Question 1

On January 1, 2018, the stockholders' equity section of Nance Corporation shows: Common stock ($5 par value) $1,500,000; paid-in capital in excess of par value $1,000,000; and retained earnings $1,200,000. During the year, the following treasury stock transactions occurred.
Mar. 1 Purchased 30,000 shares for cash at $22 per share.
July 1 Sold 6,000 treasury shares for cash at $27 per share.
Sept. 1 Sold 5,000 treasury shares for cash at $19 per share.
Instructions
(a) Journalize the treasury stock transactions.
(b) Restate the entry for September 1, assuming the treasury shares were sold at $12 per share.

Accepted Answer

The answer of On January 1, 2018, the stockholders' equity...

Question 2

The following information is available for Pencil Corporation:  
A 20% stock dividend is declared and paid when the market value was $16 per share.
Instructions
Compute each of the following after the stock dividend.
(a) Total stockholders' equity.
(b) Number of shares outstanding.

Accepted Answer

(a) Total stockholders' equity = $2,900,...

Question 3

Additional paid-in capital includes all of the following except

Accepted Answer

A)   paid-in capital from treasury stock.
B)   paid-in capital in excess of par.
C)   paid-in capital in excess of stated value.
D)   paid-in capital in excess of book value.E) All of the above
F) C) and D)

Question 4

Treasury stock should not be classified as a current asset.

Accepted Answer

A) True 
 B)False

Question 5

A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

Accepted Answer

A)   corporation is organized for the purpose of making a profit.
B)   corporation is subject to more federal and state government regulations.
C)   corporation is an accounting economic entity.
D)   corporation's temporary accounts are closed at the end of the accounting period.E) A) and B)
F) A) and C)

Question 6

A corporation purchases 40,000 shares of its own $30 par common stock for $45 per share, recording it at cost. What will be the effect on total stockholders' equity?

Accepted Answer

A)   Increase by $1,800,000
B)   Decrease by $1,200,000
C)   Decrease by $1,800,000
D)   Increase by $1,200,000E) All of the above
F) A) and B)

Question 7

Under IFRS, equity is described as each of the following except

Accepted Answer

A)   retained equity.
B)   shareholders' funds.
C)   owners' equity.
D)   capital and reserves.E) All of the above
F) None of the above

Question 8

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

Accepted Answer

The answer of Stockholders generally have the right to share...

Question 9

When stock dividends are distributed,

Accepted Answer

A)   Common Stock Dividends Distributable is decreased.
B)   Retained Earnings is decreased.
C)   Paid-in Capital in Excess of Par is debited if it is a small stock dividend.
D)   no entry is necessary if it is a large stock dividend.E) A) and D)
F) B) and C)

Question 10

Each of the following decreases total stockholders' equity except a

Accepted Answer

A)   cash dividend.
B)   liquidating dividend.
C)   stock dividend.
D)   All of these decrease total stockholders' equity.E) B) and D)
F) A) and D)

Question 11

The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.

Accepted Answer

A) True 
 B)False

Question 12

Aaron, Inc. paid $120,000 to buy back 10,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $8 per share. The entry to record the sale includes a

Accepted Answer

A)   debit to Retained Earnings for $40,000.
B)   credit to Retained Earnings for $10,000.
C)   debit to Paid-in Capital from Treasury Stock for $120,000.
D)   credit to Paid-in Capital from Treasury Stock for $10,000.E) All of the above
F) B) and C)

Question 13

The return on common stockholders' equity is computed by dividing

Accepted Answer

A)   net income by ending common stockholders' equity.
B)   net income by average common stockholders' equity.
C)   net income minus preferred dividends by ending common stockholders' equity.
D)   net income minus preferred dividends by average common stockholders' equity.E) C) and D)
F) A) and B)

Question 14

Adams Corporation began business by issuing 400,000 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

Accepted Answer

A)   Common stock of $2,000,000.
B)   Common stock of $9,600,000.
C)   Total paid-in capital of $9,560,000.
D)   Total paid-in capital of $7,600,000.E) A) and B)
F) A) and C)

Question 15

If an investment firm underwrites a stock issue, the

Accepted Answer

A)   risk of being unable to sell the shares stays with the issuing corporation.
B)   corporation obtains cash immediately from the investment firm.
C)   investment firm has guaranteed profits on the sale of the stock.
D)   issuance of stock is likely to be directly to creditors.E) A) and B)
F) A) and C)

Question 16

Which one of the following is not an ownership right of a stockholder in a corporation?

Accepted Answer

A)   To vote in the election of directors
B)   To declare dividends on the common stock
C)   To share in assets upon liquidation
D)   To share in corporate earningsE) A) and D)
F) All of the above

Question 17

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

Accepted Answer

A)   publicly held and privately held.
B)   stock and non-stock.
C)   inside and outside.
D)   majority and minority.E) A) and B)
F) B) and C)

Question 18

Parker Company has 24,000 shares of $1 par common stock issued and outstanding. The company also has 2,000 shares of $100 par 5% cumulative preferred stock outstanding. The company did not pay the preferred dividends in 2017 or 2018. What amount of dividends must the company pay the preferred shareholders in 2019 if they wish to pay the common stockholders a dividend?

Accepted Answer

Annual preferred dividend: 2,0...

Question 19

A corporation can issue more shares than it is authorized in its charter, if the board of directors approves of an increase in the number of authorized shares.

Accepted Answer

A) True 
 B)False

Question 20

Stock can be issued only in exchange for cash.

Accepted Answer

A) True 
 B)False

Exam 11: Corporations: Organization, Stock Transactions, and Stockholders Equity

A corporation purchases 40,000 shares of its own $30 par common stock for $45 per share, recording it at cost. What will be the effect on total stockholders' equity?

Correct Answer
verified

The following information is available for Pencil Corporation: A 20% stock dividend is declared and paid when the market value was $16 per share. Instructions Compute each of the following after the stock dividend. (a) Total stockholders' equity. (b) Number of shares outstanding.

Correct Answer
verified
(a) Total stockholders' equity = $2,900,...
View Answer

Each of the following decreases total stockholders' equity except a

Correct Answer
verified

The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.

Correct Answer
verified

Adams Corporation began business by issuing 400,000 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

Correct Answer
verified

The return on common stockholders' equity is computed by dividing

Correct Answer
verified

Additional paid-in capital includes all of the following except

Correct Answer
verified

Stock can be issued only in exchange for cash.

Correct Answer
verified

Correct Answer
verified
Annual preferred dividend: 2,0...
View Answer

Under IFRS, equity is described as each of the following except

Correct Answer
verified

When stock dividends are distributed,

Correct Answer
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Which one of the following is not an ownership right of a stockholder in a corporation?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Aaron, Inc. paid $120,000 to buy back 10,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $8 per share. The entry to record the sale includes a

Correct Answer
verified

Treasury stock should not be classified as a current asset.

Correct Answer
verified

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

Correct Answer
verified

A corporation can issue more shares than it is authorized in its charter, if the board of directors approves of an increase in the number of authorized shares.

Correct Answer
verified

If an investment firm underwrites a stock issue, the

Correct Answer
verified

A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

Correct Answer
verified

Exam 11: Corporations: Organization, Stock Transactions, and Stockholders Equity

A corporation purchases 40,000 shares of its own $30 par common stock for $45 per share, recording it at cost. What will be the effect on total stockholders' equity?

Correct AnswerverifiedShow Answer

The following information is available for Pencil Corporation: A 20% stock dividend is declared and paid when the market value was $16 per share. Instructions Compute each of the following after the stock dividend. (a) Total stockholders' equity. (b) Number of shares outstanding.

Correct Answerverified(a) Total stockholders' equity = $2,900,...View AnswerShow Answer

Each of the following decreases total stockholders' equity except a

Correct AnswerverifiedShow Answer

The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.

Correct AnswerverifiedShow Answer

Adams Corporation began business by issuing 400,000 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

Correct AnswerverifiedShow Answer

The return on common stockholders' equity is computed by dividing

Correct AnswerverifiedShow Answer

Additional paid-in capital includes all of the following except

Correct AnswerverifiedShow Answer

Stock can be issued only in exchange for cash.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAnnual preferred dividend: 2,0...View AnswerShow Answer

Under IFRS, equity is described as each of the following except

Correct AnswerverifiedShow Answer

When stock dividends are distributed,

Correct AnswerverifiedShow Answer

Which one of the following is not an ownership right of a stockholder in a corporation?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Aaron, Inc. paid $120,000 to buy back 10,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $8 per share. The entry to record the sale includes a

Correct AnswerverifiedShow Answer

Treasury stock should not be classified as a current asset.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A corporation can issue more shares than it is authorized in its charter, if the board of directors approves of an increase in the number of authorized shares.

Correct AnswerverifiedShow Answer

If an investment firm underwrites a stock issue, the

Correct AnswerverifiedShow Answer

A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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(a) Total stockholders' equity = $2,900,...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Annual preferred dividend: 2,0...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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