Chapter 12 – Corporations: Organization, Stock Transactions, and Dividends
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c.
25,000
d.
30,000
ANSWER:
c
RATIONALE:
Number of shares outstanding = Number of shares originally issued – Number of
shares reacquired = 30,000 – 5,000 = 25,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–02 – LO: 12–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
80. Par value
a.
is the monetary value assigned per share in the corporate charter
b.
represents what a share of stock is worth
c.
represents the original selling price for a share of stock
d.
is established for a share of stock after it is issued
ANSWER:
POINTS:
DIFFICULTY:
QUESTION TYPE:
HAS VARIABLES:
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
DATE CREATED:
DATE MODIFIED:
81. The authorized stock of a corporation
a.
must be recorded in a formal accounting entry
b.
only reflects the initial capital needs of the company
c.
is indicated in its by-laws
d.
is indicated in its charter
ANSWER:
POINTS:
DIFFICULTY:
QUESTION TYPE:
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86. Nexis Corp. issues 1,000 shares of $15 par value common stock at $22 per share. When the transaction is recorded,
credit(s) are made to:
a.
Common Stock, $15,000, and Paid-In Capital in Excess of Par, $7,000
b.
Common Stock, $22,000, and Retained Earnings, $15,000
c.
Common Stock, $7,000, and Paid-In Capital in Excess of Stated Value, $15,000
d.
Common Stock, $22,000
ANSWER:
a
RATIONALE:
Total cash raised through the issue of shares = 1,000 shares × $22 = $22,000
Par value of common stock issued = Number of shares issued × Par value of the share
= 1,000 × $15 = $15,000
Paid-In Capital in Excess of Par—Common Stock = $22,000 – $15,000 = $7,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–02 – LO: 12–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
87. 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:
Year 1:
$10,000
Year 2:
45,000
Year 3:
90,000
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
ANSWER:
c
RATIONALE:
Total dividends for preferred stock for Year 1 = 20,000 × $100 × 2% = $40,000
The total dividend distributed in Year 1 is given as $10,000.
Dividends per share for preferred stock = Total dividends distributed in Year 1 /
Number of preferred stocks = $10,000 / 20,000 = $0.50
Dividends per share for common stock for Year 1 = 0.00
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Moderate
REFERENCES:
11–03
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–02 – LO: 12–02
Chapter 12 – Corporations: Organization, Stock Transactions, and Dividends
Copyright Cengage Learning. Powered by Cognero.
Page 39
d.
the date of declaration
ANSWER:
POINTS:
DIFFICULTY:
QUESTION TYPE:
HAS VARIABLES:
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
DATE CREATED:
DATE MODIFIED:
97. A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the
company declared a 2% stock dividend on a date when the market price was $11 a share. What is the amount transferred
from the retained earnings account to paid-in capital accounts as a result of the stock dividend?
a.
$3,200
b.
$6,400
c.
$4,800
d.
$8,800
ANSWER:
d
RATIONALE:
Amount transferred from the retained earnings account to paid-in capital accounts =
Number of shares issued as stock dividends × Market price of each share at the time of
issue = 2% × 40,000 × $11 = $8,800
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–03 – LO: 12–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
98. A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the
company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and
issuance of the stock dividend is to
a.
decrease retained earnings, increase common stock, and increase paid-in capital
b.
increase retained earnings, decrease common stock, and decrease paid-in capital
c.
increase retained earnings, decrease common stock, and increase paid-in capital
d.
decrease retained earnings, increase common stock, and decrease paid-in capital
ANSWER:
POINTS: