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Exam 13: Corporations

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Question 61

True/False

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If treasury shares are sold for less than their cost,the difference is recorded as a loss.

A) True
B) False

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Question 62

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When the corporation declares a stock dividend,a stockholder's percentage ownership in the stock of the corporation ________.

A) will decrease
B) can increase or decrease
C) will increase
D) remains unchanged

E) B) and C)
F) B) and D)

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Question 63

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A deficit occurs when a company has reoccurring losses and/or declares dividends in excess of retained earnings.

Which of the following requires a formal journal entry?

Preferred stockholders ________.

If preferred stock is noncumulative,the company is required to pay dividends that were passed in previous years.

Preferred stockholders receive a dividend preference over common stockholders.

Regarding discontinued operations,which of the following statements is incorrect?

On December 2,2018,Eshares,Inc.purchases land.In payment for the land,Eshares,Inc.issues 6000 shares of common stock with $6 par value.The land has been appraised at a market value of $430,000.Which of the following is included in the journal entry to record this transaction?

Milton,Inc.had the following transactions in 2019,its first year of operations: • Issued 8000 shares of common stock.Stock has par value of $0.01 per share and was issued at $40.00 per share. • Earned net income of $200,000. • Paid dividends of $8.00 per share. At the end of 2019,what is total stockholders' equity?

The journal entry for the purchase of treasury stock includes a credit to Cash.

On July 31,2018,Baldwin,Inc.reported the following information in the equity section of their balance sheet: $\begin{array} { | l | r | } \hline \text { Stockholders' Equity: } & \\\hline \begin{array} { l } \text { Common Stock, } \$ 1.00 \text { par, } 500,000 \text { shares authorized,20,000 shares issued } \\\text { and outstanding }\end{array} & \$ 20,000 \\\hline \text { Paid-In Capital in Excess of Par-Common } & 3,180,000 \\\hline \text { Retained Earnings } & 3,200,000\\\hline\text { Total Stockholder's Equity }&\$ 4,400,000 \\\hline \end{array}$ Assume that Baldwin splits its common stock 3-for-1.Prepare an equity section of the balance sheet that shows the effects of the stock split.(Please round all numbers to the nearest cent.)

The statement of retained earnings reports how the company's retained earnings balance changed from the beginning of the period to the end of the period.

Stated value stock is no-par stock that has been assigned an amount similar to par value.

Rather Corporation's annual report is as follows. $\begin{array} { | l | r | r | } \hline & \text { March 31, 2018 } & \text { March 31, 2019 } \\\hline \text { Net Income } & \$ 358,000 & \$ 429,500 \\\hline \text { Preferred Dividends } & 0 & 0 \\\hline \text { Total Stockholders' Equity } & \$ 4,220,000 & \$ 5,112,000 \\\hline \text { Stockholders' Equity attributable to Preferred } & & \\\text { Stock } & 0 & 0 \\\hline \text { Number of Common Shares Outstanding } & 275,464 & 200,168 \\\hline\end{array}$ If the current market price is $17 on March 31,2019,compute the price/earnings ratio on March 31,2019.(Round any intermediate calculations and your final answer to the nearest cent.)

Which of the following actions could increase the balance in the Paid-In Capital in Excess of Par-Common account?

Which of the following is TRUE of a corporation?

Which of the following actions will decrease Retained Earnings?

On the date of record for a dividend,the company ________.

Electric,Inc.was incorporated on January 1,2016.Electric issued 4000 shares of common stock and 1200 shares of preferred stock on that date.The preferred stock is cumulative,$100 par,with an 12% dividend rate.Electric has not paid any dividends yet.In 2019,Electric had its first profitable year,and on November 1,2019,Electric declared a total dividend of $63,000.What is the total amount that will be paid to preferred shareholders?