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Exam 14: Corporations: Dividends, Retained Earnings, and Income Reporting

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Question 91

Multiple Choice

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A net loss

A) occurs if operating expenses exceed cost of goods sold.
B) is not closed to Retained Earnings if it would result in a debit balance.
C) is closed to Retained Earnings even if it would result in a debit balance.
D) is closed to the paid-in capital account of the stockholders' equity section of the balance sheet.

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Question 92

Multiple Choice

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Colson Inc. declared a $160,000 cash dividend. It currently has 6,000 shares of 7%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Colson distribute to the common stockholders?

A) $76,000.
B) $84,000.
C) $118,000.
D) None.

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Question 93

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Corporations sometimes segregate retained earnings into two categories: (1)________________ retained earnings and (2)________________ retained earnings.

Franklin, Inc. declares a 10% common stock dividend when it has 30,000 shares of $10 par value common stock outstanding. If the market value of $24 per share is used, the amounts debited to Retained Earnings and credited to Paid-in Capital in Excess of Par Value are:

Net income of a corporation should be closed to retained earnings and net losses should be closed to paid-in capital accounts.

Allstate, Inc., has 10,000 shares of 6%, $100 par value, noncumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2010. If the board of directors declares a $200,000 dividend, the

Corporations report which of the following in a separate section of the income statement?

The following selected amounts are available for Sanders Company. What is its ending retained earnings balance?

Jennifer Company reports the following amounts for 2010: The 2010 rate of return on common stockholders' equity is

Retained earnings that are restricted are unavailable for dividends.

Devons Company has 24,000 shares of $1 par common stock issued and outstanding. The company also has 2,000 shares of $100 par 5% cumulative preferred stock outstanding. The company did not pay the preferred dividends in 2009 or 2010. What amount of dividends must the company pay the preferred shareholders in 2011 if they wish to pay the common stockholders a dividend?

On December 31, 2010, Springer, Inc. has 3,000 shares of 6% $100 par value cumulative preferred stock and 45,000 shares of $10 par value common stock outstanding. On December 31, 2010, the directors declare a $12,000 cash dividend. The entry to record the declaration of the dividend would include:

A prior period adjustment is reported as an adjustment of the beginning balance of Retained Earnings.

Earnings per share is reported only for common stock.

The date on which a cash dividend becomes a binding legal obligation is on the

When stock dividends are distributed,