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Exam 11: Reporting and Analyzing Stockholders Equity

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Question 101

Multiple Choice

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If an investment firm underwrites a stock issue, the

A) risk of being unable to sell the shares stays with the issuing corporation.
B) corporation obtains cash immediately from the investment firm.
C) investment firm has guaranteed profits on the sale of the stock.
D) issuance of stock is likely to be directly to creditors.

E) All of the above
F) A) and C)

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Question 102

Multiple Choice

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Nice Corporation issues 40,000 shares of $100 par value preferred stock for cash at $110 per share.The entry to record the transaction will consist of a debit to Cash for $4,400,000 and a credit or credits to

A) Preferred Stock for $4,400,000.
B) Preferred Stock for $4,000,000 and Paid-in Capital in Excess of Par Value-Preferred Stock for $400,000.
C) Preferred Stock for $4,000,000 and Retained Earnings for $300,000.
D) Paid-in Capital from Preferred Stock for $4,400,000.

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

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Question 103

Multiple Choice

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Racer Corporation's December 31, 2020 balance sheet showed the following: 6% preferred stock, $20 par value, cumulative, Racer declared and paid a $100,000 cash dividend on December 15, 2020.If the company's dividends in arrears prior to that date were $30,000, Racer's common stockholders received

A stock dividend will cause an increase in total contributed capital at the date the dividend is declared.

A corporation has the following account balances: Common Stock, $1 par value, $80,000; Paid-in Capital in Excess of Par Value, $2,700,000.Based on this information, the

Placing a restriction on retained earnings will

Which of the following represents the largest number of common shares?

The par value of common stock must always be equal to its market value on the date the stock is issued.

A company would not acquire treasury stock

Hutchinson Company had retained earnings of $18,000 on the balance sheet but disclosed in the footnotes that $2,000 of retained earnings was restricted for plant expansion and $1,000 was restricted for bond repayments.Cash of $2,000 had been set aside for the plant expansion.How much of retained earnings is available for dividends?

Tomlinson Packaging Corporation began business in 2020 by issuing 50,000 shares of $5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par.At year-end, the common stock had a market value of $10.On its December 31, 2020 balance sheet, Tomlinson Packaging would report

Nance Corporation's December 31, 2020 balance sheet showed the following: Nance's total stockholders' equity was

John Jones Company has 20,000 shares of $100 par value common stock.Assuming that the proper journal entry was made to record a 5% common stock dividend on the declaration date when the market value of the stock was $135, which of the following accounts would be debited when the stock dividend is distributed?

Dividends may be declared and paid in cash or stock.

A small stock dividend is defined as

Which of the following is the appropriate general journal entry to record the declaration of cash dividends?

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

Alt Corp.issues 5,000 shares of $10 par value common stock at $14 per share.When the transaction is recorded, credits are made to:

Paid-in capital in excess of stated value would appear on a balance sheet under the category

Dawson Company issued 800 shares of no-par common stock for $7,200.Which of the following journal entries would be made if the stock has stated value of $2 per share?