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

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Question 41

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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

E) A) and C)
F) C) and D)

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Question 42

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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

E) A) and B)
F) All of the above

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Question 43

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Treasury stock shares are

On March 4 of the current year, Barefoot Bay, Inc. reacquired 5,000 shares of its common stock at $89 per share. On August 7, Barefoot Bay sold 3,500 of the reacquired shares at $100 per share. The remaining 1,500 shares were sold at $88 per share on November 29. a. Journalize the transaction of March 4, August 7, and November 29. b. What is the balance in Paid-in Capital from Sale of Treasury Stock on December 31 of the current year? c. Why might Barefoot Bay Inc. have purchased the treasury stock?

The excess of issue price over par of common stock is termed an

The authorized stock of a corporation

The day on which the board of directors of the corporation distributes a dividend is called the declaration date.

If 20,000 shares are authorized,15,000 shares are issued,and 500 shares are held as treasury stock,a cash dividend of $1 per share would amount to $15,000.

When no-par stock is issued,Common Stock is credited for the selling price of the stock issued.

Significant changes in stockholders' equity are reported in

What is the total stockholders' equity based on the following data?

One of the prerequisites to paying a cash dividend is sufficient retained earnings.

On February 1,Marine Company reacquired 7,500 shares of its common stock at $30 per share.On March 15,Marine sold 4,500 of the reacquired shares at $34 per share.On June 2,Marine sold the remaining shares at $28 per share. Journalize the transaction of February 1,March 15,and June 2.

When a corporation issues stock at a premium,it reports the premium as an other income item on the income statement.

The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested by the stockholder.

Big Bluestem Inc.reported the following results for the year ending April 30: $\begin{array}{lr}\text { Retained earnings, May } 1 & \$ 3,750,000 \\\text { Net income } & 720,000 \\\text { Cash dividends declared } & 80,000 \\\text { Stock dividends declared } & 220,000\end{array}$ Prepare a retained earnings statement for the fiscal year ended April 30.

Indicate whether the following actions would + increase,- decrease,or 0 not affect a company's total assets,liabilities,and stockholders' equity.

The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.

The main source of paid-in capital is from issuing stock.

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?