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Exam 11: Corporations: Organization,stock Transactions,and Dividends

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Question 51

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When the board of directors declares a cash or stock dividend,this action decreases retained earnings.

A) True
B) False

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Question 52

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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

E) B) and C)
F) B) and D)

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Question 53

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The par value of common stock must always be equal to its market value on the date the stock is issued.

Double taxation is a disadvantage of a corporation because the corporation has to pay income taxes at twice the rate applied to partnerships.

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

The amount of capital paid in by the stockholders of the corporation is called legal capital.

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.

If a company has preferred stock,the preferred stock dividend is added to net income when computing earnings per common share.

A disadvantage of the corporate form of business entity is

If the dividend amount of preferred stock,$50 par value,is quoted as 8%,then the dividends per share would be $4.

A large public corporation normally uses registrars and transfer agents to maintain records of the stockholders.

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

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.

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 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?

Nevada Corporation has 30,000 shares of $25 par stock outstanding that has a current market value of $120.If the corporation issues a 5-for-1 stock split,the number of shares outstanding will be

A corporation has 12,000 shares of $20 par 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.

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 30,000 shares were originally issued and 5,000 were subsequently reacquired.What is the number of shares outstanding?

A sale of treasury stock may result in a decrease in paid-in capital.All decreases should be charged to Paid-In Capital from Sale of Treasury Stock.

Which of the following statements is not true about a 2-for-1 split?

Prepare entries to record the transactions for Maine Corp.: a- Issued 2,000 shares of $10 par common stock at $72 for cash. b- Issued 2,500 shares of common stock in exchange for land with a fair market price of $130,000. c -Purchased 400 shares of treasury stock at $70. d- Sold the 400 shares of treasury stock purchased in c at $76.