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Exam 11: Reporting and Analyzing Stockholders Equity

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Question 121

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A stock dividend does not affect the total amount of stockholders' equity.

A) True
B) False

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Question 122

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A corporation can be organized for the purpose of making a profit or it may be nonprofit.

A) True
B) False

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Question 123

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Sizemore, Inc. has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2014. If the board of directors declares a $30,000 dividend, the

Name at least three advantages of a corporation. 2. Corporations acquire treasury stock for a variety of purposes. Name three reasons why a corporation may acquire treasury stock.

Lindy Corporation has 1,000,000 authorized shares of $20 par value common stock. As of June 30, 2014, there were 600,000 shares issued and outstanding. On June 30, 2014, the board of directors declared a $0.50 per share cash dividend to be paid on August 1, 2014. Instructions Prepare the necessary journal entries to be recorded on (a) the date of declaration, (b) the date of record, and (c) the date of payment.

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

The Huntsman Corporation has the following stockholders' equity accounts: Preferred Stock Paid-in Capital in Excess of Par Value-Preferred Stock Common Stock Paid-in Capital in Excess of Stated Value-Common Stock Retained Earnings Treasury Stock-Common Instructions Classify each account using the following tabular alignment.

Which of the following factors does not affect the initial market price of a stock?

Samson Company had the following transactions. 1. Issued 5,000 shares of $100 par preferred stock at $107 for cash. 2. Issued 8,000 share of common stock with a par value of $10 for $120,000. 3. Purchased 500 shares of treasury common stock for $12,000. Instructions Prepare the journal entries to record the above stock transactions.

S. Lawyer performed legal services for E. Corp. Due to a cash shortage, an agreement was reached whereby E. Corp. would pay S. Lawyer a legal fee of approximately $15,000 by issuing 8,000 shares of its common stock (par $1). The stock trades on a daily basis and the market price of the stock on the day the debt was settled is $1.80 per share. Given this information, the best journal entry for E. Corp. to record for this transaction is

The paid-in capital section of the balance sheet consists of two classifications: ______________________ and ______________________.

All of the following statements about preferred stock are true except

For accounting purposes, stated value is treated the same way as par value.

Which of the following statements about dividends is not accurate?

The entry to record the declaration of a stock dividend increases _________________, and decreases ________________.

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

Outstanding stock of the Hall Corporation included 40,000 shares of $5 par common stock and 20,000 shares of 6%, $10 par non-cumulative preferred stock. In 2013, Hall declared and paid dividends of $8,000. In 2014, Hall declared and paid dividends of $24,000. How much of the 2014 dividend was distributed to preferred shareholders?

Under the corporate form of business organization

A corporate board of directors does not generally

Dividends may be declared and paid in cash or stock.