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Exam 11: Reporting and Interpreting Stockholders Equity

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Question 41

True/False

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Net income decreases when treasury stock is sold for an amount less than the original cost when the shares of stock were repurchased.

A) True
B) False

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Question 42

True/False

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There would be 100,000 shares of common stock outstanding when the number of shares authorized was 150,000,issued shares totaled 120,000,and 20,000 shares were being held in the treasury.

A) True
B) False

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Question 43

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Tractor Corporation was just formed.The following accounts with code letters are given below. Indicate the appropriate journal entry for each transaction by entering the code letters and the correct amounts (do not use dollar signs).The transactions,including the example,are not interrelated unless otherwise stated. Transaction Debits Credits

Dora Company declared and distributed a 10% stock dividend on 20,000 shares of issued and outstanding $5 par value common stock.The market price per share was $9 on the declaration date.Which of the following correctly describes the effect of accounting for the declaration and distribution of the stock dividend?

The following information is provided for Slickers,Inc.for year 2019: • Preferred stock,7%,$50 par value,1,000 shares issued and outstanding • Common stock,$100 par value,2,000 shares issued and outstanding • Dividends in arrears for 2017 and 2018 • Total dividends declared and paid during 2019 totaled $25,000 - How much of the dividend was paid to the preferred stockholders during 2019 assuming the preferred stock is cumulative?

Which of the following statements is false?

The declaration by a corporation's board of directors of a cash dividend on common stock creates a liability on the declaration date.

A company reported the following asset and liability balances at the end of 2018 and 2019: During 2019,cash dividends of $50,000 were declared and paid,and common stock was issued for $100,000.What was the amount of net income for 2019?

Accumulated comprehensive income

Preferred stock often has a preference over common stock in the distribution of assets in the event of dissolution of the corporation.

Earnings per share increases when a company purchases treasury stock.

Atkins Company had 20,000 shares of $5 par value common stock outstanding prior to declaring a 10% common stock dividend.The market value of the common stock on the declaration date was $11.Which of the following statements correctly describes the effect of the common stock dividend?

Prepare journal entries,with account titles only and without dollar amounts,for each of the following DJ Partnership transactions: 1.D and J each contribute cash into the partnership in exchange for capital. 2.D makes a cash withdrawal from the partnership. 3.Partnership net income is allocated to the partners' capital accounts. 4.D's drawing account is closed.

What is the correct entry for the sale of 1,000 shares of $10 par value preferred stock for $50,000 cash?

Which of the following represents the number of shares currently owned by investors?

Treasury stock shares are shares of stock that are:

The following information is provided for Bold Company for the year 2019: • Preferred stock,6%,$50 par value,1,000 shares issued and outstanding • Common stock,$100 par value,2,000 shares issued and outstanding • Dividends in arrears for three prior years (2016-2018) • Total dividends declared and paid in 2019 were $50,000. - Assuming the preferred stock is cumulative,what amount of the 2019 dividend declaration for dividends in arrears was recorded with a debit to the Dividends payable account on the date of declaration?

On December 15,2019,the board of directors of Cross Corporation declared a cash dividend,payable on January 8,2020,of $0.80 per share on the 2,000,000 common shares outstanding.On December 15,2019,Cross Corporation should:

A company's assets and stockholders' equity both decrease when a cash dividend is declared by the company's board of directors.

Davidson Company has 10,000,000 common shares issued and 500,000 shares of treasury stock.The stock's par value is $2 per share and its current market price is $25 per share.Which of the following is correct when a 15% stock dividend is declared and distributed?