77) 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 common stock account during the year 2019?
A) $15,000.
B) $13,000.
C) $24,000.
D) $17,000.
78) 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 net increase in Wendell’s additional paid-in capital account during the
year 2019?
A) $60,000.
B) $58,000.
C) $56,000.
D) $24,000.
79) Which of the following correctly describes the effect of declaring and distributing a common
stock dividend?
A) Total stockholders’ equity decreases.
B) Total stockholders’ equity remains the same.
C) The number of shares outstanding increases while the par value of each share decreases.
D) The number of shares outstanding decreases while the par value of each share increases.
80) A small stock dividend:
A) Results in a transfer of retained earnings to common stock and additional paid-in capital.
B) Increases the number of shares outstanding and involves a pro rata reduction in the par value
per share.
C) Is accounted for in exactly the same manner as a stock split.
D) Results in a transfer of retained earnings to additional paid-in capital and also increases the
number of shares outstanding and involves a pro rata reduction in the par value per share.
81) A large stock dividend:
A) Results in a transfer of retained earnings to common stock and additional paid-in capital.
B) Reduces the par value per share by the percentage of the additional shares issued.
C) Is accounted for in exactly the same manner as a stock split.
D) Results in a transfer of retained earnings to the common stock account.
82) Dora Company declared and distributed a 10% stock dividend on 20,000 shares of issued and
outstanding $5 par value common stock. The market price per share was $9 on the declaration
date. Which of the following correctly describes the effect of accounting for the declaration and
distribution of the stock dividend?
A) Retained earnings decreased $10,000.
B) Additional paid-in capital increased $8,000.
C) Common stock increased $1,000.
D) Retained earnings decreased $8,000.
83) Atkins Company had 20,000 shares of $5 par value common stock outstanding prior to
declaring a 10% common stock dividend. The market value of the common stock on the
declaration date was $11. Which of the following statements correctly describes the effect of the
common stock dividend?
A) Retained earnings decreased $22,000.
B) Retained earnings decreased $10,000.
C) Total stockholders’ equity decreased $22,000.
D) Total stockholders’ equity decreased $10,000.
84) Katie Company had 40,000 shares of $2 par value common stock outstanding prior to a 40%
common stock dividend declaration and distribution. The market value of the common stock on
the declaration date was $10. Which of the following statements incorrectly describes the effect
of recording the common stock dividend?
A) Retained earnings decreased $32,000.
B) Additional paid-in capital remained the same.
C) Additional paid-in capital increased $128,000.
D) Total stockholders’ equity remained the same.
85) Chicago Clock Corporation issued a 3-for-2 stock split of its common stock, which had a par
value of $100 before the split. What dollar amount of retained earnings should be transferred to
the common stock account?
A) Par value of $100 per share.
B) Market value per share on the issue date.
C) Half of the previous total amount in the common stock account.
D) Retained earnings are not transferred to the common stock account.
86) Which of the following statements is false?
A) Both stock splits and stock dividends increase the number of common shares issued.
B) Both stock splits and stock dividends increase the number of common shares outstanding.
C) Stock splits reallocate amounts between retained earnings and contributed capital accounts.
D) Both stock splits and stock dividends have the impact of reducing the market price of the
stock.
87) A company has 10 million common shares authorized and 2.5 million shares issued. The par
value is $1 per share and the market price is $30 when the company declares a 4-for-1 stock
split. Which of the following is correct?
A) There will be a transfer of $2.5 million from retained earnings to the common stock account.
B) For every one share of stock owned, a shareholder will receive four shares and will now own
5 shares of stock.
C) The shares issued and outstanding will all quadruple while the par value will be reduced to
$0.25 per share.
D) The company will be unable to declare a 4-for-1 split because it does not have enough
authorized shares to issue the split.
88) A company declares a 40% large stock dividend when there were 4 million common shares
outstanding with a $1 par value. The current market price is $20 per common share. Which of
the following will be the effect of the stock dividend?
A) Retained earnings will decrease by $1.6 million and common stock will increase by $1.6
million.
B) Retained earnings will decrease by $1.6 million and additional paid-in capital will increase by
$1.6 million.
C) Retained earnings will decrease by $32 million and common stock will increase by $32
million.
D) Retained earnings will decrease by $32 million, common stock will increase by $1.6 million
and additional paid-in capital will increase by $30.4 million.
89) Davidson Company has 10,000,000 common shares issued and 500,000 shares of treasury
stock. The stock’s par value is $2 per share and its current market price is $25 per share. Which
of the following is correct when a 15% stock dividend is declared and distributed?
A) Retained earnings will decrease $37.5 million.
B) Retained earnings will decrease $35.625 million.
C) Retained earnings will decrease $3 million.
D) Retained earnings will decrease $2.85 million.
90) Which of the following items is included as part of comprehensive income but is not
included as part of net income?
A) Gains and losses from sales of property, plant and equipment.
B) Foreign currency translation gains and losses.
C) Income taxes and payroll taxes.
D) Gains and losses from discontinued operations.
91) Accumulated comprehensive income
A) Reports items included in net income which are excluded from comprehensive income.
B) Reports items included in comprehensive income which are excluded from net income.
C) Is reported on the balance sheet as part of total assets.
D) Is reported on the balance sheet in the “mezzanine” section between liabilities and
stockholders’ equity.
92) Broadbean Co. had the following amounts on its balance sheet on December 31, 2018:
Common stock and Additional paid in capital
$
Retained earnings
Treasury stock
Accumulated other comprehensive income (loss)
$
)
During 2019, Broadbean Co. reported net income of $46,200, declared cash dividends of
$31,800, purchased additional treasury stock for $8,400, and experienced a foreign currency
translation gain of $3,600. What amount will Broadbean report as total stockholders’ equity at
December 31, 2019 on its statement of stockholders’ equity?
A) $717,400.
B) $650,600.
C) $643,400.
D) $672,000.
93) Coal, Inc. had the following amounts on its balance sheet on December 31, 2018:
Common stock and Additional paid in capital
$
Retained earnings
Treasury stock
Accumulated other comprehensive income (loss)
$
)
During 2019, Coal Inc. reported net income of $69,300, declared cash dividends of $47,700,
purchased additional treasury stock for $12,600, and experienced a foreign currency translation
gain of $5,400. What amount will Coal report as total stockholders’ equity at December 31, 2019
on its statement of stockholders’ equity?
A) $1,076,100.
B) $975,900.
C) $965,100.
D) $1,008,000.
94) Which of the following transactions does not result in an increase in stockholders’ equity?
A) Sale of no-par common stock for cash.
B) Declaration and distribution of a common stock dividend.
C) Sale of preferred stock for cash at par value.
D) Sale of treasury stock for cash at a price less than its cost.
95) Which of the following statements does not correctly describe preferred stock?
A) Preferred shareholders have a preference with respect to dividend payments.
B) Preferred shareholders have a preference with respect to assets in the event of dissolution.
C) Preferred shareholders have voting rights on a per share basis.
D) Preferred stock typically has a fixed dividend rate.
96) What is the correct entry for the sale of 1,000 shares of $10 par value preferred stock for
$50,000 cash?
A)
Cash
50,000
Preferred stock
50,000
B)
Cash
10,000
Preferred stock
10,000
C)
Cash
50,000
Gain on sale of preferred stock
40,000
Preferred stock
10,000
D)
Cash
50,000
Preferred stock
10,000
Additional paid-in capital
40,000
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97) Which of the following does not correctly describe preferred stock?
A) Preferred stock has a dividend preference relative to common stock.
B) Preferred stockholders are guaranteed to receive dividends.
C) Preferred stock does not grant voting rights.
D) Preferred stockholders receive dividends in arrears only if the shares are cumulative.
98) The following information is provided for Bold Company for the year 2019:
• Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding
• Common stock, $100 par value, 2,000 shares issued and outstanding
• Dividends in arrears for three prior years (2016-2018)
• Total dividends declared and paid in 2019 were $50,000.
How much of the 2019 dividend payment was paid to the preferred stockholders assuming the
preferred stock is cumulative?
A) $12,000.
B) $3,000.
C) $47,000.
D) $38,000.
99) The following information is provided for Bold Company for the year 2019:
• Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding
• Common stock, $100 par value, 2,000 shares issued and outstanding
• Dividends in arrears for three prior years (2016-2018)
• Total dividends declared and paid in 2019 were $50,000.
How much of the 2019 dividend payment was paid to the common stockholders assuming the
preferred stock is cumulative?
A) $12,000.
B) $50,000.
C) $47,000.
D) $38,000.
100) The following information is provided for Bold Company for the year 2019:
• Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding
• Common stock, $100 par value, 2,000 shares issued and outstanding
• Dividends in arrears for three prior years (2016-2018)
• Total dividends declared and paid in 2019 were $50,000.
How much of the 2019 dividend payment was paid to the preferred stockholders assuming the
preferred stock is noncumulative?
A) $12,000.
B) $3,000.
C) $47,000.
D) $38,000.
101) The following information is provided for Bold Company for the year 2019:
• Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding
• Common stock, $100 par value, 2,000 shares issued and outstanding
• Dividends in arrears for three prior years (2016-2018)
• Total dividends declared and paid in 2019 were $50,000.
How much of the 2019 dividend payment was paid to the common stockholders assuming the
preferred stock is noncumulative?
A) $12,000.
B) $47,000.
C) $3,000.
D) $38,000.
102) The following information is provided for Bold Company for the year 2019:
• Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding
• Common stock, $100 par value, 2,000 shares issued and outstanding
• Dividends in arrears for three prior years (2016-2018)
• Total dividends declared and paid in 2019 were $50,000.
Assuming the preferred stock is cumulative, what amount of the 2019 dividend declaration for
dividends in arrears was recorded with a debit to the Dividends payable account on the date of
declaration?
A) $12,000.
B) $3,000.
C) $0.
D) $50,000.
103) The following information is provided for Bold Company for the year 2019:
• Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding
• Common stock, $100 par value, 2,000 shares issued and outstanding
• Dividends in arrears for three prior years (2016-2018)
• Total dividends declared and paid in 2019 were $50,000.
Assuming the preferred stock is noncumulative, what amount of the 2019 dividend declaration
for the amount of dividends in arrears was recorded with a credit to the Dividends payable
account on the date of declaration?
A) $12,000.
B) $3,000.
C) $0.
D) $50,000.
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104) The following information is provided for Slickers, Inc. for year 2019:
• Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding
• Common stock, $100 par value, 2,000 shares issued and outstanding
• Dividends in arrears for 2017 and 2018
• Total dividends declared and paid during 2019 totaled $25,000
How much of the dividend was paid to the preferred stockholders during 2019 assuming the
preferred stock is cumulative?
A) $3,500.
B) $7,000.
C) $10,500.
D) $14,500.
105) The following information is provided for Slickers, Inc. for year 2019:
• Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding
• Common stock, $100 par value, 2,000 shares issued and outstanding
• Dividends in arrears for 2017 and 2018
• Total dividends declared and paid during 2019 totaled $25,000
How much of the dividend was paid to the preferred stockholders during 2019 assuming the
preferred stock is noncumulative?
A) $3,500.
B) $7,000.
C) $10,500.
D) $14,500.