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Exam 13: Corporations

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Question 31

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Jefferson Anderson is a sole proprietor of a successful business.He is interested in incorporating to protect his personal assets.What are some disadvantages of organizing as a corporate entity?

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Some disadvantages of organizing as a co...

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Question 32

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The retained earnings of a corporation is ________.

A) internally generated equity that is earned by profitable operations that is not distributed to stockholders
B) externally generated equity that is contributed by shareholders
C) externally generated equity that is acquired from banks and other creditors
D) internally generated equity that is received from employee stock purchases

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Question 33

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Dividends in arrears are ________.

On June 30,2018,Padres,Inc.showed the following data on the equity section of their balance sheet: $\begin{array} { | l | r | } \hline \text { Stockholders' Equity } & \\\hline \text { Common Stock, } \$ 1 \text { par; 197,000 shares authorized, } & \\146,000 \text { shares issued and outstanding } & \$ 146,000 \\\hline \text { Paid-In Capital in Excess of Par-Common } & \$ 263,000 \\\hline \text { Retained Earnings } & \$ 958,000 \\\hline \text { Total Stockholder's Equity } & \$ 1,367,000 \\\hline\end{array}$ On July 1,2018,the company declared and distributed a 10% stock dividend.The market value of the stock at that time was $15 per share.Following this transaction,what is the number of shares issued?

The following information is from the December 31,2018 balance sheet of January Corporation. $\begin{array} { | l | r | } \hline \text { Preferred Stock, } \$ 100 \text { par } & \$ 270,000 \\\hline \text { Paid-In Capital in Excess of Par-Preferred } & 22,000 \\\hline \text { Common Stock, } \$ 1 \text { par } & 69,000 \\\hline \text { Paid-In Capital in Excess of Par-Common } & 206,000 \\\hline \text { Retained Earnings } & \underline { 56,600 } \\\hline \text { Total Stockholders' Equity } & \$ 623,600 \\\hline\end{array}$ What is the average issue price of the preferred stock shares? (Round answers to the nearest dollar.)

Smart Electronics completed the following stock issuance transactions: $\begin{array} { | l | l | } \hline&\text { Issued } 4,000 \text { shares of } \$ 3 \text { par value common stock for cash of }\\ \text { June 7 } & \$ 12 \text { per share } \\\hline \text { Aug. 16 } & \text { Issued 400 shares of no-par preferred stock for } \$ 25,000 \text { cash } \\\hline & \text { Received equipment with a market value of } \$ 75,000 \text { in } \\\text { Sept. 19 } & \text { exchange for 5,000 shares of the } \$ 3 \text { par value common stock } \\\hline\end{array}$ Prepare the journal entries to record these transactions.Explanations are not required.

Thomas Business Supply reported a negative amount in Retained Earnings.What term describes this negative amount? What can cause this to happen?

Earnings per share is calculated as net income plus preferred dividends divided by the average number of common shares outstanding.

On November 1,2019,Stateside,Inc.declared a dividend of $3.00 per share.Stateside,Inc.has 20,000 shares of common stock outstanding and no preferred stock.The date of record is November 15,and the payment date is November 30,2019.Provide the journal entry needed on November 30.Omit explanation.

Most states prohibit corporations from paying a dividend if a deficit will occur.

Retained earnings represents amounts received from stockholders of a corporation in exchange for stock.

Lack of mutual agency is best described as which of the following?

A higher price/earnings ratio signifies a higher return on investment.

Which of the following items are NOT reported after income from continuing operations?

List the four basic rights of stockholders.

Treasury stock is a corporation's own stock that it has previously issued and later reacquired.

Prior period adjustments ________.

Which of the following is TRUE of a stock split and a stock dividend?

Regarding the issuance of stock,which of the following statements is incorrect?

Small and large stock dividends have no effect on the Common Stock account.