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Exam 11: Corporations: Organization, Stock Transactions, and Dividends

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Question 1

Multiple Choice

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Which of the following is the appropriate general journal entry to record the declaration of a cash dividends?

A) Retained earnings Cash
B) Cash Dividends payable Cash
C) Paid-in capital Cash Dividends payable
D) Cash Dividends Cash Dividends Payable

E) A) and B)
F) None of the above

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D

Question 2

True/False

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If the dividend amount of preferred stock, $50 par value, is quoted as 8%, then the dividends per share would be $4.

A) True
B) False

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Question 3

Multiple Choice

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Significant changes in stockholders' equity are reported in

If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend of $1 per share would amount to $15,000.

Morocco Inc. reported the following results for the year ending April 30, 2012: Prepare a retained earnings statement for the fiscal year ended April 30, 2012.

A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

The initial owners of stock of a newly formed corporation are called directors.

The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.

On April 2nd a corporation purchased for cash 5,000 shares of its own $10 par common stock at $26 a share. They sold 3,000 of the treasury shares at $29 a share on June 15th. The remaining 2,000 shares were sold on November 10th for $22 a share.

On June 5, Belen Corporation reacquired 3,300 shares of it common stock at $45 per share. On July 15, Belen sold 2,000 of the reacquired shares at $48 per share. On August 30, Belen sold the remaining shares at $42 per share. Journalize the transactions of June 5, July 15, and August 30.

Prepare entries to record the following selected transactions completed during the current fiscal year:

On April 1, 10,000 shares of $5 par common stock were issued at $22, and on April 7, 5,000 shares of $50 par preferred stock were issued at $104. Journalize the entries for April 1 and 7.

All of the following are normally found in a corporation's stockholders' equity section except

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

Which of the following amounts should be disclosed in the stockholders' equity section of the balance sheet?

Vincent Corporation has 100,000 share of $100 par common stock outstanding. On June 30, Vincent Corporation declared a 5% stock dividend to be issued July 30 to stockholders of record July 15. The market price of the stock was $132 a share on June 30. Journalize the entries required on June 30, July 15 and July 30.

Treasury stock shares are

The number of shares of outstanding stock is equal to the number of shares authorized minus the number of shares issued.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

Under the corporate form of business organization