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Exam 13: Corporations: Organization, Stock Transactions, and Dividends

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Question 41

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A disadvantage of the corporate form of business entity is

A) mutual agency for stockholders
B) unlimited liability for stockholders
C) corporations are subject to more governmental regulations
D) the ease of transfer of ownership

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Question 42

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Preferred stockholders must receive their current year dividends before the common stockholders can receive any dividends.

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Question 43

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A stock split results in a transfer at market value from retained earnings to paid-in capital.

Morocco Inc. reported the following results for the year ending April 30, 2014: Prepare a retained earnings statement for the fiscal year ended April 30, 2014.

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

If common stock is issued for an amount greater than par value, the excess should be credited to

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 30,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported in the income statement.

Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions combined

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

The amount of capital paid in by the stockholders of the corporation is called legal capital.

Those most responsible for the major policy decisions of a corporation are the

The retained earnings statement may be combined with the income statement.

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Determine the dividends in arrears for preferred stock for the second year.

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Determine the dividends per share for preferred and common stock for the third year.

The dates of importance in connection with a cash dividend of $50,000 on a corporation's common stock are January 15, February 15, and March 15. Journalize the entries required on each date.

Under the corporate form of business organization

The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.

A company had stock outstanding as follows during each of its first three years of operations: 2,500 shares of $10, $100 par, cumulative preferred stock and 50,000 shares of $10 par common stock. The amounts distributed as dividends are presented below. Determine the total and per share dividends for each class of stock for each year by completing the schedule.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding?