Organization Stock Transactions and Dividends Part 2 (79-131)

79. The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to A. Organizational Expenses B. Goodwill C. Common Stock D. Cash 80. The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors? A. the financial condition, earnings record, and dividend record of the corporation B. investor expectations of the corporation's earning power C. how high the par value is D. general business and economic conditions and prospects 81. The entry to record the issuance of common stock at a price above par includes a debit to A. Organizational Expenses B. Common Stock C. Cash D. Paid-In Capital in Excess of Par-Common Stock 82. Merritt Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $18 per share. At what amount should the building be recorded by Merritt Company? A. $60,000 B. $216,000 C. $210,000 D. $156,000 83. 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. 35,000 B. 70,000 C. 25,000 D. 30,000 84. Par value A. is the monetary value assigned per share in the corporate charter. B. represents what a share of stock is worth. C. represents the original selling price for a share of stock. D. is established for a share of stock after it is issued. 85. The authorized stock of a corporation A. must be recorded in a formal accounting entry. B. only reflects the initial capital needs of the company. C. is indicated in its by-laws. D. is indicated in its charter. 86. If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account A. Common Stock will be credited for $75,000. B. Paid-in Capital in excess of Par Value will be credited for $5,000. C. Paid-in Capital in excess of Par Value will be credited for $70,000. D. Cash will be debited for $70,000. 87. If common stock is issued for an amount greater than par value, the excess should be credited to A. Retained Earnings. B. Cash. C. Legal Capital. D. Paid-in Capital in Excess of Par Value. 88. The Sneed Corporation issues 10,000 shares of $50 par value preferred stock for cash at $75 per share. The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to A. Preferred Stock for $750,000. B. Preferred stock for $500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $250,000. C. Preferred Stock for $500,000 and Retained Earnings for $250,000. D. Paid-in Capital from Preferred Stock for $750,000. 89. Alma Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to: A. Common Stock $14,000. B. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000. C. Common Stock $4,000 and Paid-in Capital in Excess of Stated Value $10,000. D. Common Stock $10,000 and Retained Earnings $4,000. 90. Nexis Corp. issues 1,000 shares of $15 par value common stock at $22 per share. When the transaction is recorded, credits are made to: A. Common Stock $15,000 and Paid-in Capital in Excess of Par Value $7,000. B. Common Stock $22,000 and Retained Earnings $15,000. C. Common Stock $7,000 and Paid-in Capital in Excess of Stated Value $15,000. D. Common Stock $22,000. 91. When Bayou Corporation was formed on January 1, 20xx, the corporate charter provided for 100,000 share of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 9,000 shares of stock at a price of $23 per share. The entry to record the above transaction would include a A. debit to Cash for $90,000 B. credit to Common Stock for $207,000 C. credit to Paid in Capital in Excess of Par for $117,000 D. debit to Common Stock for $90,000 92. On January 1, 20xx, Swenson Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, 20xx, Swenson purchased 4,000 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1, 20xx. The journal entry to record the purchase of the treasury shares on February 1, 20xx, would include a A. credit to Treasury Stock for $96,000. B. debit to Treasury Stock for $96,000. C. debit to a loss account for $120,000 D. credit to a gain account for $120,000. 93. 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? A. $ 60,000 B. $ 20,000 C. $120,000 D. $100,000 94. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared? A. $80,000 B. $10,000 C. $90,000 D. $100,000 95. The date on which a cash dividend becomes a binding legal obligation is on the A. declaration date. B. date of record. C. payment date. D. last day of the fiscal year. 96. The cumulative effect of the declaration and payment of a cash dividend on a company’s financial statements is to A. decrease total liabilities and stockholders’ equity. B. increase total expenses and total liabilities. C. increase total assets and stockholders’ equity. D. decrease total assets and stockholders’ equity. 97. Which of the following is the appropriate general journal entry to record the declaration of a cash dividends? A. Retained earnings Cash B. Cash Dividends payable Cash C. Paid-in capital Cash Dividends payable D. Cash Dividends Cash Dividends Payable 98. Miriah Inc. has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock? A. $50 per share B. $50,000 in total C. $10,000 in total D. $0.50 per share 99. Which of the following is not a prerequisite to paying a cash dividend? A. formal action by the board of directors B. market value in excess of par value per share C. sufficient cash D. sufficient retained earnings 100. The liability for a dividend is recorded on which of the following dates? A. the date of record B. the date of payment C. the last day of the fiscal year D. the date of declaration 101. When a stock dividend is declared, which of the following accounts is credited? A. Common Sock B. Dividend Payable C. Stock Dividends Distributable D. Retained Earnings 102. Treasury stock shares are A. shares held by the U.S. Treasury Department B. part of the total outstanding shares but not part of the total issued shares of a corporation C. unissued shares that are held by the treasurer of the corporation D. issued shares that have been reacquired by a corporation 103. Which statement below is not a reason for a corporation to buy back its own stock. A. resale to employees B. bonus to employees C. for supporting the market price of the stock D. to increase the shares outstanding 104. How is treasury stock shown on the balance sheet? A. as an asset B. as a decrease in stockholders' equity C. as an increase in stockholders' equity D. treasury stock is not shown on the balance sheet 105. The excess of sales price of treasury stock over its cost should be credited to A. Treasury Stock Receivable B. Premium on Capital Stock C. Paid-In Capital from Sale of Treasury Stock D. Income from Sale of Treasury Stock 106. What is the total stockholders' equity based on the following account balances? Common Stock Paid-In Capital in Excess of Par Retained Earnings Treasury Stock $375,000 90,000 190,000 15,000 A. $670,000 B. $655,000 C. $640,000 D. $565,000 107. Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions combined A. income will be increased by $500 B. stockholders' equity will be increased by $3,500 C. stockholders' equity will be increased by $500 D. stockholders' equity will not change 108. Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The journal entry to record the reissuance would include a credit to A. Treasury Stock for $8,500 B. Paid-In Capital from Treasury Stock for $8,500 C. Paid-In Capital in Excess of Par/Common for $2,900 D. Paid-In Capital from Treasury Stock for $2,900 109. A corporation purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale? A. $0 B. $5,000 C. $2,500 D. $10,000 110. A corporation purchases 10,000 shares of its own $10 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity? A. increase, $100,000 B. increase, $350,000 C. decrease, $100,000 D. decrease, $350,000 111. In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported? A. other expense on income statement B. intangible asset on balance sheet C. stockholders' equity on balance sheet D. other income on income statement 112. Which of the following is not classified as paid-in capital on the balance sheet? A. common stock B. common stock distributable C. donated capital D. treasury stock 113. All of the following are normally found in a corporation's stockholders' equity section except A. Common Stock B. Paid-In Capital in Excess of Par C. Dividends in Arrears D. Retained Earnings 114. Which of the following amounts should be disclosed in the stockholders' equity section of the balance sheet? A. the number of shares of common stock outstanding B. the number of shares of common stock issued C. the number of shares of common stock authorized D. all of the above 115. Significant changes in stockholders' equity are reported in A. income statement B. retained earnings statement C. statement of stockholders' equity D. statement of cash flows 116. Retained earnings A. is the same as contributed capital B. cannot have a debit balance C. changes are summarized in the retained earnings statement D. is equal to cash on hand 117. Which of the following would appear as a prior-period adjustment? A. loss resulting from the sale of fixed assets B. difference between the actual and estimated uncollectible accounts receivable C. error in the computation of depreciation expense in the preceding year D. loss from the restructuring of assets 118. A restriction/appropriation of retained earnings A. decreases total assets B. increases total retained earnings C. decreases total retained earnings D. has no effect on total retained earnings 119. The Dayton Corporation began the current year with a retained earnings balance of $32,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and declared cash dividends of $7,000. Compute the year end retained earnings balance. A. $34,000 B. $37,000 C. $41,000 D. $44,000 120. What is the total stockholders' equity based on the following data? Common Stock Excess of Issue Price Over Par Retained Earnings (deficit) A. $1,070,000 B. $1,005,000 C. $940,000 D. $565,000 $630,000 375,000 (65,000) 121. Treasury stock should be reported in the financial statements of a corporation as a(n) A. investment. B. liability. C. current asset. D. deduction from stockholders’s equity. 122. The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a A. liquidating dividend B. stock split C. stock option D. preferred dividend 123. A corporation has 50,000 shares of $25 par value stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be A. 150,000 shares B. 50,000 shares C. 100,000 shares D. 16,666 shares 124. When a corporation completes a 3-for-1 stock split A. the ownership interest of current stockholders is decreased B. the market price per share of the stock is decreased C. the par value per share is decreased D. b and c 125. A corporation has 50,000 shares of $28 par value 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 A. $7.00 B. $112.00 C. $37.50 D. $600.00 126. The primary purpose of a stock split is to A. increase paid-in capital B. reduce the market price of the stock per share C. increase the market price of the stock per share D. increase retained earnings 127. A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend? A. $3,200 B. $6,400 C. $4,800 D. $8,800 128. A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to A. decrease retained earnings, increase common stock, and increase paid-in capital B. increase retained earnings, decrease common stock, and decrease paid-in capital C. increase retained earnings, decrease common stock, and increase paid-in capital D. decrease retained earnings, increase common stock, and decrease paid-in capital 129. A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 a share. What is the amount transferred from the Retained Earnings account to Paid-in Capital accounts as a result of the stock dividend? A. $12,800 B. $19,200 C. $32,000 D. $48,800 130. Which of the following statements is not true about a 2-for-1 split? A. Par value per share is reduced to half of what it was before the split. B. Total contributed capital increases. C. The market price will probably decrease. D. A stockholder with ten shares before the split owns twenty shares after the split. 131. A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $150. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately: A. $25 B. $150 C. $5 D. $30