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Exam 13: Accounting for Corporations

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Question 41

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A company's board of directors votes to declare a cash dividend of $.75 per share of common stock.The company has 15,000 shares authorized,10,000 issued,and 9,500 shares outstanding.The total amount of the cash dividend is:

A) $10,250.
B) $14,625.
C) $7,125.
D) $7,500.
E) $11,250.

F) A) and E)
G) A) and D)

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Question 42

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Hutter Corporation declared a $0.50 per share cash dividend on its common shares.The company has 20,000 shares authorized,9,000 shares issued,and 8,000 shares of common stock outstanding.The journal entry to record the dividend payment is:

A) Debit Retained Earnings $4,000;credit Common Dividends Payable $4,000.
B) Debit Common Dividends Payable $4,000;credit Cash $4,000.
C) Debit Retained Earnings $4,500;credit Common Dividends Payable $4,500.
D) Debit Common Dividends Payable $4,500;credit Cash $4,500.
E) Debit Retained Earnings $10,000;credit Common Dividends Payable $10,000.

F) A) and C)
G) A) and B)

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Question 43

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The total number of shares outstanding is the authorized stock.

Parlay Corporation has 2,000,000 shares of $0.50 par value common stock outstanding.The following selected transactions related to the company's stock took place during the current year: Prepare necessary journal entries to record the events of April 15,May 1 and May 10.

A common statutory restriction is reported on the income statement whereas;a common contractual restriction is reported in the stockholders' equity section of the balance sheet.

Stockholders' equity consists of paid-in capital and retained earnings.

Fargo Company's outstanding stock consists of 400 shares of noncumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value.During the first three years of operation,the corporation declared and paid the following total cash dividends. The amount of dividends paid to preferred and common shareholders in 2015 is:

Organization expenses of a corporation often include legal fees and promoter fees.

A corporation received its charter and began business this year.The company is authorized to issue 500,000 shares of $100 par,6%,noncumulative,nonparticipating preferred stock,and 1,000,000 shares of no-par common stock.The following selected transactions occurred during this year: Prepare journal entries to record these transactions.

Prior period adjustments to financial statements can result from:

The dividend yield is computed by dividing:

The main limitation in using book value per share for stock valuation models is the potential difference between recorded value and market value for both assets and liabilities.

_______________________ is the stockholders' equity applicable to common shares divided by the number of common shares outstanding.

Corporations may buy back their own stock for any of the following reasons except to:

A company paid $0.48 in cash dividends per share.Its earnings per share is $3.20 and its market price per share is $20.00.Its dividend yield equals:

A company has 50,000 shares of common stock outstanding.The stockholders' equity applicable to common shares is $1,470,000,and the par value per common share is $5.The book value per share is:

If a corporation is authorized to issue 1,000 shares of $5 common stock,it is said to have $5,000 of stock outstanding.

The following data has been collected about Keller Company's stockholders' equity accounts: Assuming the treasury shares were all purchased at the same price,the cost per share of the treasury stock is:

Stock not assigned a value per share by the corporate charter,allowing it to be issued at any price without the possibility of a minimum legal capital deficiency,is called _________________.

Participating preferred stock has a feature that allows its holders to share with common shareholders in any dividends paid in excess of the percent or dollar amount stated on the preferred stock.