131)
A corporation with $10 par common stock issues a small stock dividend. The capitalization of
retained earnings is equal to:
A)
The par value of the shares outstanding.
B)
The par value of the shares to be distributed.
C)
There is no capitalization of retained earnings in the case of a small stock dividend.
D)
The market value of the shares outstanding.
E)
The market value of the shares to be distributed.
132)
A corporation with $10 par common stock issues a large stock dividend. The capitalization of
retained earnings is equal to:
A)
The par value of the shares to be distributed.
B)
There is no capitalization of retained earnings in the case of a large stock dividend.
C)
The market value of the shares outstanding.
D)
The market value of the shares to be distributed.
E)
The par value of the shares outstanding.
133)
A company’s board of directors votes to declare a cash dividend of $1.00 per share on its 12,000
common shares outstanding. The journal entry to record the declaration of the cash dividend is:
A)
Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000.
B)
Debit Dividend Expense $12,000; credit Cash $12,000.
C)
Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000.
D)
Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000.
E)
Debit Common Dividend Payable $12,000; credit Cash $12,000.
134)
A company’s board of directors votes to declare a cash dividend of $1.00 per share on its 12,000
common shares outstanding. The journal entry to record the payment of the cash dividend is:
A)
Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000.
B)
Debit Dividend Expense $12,000; credit Cash $12,000.
C)
Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000.
D)
Debit Common Dividend Payable $12,000; credit Cash $12,000.
E)
Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000.
135)
Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company
has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding.
The journal entry to record the dividend declaration is:
A)
Debit Retained Earnings $4,000; credit Common Dividends Payable $4,000.
B)
Debit Common Dividends Payable $4,000; credit Cash $4,000.
C)
Debit Retained Earnings $10,000; credit Common Dividends Payable $10,000.
D)
Debit Retained Earnings $4,500; credit Common Dividends Payable $4,500.
E)
Debit Common Dividends Payable $4,500; credit Cash $4,500.
136)
Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company
has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding.
The journal entry to record the dividend payment is:
A)
Debit Common Dividends Payable $4,000; credit Cash $4,000.
B)
Debit Common Dividends Payable $4,500; credit Cash $4,500.
C)
Debit Retained Earnings $4,000; credit Common Dividends Payable $4,000.
D)
Debit Retained Earnings $4,500; credit Common Dividends Payable $4,500.
E)
Debit Retained Earnings $10,000; credit Common Dividends Payable $10,000.
137)
A corporation’s distribution of additional shares of its own stock to its stockholders without the
receipt of any payment in return is called a:
A)
Discount on stock.
B)
Premium on stock.
C)
Treasury stock.
D)
Stock dividend.
E)
Stock subscription.
138)
Which of the following is true of a stock dividend?
A)
Transfers a portion of equity from retained earnings to a cash reserve account.
B)
The decision to declare a stock dividend resides with the shareholders.
C)
Reduces a corporation’s assets and stockholders’ equity.
D)
It is a liability on the balance sheet.
E)
Does not affect total equity, but transfer amounts between the components of equity.
139)
On September 1, Ziegler Corporation had 50,000 shares of $5 par value common stock, and
$1,500,000 of retained earnings. On that date, when the market price of the stock is $15 per share,
the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:
A)
Debit Retained Earnings $250,000; credit Common Stock $250,000.
B)
No entry is made for this transaction.
C)
Debit Retained Earnings $750,000; credit Common Stock $750,000.
D)
Debit Retained Earnings $750,000; credit Common Stock Split Distributable $750,000.
E)
Debit Retained Earnings $250,000; credit Stock Split Payable $250,000.
140)
All of the following statements regarding stock dividends are true except:
A)
Stock dividends transfer a portion of equity from retained earnings to contributed capital.
B)
Directors can use stock dividends to keep the market price of the stock affordable.
C)
Stock dividends provide evidence of management’s confidence that the company is doing
well.
D)
Stock dividends do not reduce assets or equity.
E)
Stock dividends decrease the number of shares outstanding.
141)
A stock dividend is recorded with a transfer from:
A)
Contributed capital to assets.
B)
Assets to contributed capital.
C)
Contributed capital to retained earnings.
D)
Retained earnings to assets.
E)
Retained earnings to paid-in capital.
142)
A corporation declared and issued a 15% stock dividend on October 1. The following information
was available immediately prior to the dividend:
Retained earnings $ 750,00
0
Shares issued and outstanding 60,000
Market value per share $ 15
Par value per share $ 5
The amount that contributed capital will increase (decrease) as a result of recording this stock
dividend is:
A) $(135,000).
B) $135,000.
C) $(45,000).
D) $45,000.
E) $0.
143)
Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later
that day the board of directors declared a 10% stock dividend when the market value of each share
was $27. The entry to record the dividend declaration is:
A)
No entry is made until the stock is issued.
B)
Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000.
C)
Debit Retained Earnings $135,000; credit Cash $135,000.
D)
Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000.
E)
Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000;
credit Paid-In Capital in Excess of Par Value, Common Stock $35,000.
144)
Eastline Corporation had 10,000 shares of $10 par value common stock outstanding when the
board of directors declared a stock dividend of 3,000 shares. At the time of the stock dividend, the
market value per share was $12. The entry to record this dividend is:
A)
Debit Common Stock Dividend Distributable $36,000; credit Retained Earnings $36,000.
B)
Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $36,000.
C)
Debit Retained Earnings $30,000; credit Common Stock Dividend Distributable $30,000.
D)
No entry is needed.
E)
Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $30,000;
credit Paid-In Capital in Excess of Par Value, Common Stock $6,000.
145)
Preferred stock which confers rights to prior periods’ unpaid dividends even if they were not
declared is called:
A)
Noncumulative preferred stock.
B)
Participating preferred stock.
C)
Cumulative preferred stock.
D)
Convertible preferred stock.
E)
Callable preferred stock.
146)
Preferred stock that allows preferred stockholders to share with common stockholders any
dividends paid in excess of the percent or dollar amount stated on the preferred stock is called:
A)
Convertible preferred stock.
B)
Participating preferred stock.
C)
Cumulative preferred stock.
D)
Common stock.
E)
Premium stock.
147)
Achieving an increased return on common stock by paying dividends on preferred stock at a rate
that is less than the rate of return earned with the assets invested from the preferred stock issuance
is called:
A)
Premium on stock.
B)
Capital gain.
C)
Discount on stock.
D)
Preemptive right.
E)
Financial leverage.
148)
Preferred stock with a feature allowing preferred stockholders to share with common shareholders
in any dividends in excess of the percent or dollar amount stated on the preferred stock is called:
A)
Convertible preferred stock.
B)
Preferential preferred stock.
C)
Callable preferred stock.
D)
Participating preferred stock.
E)
Cumulative preferred stock.
149)
Ultimate Sportswear has $100,000 of 8% noncumulative, nonparticipating, preferred stock
outstanding. Ultimate Sportswear also has $500,000 of common stock outstanding. In the
company’s first year of operation, no dividends were paid. During the second year, the company
paid cash dividends of $30,000. This dividend should be distributed as follows:
A)
$0 preferred; $30,000 common.
B)
$7,500 preferred; $22,500 common.
C)
$8,000 preferred; $22,000 common.
D)
$15,000 preferred; $15,000 common.
E)
$16,000 preferred; $14,000 common.
150)
Gracey’s Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock
outstanding. Gracey’s also has $600,000 of common stock outstanding. During its first year, the
company paid cash dividends of $30,000. This dividend should be distributed as follows:
A)
$0 preferred; $30,000 common.
B)
$30,000 preferred; $0 common.
C)
$12,000 preferred; $18,000 common.
D)
$15,000 preferred; $15,000 common.
E)
$6,000 preferred; $24,000 common.
151)
Torino Company has 10,000 shares of $5 par value, 4% cumulative and nonparticipating preferred
stock and 100,000 shares of $10 par value common stock outstanding. The company paid total cash
dividends of $1,000 in its first year of operation. The cash dividend that must be paid to preferred
stockholders in the second year before any dividend is paid to common stockholders is:
A) $2,000. B) $1,000. C) $0. D) $3,000. E) $4,000.
152)
Preferred stock on which the right to receive dividends is forfeited for any year that the dividends
are not declared is referred to as:
A)
Callable preferred stock.
B)
Participating preferred stock.
C)
Cumulative preferred stock.
D)
Convertible preferred stock.
E)
Noncumulative preferred stock.
153)
A dividend preference for preferred stock means that:
A)
Preferred stockholders are allocated their dividends before dividends are allocated to common
shareholders.
B)
Preferred stockholders prefer dividends more than common stockholders.
C)
Dividends are paid quarterly.
D)
Preferred shareholders are guaranteed dividends.
E)
Dividends must be declared on preferred stock.
154)
Alto Company issued 7% preferred stock with a $100 par value. This means that:
A)
The market price per share will approximate $100 per share.
B)
The amount of the potential dividend is $7 per year per preferred share.
C)
Preferred shareholders are entitled to 7% of the annual income.
D)
Preferred shareholders have a guaranteed dividend.
E)
Only 7% of the total paid–in capital can be preferred stock.
155)
Stock that was reacquired and is still held by the issuing corporation is called:
A)
Capital stock.
B)
Treasury stock.
C)
Preferred stock.
D)
Redeemed stock.
E)
Callable stock.
156)
Treasury stock is classified as:
A)
A contra asset account.
B)
A liability account.
C)
An asset account.
D)
A revenue account.
E)
A contra equity account.
157)
The following data were reported by a corporation:
Authorized shares 20,00
0
Issued shares 15,00
0
Treasury shares 3,000
The number of outstanding shares is:
A) 17,000. B) 23,000. C) 12,000. D) 15,000. E) 20,000.
158)
Corporations may buy back their own stock for any of the following reasons except to:
A)
Allow management to assume the voting rights.
B)
Avoid a hostile take-over.
C)
Maintain market value for the company stock.
D)
Have shares available for a merger or acquisition.
E)
Have shares available for employee compensation.
159)
The following data has been collected about Keller Company’s stockholders’ equity accounts:
Common stock $10 par value 20,000 shares
authorized and 10,000 shares issued, 9,000 shares outstanding
$100,00
0
Paid-in capital in excess of par value, common stock 50,000
Retained earnings 25,000
Treasury stock 11,500
Assuming the treasury shares were all purchased at the same price, the cost per share of the treasury
stock is:
A) $1.28. B) $10.50. C) $10.00. D) $11.50. E) $1.15.
160)
The following data has been collected about Keller Company’s stockholders’ equity accounts:
Common stock $10 par value 20,000 shares
authorized and 10,000 shares issued, 9,000 shares outstanding
$100,00
0
Paid-in capital in excess of par value, common stock 50,000
Retained earnings 25,000
Treasury stock 11,500
Assuming the treasury shares were all purchased at the same price, the number of shares of treasury
stock is:
A) 1,150. B) 11,000. C) 1,000. D) 21,000. E) 575.
161)
Prior to June 30, a company has never had any treasury stock transactions. A company repurchased
100 shares of its common stock on June 30 for $40 per share. On July 20, it reissued 50 of these
shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the
balance in the Treasury Stock account on August 2?
A) $100. B) $2,600. C) $1,200. D) $5,050. E) $0.
162)
Prior to May 1, Fortune Company has never had any treasury stock transactions. A company
repurchased 100 shares of its common stock on May 1 for $5,000. On July 1, it reissued 50 of these
shares at $52 per share. On August 1, it reissued the remaining treasury shares at $49 per share.
What is the balance in the Paid-in Capital, Treasury Stock account on August 2?
A) $0. B) $100. C) $50. D) $5,050. E) $2,600.