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Exam 13: Accounting for Corporations

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Question 61

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Stocks that pay relatively large cash dividends on a regular basis are called:

A) Small capital stocks.
B) Mid capital stocks.
C) Growth stocks.
D) Large capital stocks.
E) Income stocks.

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Question 62

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The costs of bringing a corporation into existence, including legal fees, promoter fees, and amounts paid to obtain a charter are called:

A) Minimum legal capital.
B) Stock subscriptions.
C) Organization expenses.
D) Selling expenses.
E) Prepaid fees.

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Question 63

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Stock that is not assigned a value per share by the corporate charter is called ________________.

In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the:

A company reported stockholders' equity on January 1 of the current year as follows: Common Stock, $5 par value, 1,000,000 shares authorized, 600,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $1,025,000; Retained Earnings, $2,850,000. Prepare journal entries to record the following transactions:

A company paid a cash dividend of $0.44 per share during the current year, and reported 18,000 shares of common stock issued, and 2,000 common shares in treasury stock during the current year. The year-end market price per share was $27.50. Calculate the following: (1) total amount of cash dividends paid to common shareholders, and (2) dividend yield.

A corporation had the following stock outstanding when the company's board of directors declared a $95,000 cash dividend in the current year: Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is noncumulative and nonparticipating.

If a company resells treasury stock below the acquisition cost, a loss from the sale of treasury stock is recorded.

A company has $424,000 in total stockholders' equity. The company has no preferred stock and has 40,000 common shares outstanding. Its book value per share is $10.60. $424,000/40,000 shares = $10.60/share

Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called:

A corporation is responsible for its own acts and debts. This is because a corporation is considered a __________________________________.

A stock split is the distribution of additional shares of stock to stockholders according to their percent of ownership.

A company reported net income of $850,000 for the current year. The year-end market price per common share was $12 and there were 425,000 weighted-average shares of common stock outstanding. Calculate the company's price-earnings ratio.

Dividend yield shows the annual amount of cash dividends distributed to common shares relative to the stock's market price.

Buying stock in a corporation is attractive to investors because:

Organization expenses of a corporation often include legal fees and promoter fees.

Identify and discuss the key differences between common and preferred stock.

A corporation had stockholders' equity on January 1 as follows: Common Stock, $5 par value, 1,000,000 shares authorized, 500,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $1,000,000; Retained Earnings, $3,000,000. Prepare journal entries to record the following transactions:

On May 1, a company's board of directors declared a 10% stock dividend to be distributed on June 1 to the stockholders of record on May 21. The company had 250,000 shares of $10 par value common stock outstanding with a market value of $22 per share. Prepare the journal entries required on May 1, May 21, and June 1.