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Exam 13: Corporations

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Question 31

Multiple Choice

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Restrictions on retained earnings are ________.

A) reported on the statement of cash flows
B) usually reported in the notes to the financial statements
C) reported on the income statement
D) designed to maximize dividends paid to shareholders

E) B) and D)
F) B) and C)

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Question 32

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When a corporation sells 9,000 shares of $17 par value common stock for $157,000, Common Stock is credited for $153,000.

A) True
B) False

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Question 33

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When a company issues stock at an amount greater than the par value, a gain is recorded for the difference between the issue price and the par value.

Which of the following best describes the appropriation of retained earnings?

Which of the following statements is true?

On March 31, 2017, Park Place, Inc. shows the following data on its balance sheet: Assume that Park Place sells 1,700 shares of treasury stock at $45 per share. What is total stockholders' equity after this transaction?

Lack of mutual agency is best described as which of the following?

Which of the following actions will decrease the amount of Total Stockholders' Equity?

The 2017 balance for Mason Electronics reported the following items - with 2016 figures given for comparison: Net income for 2016 was $20,000. Compute the rate of return on common stockholders' equity for 2016. (Round your final answer to two decimal places.)

On June 30, 2017, Martin Brothers, Inc. showed the following data on the equity section of their balance sheet: On July 1, 2017, the company declared and distributed a 9% stock dividend. The market value of the stock at that time was $16 per share. Following this transaction, what is the balance of Paid-In Capital in Excess of Par-Common?

Which of the following occurs when the board of directors declares a 3-for-1 stock split on 17,000 outstanding shares of $24 par common stock?

Paid-in capital is externally generated capital and results from transactions with outsiders.

Which of the following actions will increase the Common Stock account?

Ross Corporation reported the following: Which of the following is included in the entry to record the corporation's purchase of 40,000 shares of its common stock for $14.00 per share?

Micro Electronics completed the following stock issuance transactions: Prepare the journal entries to record these transactions. Explanations are not required.

Overton, Inc. had the following transactions in 2017, its first year of operations: • Issued 15,000 shares of common stock. Stock has par value of $0.01 per share and was issued at $39.00 per share. • Earned net income of $300,000. • Paid dividends of $15.00 per share. At the end of 2017, what is total stockholders' equity?

Comment on how an investor would use each of the following ratios to evaluate business performance.

Cash dividends and stock splits decrease the Retained Earnings account.

A corporation issues 14,000 shares of its $4 stated value common shares. The issue price is $7 per share. The credit to the Common Stock account is $98,000.

Challenger Corporation currently has 120,000 shares outstanding of $1 par value common stock. The stock was originally issued for $12 per share. On March 15, the board of directors declares and distributes a 10% stock dividend when the stock is selling for $16 per share. Prepare the journal entry to record the stock dividend.