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Exam 10: Reporting and Analyzing Stockholders Equity

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Question 91

Multiple Choice

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Dividends in arrears are dividends on

A) cumulative preferred stock that have been declared but have not been paid.
B) non-cumulative preferred stock that have not been declared for a given period of time.
C) cumulative preferred stock that have not been declared for a given period of time.
D) common dividends that have been declared but have not yet been paid.

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

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Question 92

Multiple Choice

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The following selected amounts are available for Thomas Company. $\begin{array}{lr}\text { Retained earnings (beginning) } & \$ 3,500 \\\text { Net loss } & 200 \\\text { Cash dividends declared } & 200 \\\text { Stock dividends declared } & 200\end{array}$ What is its ending Retained Earnings balance?

A) $3,200.
B) $3,300.
C) $2,900.
D) $3,100.

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

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Question 93

Multiple Choice

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If Norben Company issues 6,000 shares of $5 par value common stock for $210,000, the account

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 $20,000 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 $2.40 per share. Given this information, the best journal entry for E. Corp. to record for this transaction is

Which of the following statements concerning taxation is accurate?

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

Herman Corporation had net income of $100,000 and paid dividends of $25,000 to common stockholders and $20,000 to preferred stockholders in 2017. Herman Corporation's common stockholders' equity at the beginning and end of 2017 was $450,000 and $550,000, respectively. Herman Corporation's payout ratio for 2017 is

Alt Corp. issues 5,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:

The tax laws can be a significant disadvantage of the corporate form of business.

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

The board of directors of Bosco Company declared a cash dividend on November 15, 2017, to be paid on December 15, 2017, to stockholders owning the stock on November 30, 2017. Given these facts, the date of November 30, 2017, is referred to as the

Which of the following statements is not true about a 2-for-1 stock split?

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

Paid-in capital is the amount paid in to the corporation by stockholders in exchange for shares of ownership.

Danley Corporation began business by issuing 200,000 shares of $5 par value common stock for $24 per share. During its first year, the corporation sustained a net loss of $40,000. The year-end balance sheet would show

Cey, Inc. issued 10,000 shares of stock at a stated value of $10/share. The total issue of stock sold for $15/share. The journal entry to record this transaction would include a

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

The board of directors must assign a per share value to a stock dividend declared that is

A debit balance in the Retained Earnings account is identified as a deficit.

Treasury stock should be reported in the financial statements of a corporation as a(n)