Chapter 20 – Corporations: Formation and Capital Stock Transactions
75. McDougall Corporation issued 40,000 shares of its $2 par-value common stock for cash at
$20 a share. Record the issuance of the stock on page 1 of a general journal. Omit the
description.
20–39
80. The Mayfair Corporation was organized on August 1, 2013. The firm is authorized to
issue 80,000 shares of no-par-value common stock with a stated value of $20 per share and
20,000 shares of $50 par-value, 12 percent preferred stock. Record the selected transactions
on page 1 of a general journal. Omit descriptions.
Chapter 20 – Corporations: Formation and Capital Stock Transactions
20–40
20–41
81. The Lilac Corporation was organized on January 1, 2013. The firm is authorized to issue
160,000 shares of no-par-value common stock with a stated value of $40 per share and 40,000
shares of $100 par-value, 12 percent preferred stock. Record the selected transactions on page
1 of a general journal. Omit descriptions.
20–42
Chapter 20 – Corporations: Formation and Capital Stock Transactions
20–43
Matching Questions
82. Match the accounting terms with the description by entering the proper number.
20–45
18. Preferred stock that conveys the right to convert
that stock to common stock after a specified date or
during a period of time
Limited liability
partnership (LLP)
16
19. A subsidiary ledger that contains a record of each
stockholder’s purchases, transfers, and current balance
of shares owned; also called stockholders’ ledger
Callable preferred
stock
10
20. A shareholder’s right to purchase a proportionate
amount of any new stock issued at a later date
No-par-value stock
3
21. A document issued by a state government that
establishes a corporation
Preferred stock
32
22. Stock that conveys to its owners the right to only
the preference dividend amount specified on the stock
certificate
Registrar
26
23. A book in which accurate and complete records of
all meetings of stockholders and directors are kept
Shareholder
1
24. The price per share at which stock is bought and
sold
Stockholders’
equity
2
25. The general class of stock issued when no other
class of stock is authorized; each share carries the
same rights and privileges as every other share. Even
if preferred stock is issued, common stock will also be
issued
Stock certificate
5
26. A person or institution in charge of the issuance
and transfer of a corporation’s stock
Stated value
29
27. The number of shares authorized for issue by the
corporate charter
Capital stock
transfer journal
11
28. Distributions of the profits of a corporation to its
shareholders
Liquidation value
7
29. The value that can be assigned to no-par-value
stock by a board of directors for accounting purposes
Market value
24
30. An entity formed as a corporation that meets the
requirements of Subchapter S of the Internal Revenue
Code to be treated essentially as a partnership, so that
the corporation pays no income tax
Capital stock ledger
19
31. A list of the stock subscriptions received
Stockholders’
ledger
34
32. A class of stock that has special claims on the
corporate profits or, in case of liquidation, on
corporate assets
Capital stock ledger
23
33. Provides limited liability to the owners, who can
elect to have the profits taxed at the LLC level or on
their individual tax returns
Noncumulative
preferred stock
4
34. Another term for capital stock ledger
Subchapter S
corporation (S)
30
