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Exam 11: Corporations: Organization, Share Transactions, Dividends, and Retained Earnings

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Question 21

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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

A) decrease total assets and total equity.
B) increase equity and decrease total liabilities.
C) decrease total retained earnings and increase total liabilities.
D) reduce the amount of retained earnings available for dividend declarations.

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Question 22

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A corporation's own shares that have been reacquired by the corporation but not canceled are called ___________________.

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A corporation's own shares tha...

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Question 23

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Simon Company issued 2,000 ordinary shares with a $5 par value in payment of its attorney's bill of $40,000. The bill was for services performed in helping the company incorporate. Simon should record this transaction by debiting

Outstanding shares of the Abel Corporation included 20,000 ordinary shares with a $5 par and 10,000 shares of 4%, $10 par noncumulative preference shares. In 2013, Abel declared and paid dividends of $6,000. In 2014, Abel declared and paid dividends of $12,000. How much of the 2014 dividend was distributed to preference shareholders?

Which of the following is not a significant date with respect to dividends?

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 $15,000 by issuing 5,000 ordinary shares (par $1). The shares trade on a daily basis and the market price of the shares on the day the debt was settled is $2.20 per share. Given this information, the journal entry for E. Corp. to record this transaction is:

On January 1, Castagno Corporation had 1,200,000 ordinary shares with a $10 par value outstanding. On March 31, the company declared a 15% share dividend. Market value was $15/share. As a result of this event,

Under the cost method, Treasury Shares is debited at the price paid to reacquire the shares, and the same amount is credited to Treasury Shares when the shares are sold.

Three important dates associated with dividends are the: (1)__________________, (2)__________________, and (3)__________________.

Retained earnings is increased by each of the following except

Restricted retained earnings are available for preference share dividends but unavailable for ordinary share dividends.

Ownership rights in a corporation are evidenced by ordinary shares.

Place each of the items listed below in the appropriate location in the equity section of a statement of financial position. Share capital-ordinary, $10 stated value Retained earnings Share capital-preference, 6% $100 par value Share premium-preference Share premium-ordinary Treasury shares Share premium-treasury

Match each item/event pair below with the indicated change in the item. An individual classification may be used more than once, or not at all. For each dividend, assume that both declaration and payment or distribution has occurred. Item   Event

Which of the following show the proper effect of a share split and a share dividend?

On January 2, 2011, Pacer Corporation issued 30,000 shares of 5% cumulative preference shares at $100 par value. On December 31, 2014, Pacer Corporation declared and paid its first dividend. What dividends are the preference shareholders entitled to receive in the current year before any distribution is made to ordinary shareholders?

Lopez, Inc. has 2,500 shares of 4%, $50 par value, cumulative preference shares and 50,000 ordinary shares with a $1 par value outstanding at December 31, 2013, and December 31, 2014. The board of directors declared and paid a $3,000 dividend in 2013. In 2014, $15,000 of dividends are declared and paid. What are the dividends received by the preference and ordinary shareholders in 2014?

Oxford Inc. was authorized to issue 100,000 £10 par value ordinary shares. As of December 31, 2014, the company had issued 44,000 shares at an average price of £22 per share. During 2014, the company felt that the shares were undervalued so it purchased 10,000 treasury shares at £18 per share. When the share price rebounded later in the year, the company sold 4,000 of the treasury for £25. Retained earnings was £829,000 at December 31, 2014. As of December 31, 2014, the number of outstanding ordinary shares is

Jacquet Wholesale Merchandise Inc. had 40,000 shares of 6%, CHF20 par value preference shares and 30,000 shares of CHF25 Par value ordinary shares outstanding throughout 2014. Total dividends declared in 2014 were $70,000. The preference shares are cumulative. No dividends were paid in 2013. The ordinary shareholders should receive total 2014 dividends of

On the dividend record date,