of business organization. Contrast each one with the partnership form of organization 1. Is Mr. Carlson's suggestion ethical? Explain. 2. Is it ethical to discontinue the cash dividend? Explain.

Correct Answer

verified

1. There is no definite answer as to whe...

View Answer

Show Answer

Question 92

Multiple Choice

Review LaterAdd Note

Review Later

If the board of directors authorizes a $100,000 restriction of retained earnings for a future plant expansion, the effect of this action is to

A) decrease total assets and total stockholders' equity.
B) increase stockholders' equity and decrease total liabilities.
C) decrease total retained earnings and increase total liabilities.
D) reduce the amount of retained earnings available for dividend declarations.

E) A) and B)
F) A) and C)

Correct Answer

verified

Show Answer

Question 93

True/False

Review LaterAdd Note

A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

On May 1, Howard Corporation purchased 2,000 shares of its $10 par value common stock at a cash price of $15/share. On July 15, 900 shares of the treasury stock were sold for cash at $17/share. Instructions Journalize the two transactions.

Stockholders generally have the right to share in corporate _______________ and in ______________ upon liquidation.

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

Preferred stock has contractual preference over common stock in certain areas.

A stockholders' equity statement shows

Darling Corporation issued 200,000 shares of $20 par value, 5% preferred stock on January 1, 2016, for $4,500,000. In December 2018, Darling declared its first dividend of $800,000. Instructions (a) Prepare Darling's journal entry to record the issuance of the preferred stock. (b) If the preferred stock is not cumulative, how much of the $800,000 would be paid to common stockholders? (c) If the preferred stock is cumulative, how much of the $800,000 would be paid to common stockholders?

The _______________ feature of preferred stock gives the preferred stockholders the right to receive current-year dividends and unpaid prior-year dividends before common stockholders receive any dividends.

Stock dividends and stock splits have the following effects on retained earnings:

If a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends received from that corporation.

Rex Company reported retained earnings at December 31, 2017, of $420,000. Reese had 180,000 shares of common stock outstanding throughout 2018. The following transactions occurred during 2018. 1. Net income was $295,000. 2. A cash dividend of $0.50 per share was declared and paid. 3. A 5% stock dividend was declared and distributed when the market price per share was $15 per share. Instructions Prepare a retained earnings statement for 2018.

If no-par stock is issued without a stated value, then

Dillon Corporation splits its common stock 2 for 1, when the market value is $40 per share. Prior to the split, Dillon had 50,000 shares of $10 par value common stock issued and outstanding. After the split, the par value of the stock

A corporation can be organized for the purpose of making a profit or it may be not-for-profit.

The authorized stock of a corporation

Which of the following statements about a cash dividend is incorrect?

The following stockholders' equity accounts, arranged alphabetically, are in the ledger of Star Corporation at December 31, 2018. Instructions Prepare the stockholders' equity section of the balance sheet at December 31, 2018.

The stockholders' equity section of Maria Corporation at December 31, 2017, included the following: 6% preferred stock, $100 par value, cumulative, 10,000 shares authorized, 8,000 shares issued and outstanding $ 800,000 Common stock, $10 par value, 250,000 shares authorized, 200,000 shares issued and outstanding $2,000,000 Dividends were not declared on the preferred stock in 2017 and are in arrears. On September 15, 2018, the board of directors of Maria Corporation declared dividends on the preferred stock for 2017 and 2018, to stockholders of record on October 1, 2018, payable on October 15, 2018. On November 1, 2018, the board of directors declared a $.50 per share dividend on the common stock, payable November 30, 2018, to stockholders of record on November 15, 2018. Instructions Prepare the journal entries that should be made by Maria Corporation on the dates indicated below: $\begin{array}{ll}\text { September 15, } 2018 & \text { November 1, } 2018 \\\text { October 1, 2018 } & \text { November 15, 2018 } \\\text { October 15, 2018 } & \text { November 30, 2018 }\end{array}$