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Exam 11: Reporting and Interpreting Stockholders Equity

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Question 21

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The following information is provided for Slickers, Inc. for year 2016: • Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding • Common stock, $100 par value, 2,000 shares issued and outstanding • Dividends in arrears for 2014 and 2015 • Total dividends declared and paid during 2016 totaled $25,000 How much of the dividend is paid to the common stockholders during 2016 assuming the preferred stock is cumulative?

A) $3,500.
B) $7,000.
C) $22,500.
D) $14,500.

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

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Question 22

Multiple Choice

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Which of the following statements is true about partnership accounting?

A) A particular partner's capital account is debited when a withdrawal takes place by that partner.
B) Through the closing entry process for a partnership, a positive net income results in an increase in overall partner capital.
C) The total of the drawing account balances are subtracted to arrive at the net income to allocate to the partners.
D) The partner's drawing account is closed to retained earnings at the end of the perioD.The capital account in a partnership keeps track of each partner's capital balance and is affected by partner investments and withdrawals as well as net income.

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

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Question 23

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Which of the following statements is false?

Treasury stock is a corporation's own stock that was issued and then repurchased, and is still held by the corporation.

Which of the following statements is not correct?

Which of the following statements is false?

The issue of $5 par value common stock for $18 per share results in an $18 credit to the common stock account for each share issued.

Total assets remain the same when a company uses cash to purchase treasury stock.

What would be the title for the common stock account on a balance sheet prepared using International Financial Reporting Standards (IFRS) ?

The declaration and distribution of a 2-for-1 stock split results in a reduction of retained earnings.

Net income decreases when treasury stock is sold for an amount less than the original cost when the shares of stock were repurchased.

Survivor Company was formed on January 1, 2016 by selling and issuing 20,000 shares of common stock at $15 per share. On December 1, 2016, the company declared a cash dividend of $10,000, which will be paid in cash on January 15, 2017. Required: A.Prepare the journal entry to record the sale and issuance of the common stock on January 1, 2016 under each of the following independent assumptions: 1.The common stock has a par value of $10 per share.2.The common stock was no-par with a stated value of $5 per share.3.The common stock was no-par and had no stated value. B.Prepare the journal entry to record the dividend declaration on December 1, 2016. C.Prepare the journal entry to record payment of the dividend on January 15, 2017.

Tractor Corporation was just formed. The following accounts with code letters are given below. Required: Indicate the appropriate journal entry for each transaction by entering the code letters and the correct amounts (do not use dollar signs). The transactions, including the example, are not interrelated unless otherwise stated.

HighRise Company reported the following amounts of contributed capital in the stockholders' equity accounts as of January 1, 2016:

The declaration of a stock dividend by a corporation's board of directors creates a liability on the declaration date.

A large stock dividend:

Which of the following statements is correct?

The following information is provided for Bold Company for the year 2017: • Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding • Common stock, $100 par value, 2,000 shares issued and outstanding • Dividends in arrears for three prior years (2014­­-2016) • Total dividends declared and paid in 2017 were $50,000. How much of the 2017 dividend payment was paid to the common stockholders assuming the preferred stock is noncumulative?

What is the correct entry for the sale of 1,000 shares of $10 par value preferred stock for $50,000 cash?

Constance Corporation reported a $750,000 balance in its common stock account at the end of 2016. The company held 50,000 shares of treasury stock and had 700,000 shares of common stock outstanding. Required: Calculate the par value per share of the company's common stock.