52) CGJ Company has provided the following:
• 200,000 shares of $5 par value common stock are authorized
• 140,000 shares of common stock were issued for $11 per share
• 130,000 shares are outstanding
Which of the following statements is false?
A) Common stock is reported at $700,000 on the balance sheet.
B) Additional paid-in capital is reported at $840,000 on the balance sheet.
C) Stockholders’ equity decreased $110,000 when the treasury stock was purchased.
D) There are 10,000 shares of treasury stock.
53) Which of the following journal entries does not reflect the initial cash sale of shares of
common stock?
A)
Cash
xxx
Common stock (no par)
xxx
B)
Cash
xxx
Common stock (par value)
xxx
Additional paid-in capital
xxx
C)
Cash
xxx
Common stock (stated value)
xxx
D)
Cash
xxx
Common stock (stated value)
xxx
Gain on sale of stock
xxx
54) Which of the following journal entries is correct when no-par common stock is initially
issued for cash?
A)
Cash
xxx
Common stock
xxx
B)
Cash
xxx
Common stock
xxx
Additional paid-in capital
xxx
C)
Cash
xxx
Common stock
xxx
Retained earnings
xxx
D)
Cash
xxx
Common stock
xxx
Gain on sale of stock
xxx
55) Which of the following journal entries is correct when common stock is initially issued for
cash at a price in excess of the stock’s stated value?
A)
Cash
xxx
Common stock
xxx
B)
Cash
xxx
Common stock
xxx
Additional paid-in capital
xxx
C)
Cash
xxx
Common stock
xxx
Retained earnings
xxx
D)
Cash
xxx
Common stock
xxx
Gain on sale of stock
xxx
56) Irish Corporation issued (sold) 10,000 shares of common stock for $70 per share. The bylaws
established a stated value of $10 per share. What is the amount of increase in the common stock
account as a result of this transaction?
A) $0.
B) $600,000.
C) $100,000.
D) $700,000.
57) A company repurchased shares of its common stock for $19,000. The stock was initially
issued for $12,000 and had a $5,000 par value. Which of the following statements correctly
describes the effects of the repurchase of company’s common stock shares?
A) Net income increases by $7,000.
B) Net income decreases by $7,000.
C) Stockholders’ equity increases $12,000.
D) Stockholders’ equity decreases $19,000.
58) A company purchased 1,000 shares of treasury stock for $38,000 cash. The shares were
initially issued for $24,000 and had a $9,000 par value. Which of the following statements
incorrectly describes the effect of the treasury stock purchase?
A) Net income is unchanged.
B) Earnings per share (EPS) increases.
C) Total assets remain the same.
D) Stockholders’ equity decreases.
59) Which of the following statements correctly describes a treasury stock transaction?
A) A treasury stock purchase for less than the amount of the stock’s original issue cost results in
a decrease in total stockholders’ equity.
B) A treasury stock purchase for less than the amount of the stock’s original issue cost results in
an increase in total stockholders’ equity.
C) A treasury stock purchase for an amount equal to the amount of the stock’s original issue cost
results in no change to total stockholders’ equity.
D) A treasury stock purchase for more than the amount of the stock’s original issue cost results in
an increase in total stockholders’ equity.
60) Which of the following statements about treasury stock transactions is correct?
A) The total number of shares issued increases when treasury stock is purchased.
B) The total number of shares authorized changes when treasury stock is purchased.
C) Gains and losses on treasury stock transactions are reported on the income statement.
D) A stockholders’ equity account is debited when treasury stock is purchased.
61) On February 1, 2018, Cue Company acquired 1,000 shares of its $1 par value stock for $47
per share and held these shares in treasury. On April 10, 2019, Cue resold all the treasury shares
for $50 per share. Which of the following entries would be recorded when Cue Company resells
the shares of treasury stock?
A)
Cash
50,000
Treasury stock
47,000
Additional paid-in capital
3,000
B)
Cash
50,000
Treasury stock
47,000
Retained earnings
3,000
C)
Cash
50,000
Common stock
1,000
Additional paid-in capital
49,000
D)
Cash
50,000
Treasury stock
47,000
Gain on sale of treasury stock
3,000
62) On October 1, 2017, Adoll Company acquired 1,000 shares of its $1 par value stock for $44
per share and held these shares in treasury. On March 1, 2019, Adoll resold all the treasury
shares for $40 per share. Which of the following entries would be recorded when Adoll
Company resells the shares of treasury stock?
A)
Cash
40,000
Additional paid-in capital
4,000
Treasury Stock
44,000
B)
Cash
40,000
Loss on sale of treasury stock
4,000
Treasury Stock
44,000
C)
Cash
40,000
Additional paid-in capital
4,000
Common Stock
44,000
D)
Cash
40,000
Common Stock
1,000
Additional paid-in capital
39,000
63) Which of the following statements is false?
A) The declaration of a cash dividend creates a liability as of the date of record.
B) The date of record is irrelevant with respect to recording a liability for a cash dividend.
C) The dividend payment date is when the dividend liability is reduced.
D) The dividend liability for a cash dividend is created on the declaration date.
64) CBA Company reported total stockholders’ equity of $85,000 on its balance sheet dated
December 31, 2018. During the year ended December 31, 2019, CBA reported net income of
$10,000, declared and paid a cash dividend of $2,000, and issued additional common stock for
$20,000. What is total stockholders’ equity as of December 31, 2019?
A) $117,000.
B) $113,000.
C) $109,000.
D) $115,000.
65) A company reported the following asset and liability balances at the end of 2018 and 2019:
2018
2019
Total Assets
$6,800,000
$7,600,000
Total Liabilities
3,200,000
3,600,000
During 2019, cash dividends of $50,000 were declared and paid, and common stock was issued
for $100,000. What was the amount of net income for 2019?
A) $400,000.
B) $480,000.
C) $350,000.
D) $300,000.
66) A company reported the following asset and liability balances at the end of 2018 and 2019:
2018
2019
Assets
$150,000
$180,000
Liabilities
$70,000
$80,000
If the company paid dividends totaling $5,000, what is the amount of net income for 2019?
A) $20,000.
B) $105,000.
C) $80,000.
D) $25,000.
67) On December 15, 2019, the board of directors of Cross Corporation declared a cash
dividend, payable on January 8, 2020, of $0.80 per share on the 2,000,000 common shares
outstanding. On December 15, 2019, Cross Corporation should:
A) not prepare a journal entry because the event had no effect on the corporation’s financial
position until 2020.
B) decrease retained earnings $1.6 million and increase expenses $1.6 million.
C) decrease retained earnings $1.6 million and increase liabilities by $1.6 million.
D) decrease cash $1.6 million and decrease retained earnings $1.6 million.
68) The payment of a previously declared cash dividend has an overall effect of:
A) Reducing retained earnings and reducing liabilities by the amount of the dividend.
B) Reducing retained earnings and increasing contributed capital by the same amount.
C) Reducing assets and reducing liabilities by the amount of the dividend.
D) Reducing assets and reducing retained earnings by the amount of the dividend.
69) Which of the following statements is correct?
A) The dividend yield and earnings per share both have the same denominator.
B) The dividend yield and earnings per share both have the same numerator.
C) Dividends per share are used in calculating both the earnings per share and the dividend yield.
D) Net income is used in calculating the earnings per share but not in calculating the dividend
yield.
70) Which of the following statements correctly describes either the dividend yield or the
earnings per share?
A) The dividend yield decreases when net income increases.
B) Earnings per share is a measure per share of both common and preferred stock.
C) The dividend yield increases when the market price per share decreases.
D) Earnings per share decreases when dividends per share decrease.
71) Which of the following statements is correct?
A) A 2-for-1 common stock split decreases both earnings per share and total stockholders’
equity.
B) A 10% common stock dividend decreases both earnings per share and total stockholders’
equity.
C) A 2-for-1 common stock split increases both the number of common shares outstanding and
total stockholders’ equity.
D) A 30% common stock dividend increases the number of common shares outstanding and does
not affect total stockholders’ equity.
72) A company reported total stockholders’ equity of $170,000 on its balance sheet dated
December 31, 2018. During the year ended December 31, 2019, the company reported net
income of $20,000, declared and paid a cash dividend of $4,000, declared and distributed a 10%
stock dividend with a $5,000 total market value, and issued additional common stock for
$40,000. What is total stockholders’ equity as of December 31, 2019?
A) $234,000.
B) $226,000.
C) $231,000.
D) $221,000.
73) A company reported total stockholders’ equity of $340,000 on its balance sheet dated
December 31, 2018. During the year ended December 31, 2019, the company reported net
income of $40,000, declared and paid a cash dividend of $8,000, declared and distributed a 10%
stock dividend with a $10,000 total market value, issued additional common stock for $60,000,
and paid $12,000 to purchase treasury stock. What is total stockholders’ equity as of December
31, 2019?
A) $432,000.
B) $410,000.
C) $444,000.
D) $420,000.
74) A company reported total stockholders’ equity of $540,000 on its balance sheet dated
December 31, 2018. During the year ended December 31, 2019, the company reported net
income of $60,000, declared and paid a cash dividend of $18,000, declared and distributed a
10% stock dividend with a $15,000 total market value, issued additional common stock for
$70,000, and resold treasury stock for $15,000 that it had purchased in 2018 for $12,000. What is
total stockholders’ equity as of December 31, 2019?
A) $640,000.
B) $670,000.
C) $667,000.
D) $655,000.
75) Wendell Company provided the following pertaining to its accounting year that ended
December 31, 2019:
• Common stock with a $10,000 par value was sold for $50,000 cash
• Cash dividends totaling $20,000 were declared, of which $15,000 were paid
• Net income was $70,000
• A 5% stock dividend resulted in a common stock distribution, which had a $5,000 par value
and a $23,000 market value
• Treasury stock repurchased in a prior year for $9,000 was resold for $7,000 and in the journal
entry to record the sale, Additional paid-in capital was debited for the amount of the difference
between the repurchase price and the resale price
What is the amount of increase in Wendell’s total stockholders’ equity for the year ended
December 31, 2019?
A) $107,000.
B) $84,000.
C) $98,000.
D) $112,000.
76) Wendell Company provided the following pertaining to its accounting year that ended
December 31, 2019:
• Common stock with a $10,000 par value was sold for $50,000 cash
• Cash dividends totaling $20,000 were declared, of which $15,000 were paid
• Net income was $70,000
• A 5% stock dividend resulted in a common stock distribution, which had a $5,000 par value
and a $23,000 market value
• Treasury stock repurchased in a prior year for $9,000 was resold for $7,000 and in the journal
entry to record the sale, Additional paid-in capital was debited for the amount of the difference
between the repurchase price and the resale price
What is the amount of the increase in Wendell’s retained earnings for the year ended December
31, 2019?
A) $32,000.
B) $25,000.
C) $29,000.
D) $27,000.