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Exam 13: Accounting for Corporations

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Question 71

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Stock that was reacquired and is still held by the issuing corporation is called:

A) Capital stock.
B) Treasury stock.
C) Redeemed stock.
D) Preferred stock.
E) Callable stock.

F) B) and E)
G) A) and D)

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Question 72

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The stockholders' equity section of a corporation's balance sheet follows: (1)Assuming that the preferred stock is not callable and no dividends are in arrears,compute the book values per preferred share and per common share. (2)Assuming that the preferred stock has a call price of $30 per share and one year of cumulative preferred dividends is in arrears,compute the book values per preferred share and per common share.

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Question 73

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A company has $2,400,000 in stockholders' equity that includes 500 shares of $50 par value noncallable preferred stock outstanding and 250,000 shares of common stock outstanding.Calculate the book value per (1)preferred share,and (2)common share.

A corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares.At the time of the stock dividend,the market value per share was $12.The entry to record this dividend is:

The date of record is the date that directors vote to pay a cash dividend to shareholders.

The _______________________ protects stockholders' proportional interest in a corporation by allowing them to purchase their proportional share of any common stock later issued by the corporation.

A stock dividend reduces a corporation's assets and its stockholders' equity.

Organization expenses of a corporation often include legal fees and promoter fees.

The costs of bringing a corporation into existence,including legal fees,promoter fees,and amounts paid to obtain a charter are called:

Recording of a stock dividend does not result in a liability being recorded.

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

A company issued 60 shares of $100 par value stock for $7,000 cash.The total amount of paid-in capital is:

When no-par stock is not assigned a stated value,the total amount received is recorded as Common Stock.

Book value per share:

A company has 500,000 common shares authorized,400,000 common shares issued,and 15,000 common shares in treasury stock at the current year-end.It paid $0.24 per share in cash dividends during the year.The year-end market price of the stock is $15.Calculate (1)the total dividends paid and (2)the dividend yield.

A corporation had the following stock outstanding when the company's board of directors declared a $95,000 cash dividend during the current year: Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is cumulative and nonparticipating and dividends are one year in arrears.

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

A company had a beginning balance in retained earnings of $43,000.It had net income of $6,000 and paid out cash dividends of $5,625 in the current period.The ending balance in retained earnings equals:

A corporation sold 14,000 shares of its $10 par value common stock at a cash price of $13 per share.The entry to record this transaction would include:

Corporations often buy back their own stock: