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Exam 13: Corporations: Organization and Capital Stock Transactions

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Question 61

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A company would not acquire treasury stock

A) in order to reissue shares to officers.
B) as an asset investment.
C) in order to increase trading of the company's stock.
D) to have additional shares available to use in acquisitions of other companies.

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

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Question 62

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Prytania Corporation is authorized to issue 1000000 shares of $5 par value common stock. During 2017 its first year of operation the company has the following stock transactions. Jan. 1 $\quad$ Paid the state $\$ 5,000$ for incorporation fees. Jan. 15 $\quad$ Issued 500,000 shares of stock at $\$ 6$ per share. Jan. 30 $\quad$ Attorneys for the company accepted 500 shares of common stock as payment for legal service sendered in helping the company incorporate. The legal services are estimated to have a value of $\$ 7,000$ . July 2 $\quad$ Issued 100,000 shares of stock for land. The land had an asking price of $900,000. The stock is currently selling on a national exchange at $\$ 8$ per share. Sept. 5 $\quad$ Purchased 15,000 shares of common stock for the treasury at $\$ 9$ per share. Dec. 6 $\quad$ Sold 11,000 shares of the treasury stock at $\$ 11$ per share. Instructions Journalize the transactions for Prytania Corporation.

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Question 63

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Which of the following is not a right or preference associated with preferred stock?

A typical organization chart showing delegation of authority would show

The following selected transactions pertain to L. Lewis Corporation: Jan. 3 Issued 100000 shares $10 par value common stock for $25 per share. Feb. 10 Issued 6000 shares $10 par value common stock in exchange for special purpose equipment. L. Lewis Corporation's common stock has been actively traded on the stock exchange at $30 per share. Instructions Journalize the transactions.

A successful corporation can have a continuous and perpetual life.

Conecuh Manufacturing Corporation purchased 8000 shares of its own previously issued $10 par common stock for $184000. As a result of this event

Charleston Corporation has the following accounts at December 31: Common Stock $10 par 7000 shares issued $70000; Paid-in Capital in Excess of Par $10000; Retained Earnings $45000; and Treasury Stock-Common 500 shares $10000. Prepare the stockholders' equity section of the balance sheet.

Identify at least six characteristics of the corporate form of business organization. Contrast each one with the partnership form of organization.

Echota Corporation has the following capital stock outstanding at December 31 2017: 7% Preferred stock $100 par value cumulative 15,000 shares issued and outstanding $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\$ 1,500,000$ Common stock, no par, $\$ 10$ stated value, 500,000 shares authorized, 350,000 shares issued and outstanding $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$3,500,000$ The preferred stock was issued at $120 per share. The common stock was issued at an average per share price of $14. Instructions Prepare the paid-in capital section of the balance sheet at December 31 2017.

The sale of common stock below par

The two ways that a corporation can be classified by purpose are

A corporation must be incorporated in each state in which it does business.

Stockholders generally have the right to share in corporate _______________ and in ______________ upon liquidation.

Fire Red Company is authorized to issue 20000 shares of 8% $100 par value preferred stock and 1000000 shares of no-par common stock with a stated value of $1 per share. If Fire Red issues 10000 shares of preferred stock for land with an asking price of $1020000 and a market value of $1080000 which of the following would be the journal entry for Fire Red to record? a. $\begin{array}{llr} \text {Land } &1,000,000\\ \text { Preferred Stock} &&1,000,000\\\end{array}$ b. $\begin{array}{llr} \text { Land } &1,080,000\\ \text { Preferred Stock } &&1,080,000\\\end{array}$ c. $\begin{array}{llr} \text { Land} &1,200,000\\ \text { Preferred Stock } &&1,000,000\\ \text { Paid-in Capital in Excess of Par-Preferred} &&200,000\end{array}$ d. $\begin{array}{llr} \text {Land } &1,080,000\\ \text { Preferred Stock} &1,000,000\\ \text {Paid-in Capital in Excess of Par-Preferred } &80,000\end{array}$

If stock is issued in exchange for noncash assets the assets should be valued at the ____________________ of the consideration ___________________ or the assets ____________________ whichever is more clearly evident.

The acquisition of treasury stock by a corporation increases total assets and total stockholders' equity.

Retained earnings is

The number of common shares outstanding can never be greater than the number of shares issued.

Which of the following is not true of a corporation?