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Exam 18: Shareholders Equity Key

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Question 71

Multiple Choice

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Corporations are formed in accordance with:

A) The Model Business Corporation Act.
B) Federal statutes.
C) The laws of individual states.
D) Federal trade commission regulations.

E) B) and C)
F) A) and B)

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Question 72

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Dividends in arrears on cumulative preferred stock are liabilities to be paid at a later date.

A) True
B) False

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Question 73

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Roberto Corporation was organized on January 1, 2013. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2013, Roberto had the following transactions relating to shareholders' equity: Issued 10,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8) . What is total shareholders' equity at the end of 2013?

When treasury shares are resold at a price below cost:

What was the average price (rounded to the nearest dollar) of the additional shares issued by Levi in 2013?

When more than one security is sold for a single price and the total selling price is not equal to the sum of the market prices, the cash received is allocated between the securities based on:

On January 1, 2013, Fascom had the following account balances in its shareholders' equity accounts. During 2013, Fascom Inc. had several transactions relating to common stock. Required: Without preparing journal entries, prepare the shareholders' equity section of Fascom's balance sheet as of December 31, 2013. Assume net income is $500,000 for 2013.

The changes in account balances for Allen Inc. for 2013 are as follows: Assuming the only changes in retained earnings in 2013 were for net income and a $25,000 dividend, what was net income for 2013?

Any dividend that is considered to be a liquidating dividend will:

Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on total shareholders' equity for each of the listed transactions. ____ A net loss for the year. ____ A stock split effected in the form of a stock dividend. ____ A stock split in which the par per share is reduced (but not effected in the form of a stock dividend). ____ Declaration of a 5% stock dividend. ____ Declaration of a cash dividend. ____ Issue stock for noncash assets. ____ Payment of previously declared cash dividend. ____ Retirement of common stock at a cost greater than the original issue price. ____ Retirement of common stock at a cost less than the original issue price. ____ Resale of treasury stock for less than carrying value.

Outstanding common stock is:

Dividends in arrears on cumulative preferred stock are liabilities to be paid at a later date.

On October 1, 2013, Chief Corporation declared and issued a 10% stock dividend. Before this date, Chief had 80,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a result of this dividend, Chief's retained earnings will:

Poodle Corporation was organized on January 3, 2013. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2013, Poodle had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. What is total paid-in capital at the end of 2013?

Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on total shareholders' equity for each of the listed transactions. ____ Declaration of a property dividend. ____ Net income for the year. ____ Purchase of treasury stock at a cost greater than the original issue price. ____ Purchase of treasury stock at a cost less than the original issue price. ____ Issue common stock. ____ Resale of treasury stock.

In 2011, Winn, Inc., issued $1 par value common stock for $35 per share. No other common stock transactions occurred until July 31, 2013, when Winn acquired some of the issued shares for $30 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement?

The changes in account balances for Allen Inc. for 2013 are as follows: Assuming the only changes in retained earnings in 2013 were for net income and a $25,000 dividend, what was net income for 2013?

A small stock dividend is defined as one that is:

Indicate by letter whether each of the terms or phrases listed below is more associated with financial statements prepared in accordance with U.S. GAAP (U) or International Financial Reporting Standards (I).

The par value of common stock represents: