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U11: Stockholder's equity
Terms in this set (38)
The per share amount normally assigned by the board of directors to a small stock dividend is:
the market value of the stock on the date of declaration.
Which of the following show the proper effect of a stock split and a stock dividend?
Par value per share Decrease No change
The board of directors of Benson Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2014. The dividend is to be paid on August 15, 2014, to stockholders of record on July 31, 2014. The correct entry to be recorded on August 15, 2014, will include a:
debit to Dividends Payable.
If no-par stock is issued without a stated value, then:
the entire proceeds are considered to be legal capital.
On January 1, Hamblin Corporation had 80,000 shares of $10 par value common stock outstanding. On March 17 the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The stock was distributed on March 30. The entry to record the transaction of March 30 would include a:
debit to Common Stock Dividends Distributable for $80,000.
Hutchinson Company had retained earnings of $10,000 on the balance sheet but disclosed in the footnotes that $2,000 of retained earnings was restricted for plant expansion and $1,000 was restricted for bond repayments. Cash of $2,000 had been set aside for the plant expansion. How much of retained earnings is available for dividends?
The number of shares of issued stock equals:
outstanding shares plus treasury shares.
The chief accounting officer in a company is known as the:
A corporate board of directors does not generally:
Sizemore, Inc. has 10,000 shares of 6%, $ 100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2014. If the board of directors declares a $40,000 dividend, the:
preferred stockholders will receive the entire $ 40,000.
Herman Corporation had net income of $160,000 and paid dividends of $40,000 to common stockholders and $20,000 to preferred stockholders in 2012. Herman Corporation's common stockholders' equity at the beginning and end of 2014 was $450,000 and $550,000, respectively. Herman Corporation's payout ratio for 2014 is:
Berman Inc. has 4,000 shares of 8%, $ 50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2013, and December 31, 2014. The board of directors declared and paid a $ 12,000 dividend in 2013. In 2014, $48,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2014?
Brewer Inc. has 3,000 shares of 8%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2014, and December 31, 2013. The board of directors declared and paid a $9,000 dividend in 2013. In 2014, $36,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2014?
Which of the following is the appropriate general journal entry to record the declaration of cash dividends?
Cash Dividends to Dividends Payable
If Norben Company issues 2,000 shares of $5 par value common stock for $140,000, the account:
Paid-in Capital in Excess of Par Value will be credited for $130,000.
Ace Inc. has 10,000 shares of 6%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock?
$ 60,000 in total.
Which of the following statements is not true about a 2-for-1 stock split?
Total paid-in capital increases.
Watson, Inc. has 5,000 shares of 6%, $100 par value, cumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2014. There were no dividends declared in 2012. The board of directors declares and pays a $ 50,000 dividend in 2013 and in 2014. What is the amount of dividends received by the common stockholders in 2014?
Outstanding stock of the West Corporation included 20,000 shares of $5 par common stock and 5,000 shares of 6%, $10 par non-cumulative preferred stock. In 2011, West declared and paid dividends of $ 2,000. In 2014, West declared and paid dividends of $6,000. How much of the 2014 dividend was distributed to preferred shareholders?
Which of the following statements regarding the date of a cash dividend declaration is not accurate?
The dividend can be rescinded once it has been declared
Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share. The entry to record the transaction will consist of a debit to Cash for $2,400,000 and a credit or credits to:
Preferred Stock for $ 2,000,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $ 400,000.
When stock is issued in exchange for a noncash asset, the value recorded for the shares issued is best determined by:
the market value of the shares.
Cash Dividends/Net Income
Which of the following represents the largest number of common shares?
Regular dividends are declared out of:
Retained earnings are occasionally restricted:
due to contractual loan restrictions.
On January 1, Hamblin Corporation had 80,000 shares of $10 par value common stock outstanding. On March 17 the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The entry to record the transaction of March 17 would include a:
credit to Common Stock Dividends Distributable for $80,000.
S. Lawyer performed legal services for E. Corp. Due to a cash shortage, an agreement was reached whereby E. Corp. would pay S. Lawyer a legal fee of approximately $20,000 by issuing 10,000 shares of its common stock (par $1). The stock trades on a daily basis and the market price of the stock on the day the debt was settled is $1.80 per share. Given this information, the best journal entry for E. Corp. to record for this transaction is:
(Dr.) Legal Expense 18,000
(Cr.) Common Stock 10,000
(Cr.) Paid-in Capital in Excess of Par - Common 8,000
The effect of a stock dividend is to:
change the composition of stockholders' equity.
When stock dividends are distributed,
Common Stock Dividends Distributable is decreased.
If Pratt Company issues 3,000 shares of $5 par value common stock for $210,000, the account:
Cash will be debited for $210,000.
Stock dividends and stock splits have the following effects on retained earnings:
No change and Decrease
If the board of directors authorizes a $100,000 restriction of retained earnings for a future plant expansion, the effect of this action is to:
reduce the amount of retained earnings available for dividend declarations.
The two ways that a corporation can be classified by ownership are:
publicly held and privately held.
If an investment firm underwrites a stock issue, the:
corporation obtains cash immediately from the investment firm.
When retained earnings are restricted, total retained earnings:
Which of the following statements reflects the transferability of ownership rights in a corporation?
A stockholder may dispose of part or all of his shares.
The declaration and distribution of a stock dividend will:
have no effect on total assets.
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