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Exam 13: Corporations: Organization, Stock Transactions, and Dividends

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Question 21

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A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following:

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(a)
_TB2013_00 (b)
...

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Question 22

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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

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

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Question 23

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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?

Cash dividends become a liability to a corporation on the date of record.

A corporation is a separate entity for accounting purposes but for legal purposes.

A corporation was organized on January 1 of the current year, with an authorization of 20,000 shares of $4 preferred stock, $12 par, and 100,000 shares of $3 par common stock. The following selected transactions were completed during the first year of operations: Required: Journalize the transactions.

The declaration and issuance of a stock dividend does affect the total amount of a corporation's assets, liabilities, or stockholders' equity.

A large retained earnings account means that there is cash available to pay dividends.

The date on which a cash dividend becomes a binding legal obligation is on the

Treasury Stock is listed in the stockholders' equity section on the balance sheet.

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

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

In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported?

The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial statements.

How is treasury stock shown on the balance sheet?

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.

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Determine the dividends per share for preferred and common stock for the first year.

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?

The issuance of common stock affects both paid-in capital and retained earnings.

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