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Exam 13: Corporations: Organization, Stock Transactions, and Dividends

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Question 81

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The par value of stock is an arbitrary per share amount defined in many states as legal capital.

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Question 82

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Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Determine the dividends per share for preferred and common stock for the first year.

A) $0.50 and $0.10
B) $0.00 and $0.10
C) $0.50 and $0.00
D) $2.00 and $0.00

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Question 83

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Treasury Stock is listed in the stockholders' equity section on the balance sheet.

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

Match the following stockholders equity concepts to the most appropriate answer.

When a corporation issues stock at a premium, it reports the premium as an other income item on the income statement.

The dates of importance in connection with a cash dividend of $50,000 on a corporation's common stock are January 15, February 15, and March 15. Journalize the entries required on each date.

The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested by the stockholder.

Which of the following statements is not true about a 2-for-1 split?

Organizational expenses are classified as intangible assets on the balance sheet.

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 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

The liability for a dividend is recorded on which of the following dates?

Treasury stock shares are

If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported in the income statement.

Miriah Inc. has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock?

The par value of common stock must always be equal to its market value on the date the stock is issued.

Match the following descriptions to stockholders equity concepts

A corporation has 60,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be:

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