Chapter 13 – Accounting for Corporations | Test Bank | 24e

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Fundamental Accounting Principles, 24e (Wild)

Chapter 13 Accounting for Corporations

1) A corporation is a legal entity separate from its owners.

2) Corporations avoid many of the state regulations and controls that proprietorships and partnerships are subject to.

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

4) Shareholders in a corporation have the power to bind the corporation to contracts.

5) A proxy is a document that gives a designated agent the right to vote a shareholder's stock.

6) Common shareholders always share equally with all other shareholders (including preferred shareholders) in dividends.

7) A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation.

8) Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

9) A registrar keeps stockholder records for dividend payments and stockholder meetings. 

10) Stockholders' equity consists of paid-in capital and retained earnings.

11) The price at which a share of stock is bought or sold is known as par value.

12) Paid-in capital is the total amount of cash and other assets the corporation receives from its stockholders in exchange for its stock.

13) The total number of shares outstanding is always equal to the number of shares authorized.

14) If a corporation is authorized to issue 1,000 shares of $5 common stock, it is said to have $5,000 of common stock outstanding.

15) Minimum legal capital is the least amount that the buyers of stock must contribute to the corporation or be at risk to pay creditors at a future date.

16) Stated value stock is no-par stock that is assigned a "stated" value per share.

17) A corporation may be authorized to issue both common and preferred stock.

18) Common stock always carries a preference for receiving dividends over preferred stock.

19) A special right often granted to preferred stock is additional voting privileges.

20) Cumulative preferred stock carries the right to be paid both current and all prior periods' unpaid dividends before any dividends are paid to common shareholders.

21) Retained earnings generally consists of a company's cumulative net income less any net losses and dividends declared.

22) Retained earnings are part of the stockholders' claims on the company's net assets.

23) The term restricted retained earnings refers to statutory but not contractual restrictions.

24) A common statutory restriction is reported on the income statement; whereas a common contractual restriction is reported in the stockholders' equity section of the balance sheet.

25) Cash dividends reduce Retained Earnings.

26) A company made an error in recording the Year 1 purchase of computer equipment as an expense. This was discovered in Year 2. The item should be reported as a prior period adjustment on the Year 2 income statement.

27) Changes in accounting estimates are accounted for in current and future periods.

28) Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average) common stock.

29) If a company has no preferred stock, basic earnings per share is equal to net income divided by the number of weighted average common shares outstanding.

30) If a company has noncumulative preferred stock, basic earnings per share is equal to net income less preferred dividends declared divided by the number of weighted average common shares outstanding.

31) Lewis Company had net income of $67,000. The company had 9,000 weighted average common shares outstanding. The basic earnings per share equals $7.44 per share.

32) The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

33) Price-earnings ratio is computed by dividing annual dividends by average market value per share.

34) The price-earnings ratio is computed by dividing earnings per share by the par value per share.

35) A company has earnings per share of $6.50. Its dividend per share is $0.50, and its market price per share is $80. Its price-earnings ratio equals 13.

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

37) Dividend yield is defined as the annual cash dividends per share divided by the market price per share of a company's stock.

38) Growth stocks generally pay large dividends on a regular basis.

39) Dividend yield is computed by dividing earnings per share by the market value per share.

40) Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

41) The main limitation in using book value per share for stock valuation models is the potential difference between recorded value and market value for both assets and liabilities.

42) Dividing stockholders' equity applicable to common shares by the number of common shares outstanding yields the book value per common share.

43) If a corporation receives assets other than cash in exchange for stock, it records the assets received at their market value.

44) A corporation may not legally give shares of its stock to promoters in exchange for their services in organizing the corporation.

45) When no-par stock is not assigned a stated value, the total amount received is recorded in the Common Stock account.

46) The date of record is the date that directors vote to pay a cash dividend to shareholders.

47) A debit balance in retained earnings is referred to as a retained earnings deficit.

48) The declaration of cash dividends increases retained earnings.

49) The journal entry to record the declaration of dividends on common stock includes a debit to Retained Earnings and a credit to Common Dividend Payable.

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

51) A stock dividend does not reduce a corporation's assets or its stockholders' equity.

52) Large stock dividends are recorded at par or stated value.

53) Common Stock Dividend Distributable is a liability account.

54) Common Stock Dividend Distributable is an equity account.

55) Small stock dividends are recorded at par or stated value.

56) A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

57) A stock split can be done in any ratio.

58) Declaration of a stock dividend results in a liability being recorded.

59) A stock split increases total stockholders' equity.

60) A large stock dividend only occurs when a distribution of more than 50% of previously outstanding shares is issued.

61) A stock dividend decreases the market price of the company's stock.

62) A stock dividend, declared by a corporation's directors, is a distribution of additional shares of the corporation's own stock to its stockholders without any payment in return. 

63) All stock dividends are recorded at par value so there would never be a credit to the paid-in capital in excess of par value account.

64) Paid and declared preferred dividends are called dividends in arrears.

65) Accumulation of dividends in arrears on cumulative preferred stock does not guarantee the dividends will be paid. 

66) A liability for a cash dividend does not exist until the directors declare a cash dividend.

67) Participating preferred stock has a feature that allows its holders to share with common shareholders in any dividends paid in excess of the amount stated on the preferred stock.

68) Corporations issue preferred stock to raise capital without giving up control of the corporation and/or to boost the return earned by common shareholders.

69) Treasury stock is stock that has been authorized, issued, and is outstanding.

70) Purchasing treasury stock reduces the corporation's assets and stockholders' equity by unequal amounts.

71) The Paid-in Capital, Treasury Stock account can never have a debit balance.

72) The Paid-in Capital, Treasury Stock account can have a zero or credit balance.

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

74) The costs of bringing a corporation into existence, including legal fees and promoter fees, are called:

A) Minimum legal capital.

B) Stock subscriptions.

C) Organization expenses.

D) Selling expenses.

E) Prepaid fees.

75) The right of common shareholders to purchase their proportional share of any common stock later issued by the corporation is called a:

A) Preemptive right.

B) Proxy right.

C) Right to call.

D) Financial leverage.

E) Voting right.

76) Market value per share is:

A) The price at which a stock is bought and sold.

B) A contractual commitment by an investor to purchase unissued shares of stock.

C) Stock not assigned a value per share.

D) The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation.

E) An amount assigned to no-par stock.

77) The board of directors of a corporation:

A) Are elected by the corporate registrar.

B) Are responsible for day-to-day operations of the business.

C) Do not have the power to bind the corporation to contracts, due to lack of mutual agency.

D) May not also be executive officers of the corporation, due to the separate entity principle.

E) Are responsible for overseeing corporate activities.

78) The number of shares that a corporation's charter allows it to sell is referred to as:

A) Issued stock.

B) Outstanding stock.

C) Common stock.

D) Preferred stock.

E) Authorized stock.

79) Par value of a stock refers to the:

A) Issue price of the stock.

B) Value assigned per share by the corporate charter.

C) Market value of the stock on the date of the financial statements.

D) Maximum selling price of the stock.

E) Dividend value of the stock.

80) When a corporation has only one class of stock, the stock is called:

A) Preferred stock.

B) Common stock.

C) Par value stock.

D) Stated value stock.

E) No-par value stock.

81) The least amount that the buyers of stock must contribute to the corporation or be at risk to pay creditors at a future date is called the:

A) Par value of preferred.

B) Minimum legal capital.

C) Premium capital.

D) Stated value.

E) Working capital.

82) The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

A) Always equal to its par value.

B) Always equal to its stated value.

C) Referred to as paid-in capital.

D) Referred to as retained earnings.

E) Always below its stated value.

83) Stated value of no-par stock is:

A) Another name for redemption value.

B) An amount assigned to par value stock by the state of incorporation.

C) The market value of the stock on the date of issuance.

D) The difference between the par value of stock and the amount below or above par value paid-in by the stockholder.

E) An amount assigned to no-par stock by the corporation's board of directors.

84) Stockholders' equity consists of which of the following?

A) Long-term assets.

B) Paid-in capital and retained earnings.

C) Paid-in capital and par value.

D) Retained earnings and cash.

E) Premiums and discounts.

85) A class of stock for which there is no minimum legal capital is called:

A) Convertible stock.

B) No-par stock.

C) Callable stock.

D) Noncumulative stock.

E) Discounted stock.

86) The number of shares a corporation's charter allows it to sell: 

A) Issued.

B) Authorized.

C) Subscribed.

D) Outstanding.

E) In treasury.

87) Retained earnings:

A) Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.

B) Can only be appropriated by setting aside a cash fund.

C) Represent an amount of cash available to pay shareholders.

D) Are never adjusted for anything other than net income or dividends.

E) Represents the amount shareholders are guaranteed to receive upon company liquidation.

88) Prior period adjustments to financial statements can result from:

A) Changes in estimates of salvage value.

B) Unacceptable accounting practices.

C) Discontinued operations.

D) Changes in tax law.

E) Changes in estimates of useful life.

89) Prior period adjustments are reported in the:

A) Multiple-step income statement.

B) Balance sheet.

C) Statement of retained earnings.

D) Statement of cash flows.

E) Single-step income statement.

90) Changes in accounting estimates are:

A) Considered accounting errors.

B) Reported as prior period adjustments.

C) Accounted for with a cumulative "catch-up" adjustment.

D) Statement of cash flow items.

E) Accounted for in current and future periods.

91) A company had a beginning balance in retained earnings of $430,000. It had net income of $60,000 and declared and paid cash dividends of $56,250 in the current period. The ending balance in retained earnings equals:

A) $546,250.

B) $426,250.

C) $116,250.

D) $433,750.

E) $490,000.

92) A company had a beginning balance in retained earnings of $400,000. It had net income of $50,000 and declared and paid cash dividends of $55,000 in the current period. The ending balance in retained earnings equals:

A) $505,000.

B) $405,000.

C) $395,000.

D) $455,000.

E) $350,000.

93) Companies report prior period adjustments, net of any income tax effects in the:

A) Statement of cash flows.

B) Balance sheet.

C) Statement of retained earnings.

D) Income statement.

E) No disclosure is required.

94) Changes in retained earnings are commonly reported in the:

A) Statement of cash flows.

B) Balance sheet.

C) Statement of stockholders' equity.

D) Multiple-step income statement.

E) Single-step income statement.

95) A company made an error in calculating and reporting amortization expense in Year 1. The error was discovered in Year 2. The item should be reported as a prior period adjustment:

A) on the Year 1 statement of retained earnings.

B) on the Year 1 income statement.

C) on the Year 2 statement of retained earnings.

D) on the Year 2 income statement.

E) accounted for with a cumulative "catch-up" adjustment in Year 2.

96) The statement of changes in stockholders' equity:

A) Is part of the statement of retained earnings.

B) Shows only the ending balances in stockholders' equity.

C) Describes changes in paid-in capital and retained earnings subcategories.

D) Does not include changes in treasury stock.

E) Is reported by very few companies.

97) The amount of income earned per share of a company's outstanding common stock is known as:

A) Restricted retained earnings per share.

B) Earnings per share.

C) Continuing operations per share.

D) Dividends per share.

E) Book value per share.

98) Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company has no preferred stock. The company's earnings per share is:

A) $1.65.

B) $1.59.

C) $44.00.

D) $26.67.

E) $1.71.

99) Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company declared a $27,000 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:

A) $1.65.

B) $1.99.

C) $1.31.

D) $0.34.

E) $4.89.

100) The price-earnings ratio is calculated by dividing:

A) Market value per share by earnings per share.

B) Earnings per share by par value per share.

C) Dividends per share by earnings per share.

D) Dividends per share by market value per share.

E) Market value per share by dividends per share.

101) A company has net income of $90,000; its weighted-average common shares outstanding are 18,000. Its dividend per share is $0.45, its market price per share is $88, and its book value per share is $76. Its price-earnings ratio equals:

A) 9.0.

B) 17.6.

C) 12.5.

D) 15.2.

E) 16.9.

102) A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $110, and its book value per share is $96. Its price-earnings ratio equals:

A) 1.15.

B) 0.87.

C) 19.2.

D) 10.0.

E) 11.46.

103) The amount of annual cash dividends distributed to common shareholders relative to the common stock's market value is the:

A) Dividend payout ratio.

B) Dividend yield.

C) Price-earnings ratio.

D) Current yield.

E) Earnings per share.

104) The dividend yield is computed by dividing:

A) Annual cash dividends per share by earnings per share.

B) Earnings per share by cash dividends per share.

C) Annual cash dividends per share by the market value per share.

D) Par value per share by cash dividends per share.

E) Cash dividends per share by retained earnings.

105) Stocks that pay 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.

106) Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

A) Common stock's market value.

B) Earnings per share.

C) Investors' purchase price of the stock.

D) Amount of retained earnings.

E) Amount of cash.

107) A company paid $0.48 in cash dividends per share. Its earnings per share is $3.20 and its market price per share is $20.00. Its dividend yield equals:

A) 2.4%.

B) 6.25%.

C) 6.4%.

D) 6.67%.

E) 15.00%.

108) A company paid $0.85 in cash dividends per share. Its earnings per share is $3.50, and its market price per share is $35.50. Its dividend yield equals:

A) 2.0%.

B) 2.4%.

C) 9.9%.

D) 21.4%.

E) 24.2%.

109) Book value per share:

A) Reflects the value per share if a company is liquidated at balance sheet amounts.

B) Is assets divided by equity.

C) Is assets divided by the number of common shares outstanding.

D) Measures the current market value assets.

E) Is equal to par value per share.

110) Book value per common share is computed by:

A) Multiplying the number of common shares outstanding times the market price per common share.

B) Dividing total assets by the number of shares outstanding.

C) Dividing stockholders' equity applicable to common shares by the number of common shares outstanding.

D) Multiplying the number of common shares outstanding by par value per share.

E) Dividing the number of common shares outstanding by stockholders' equity applicable to common shares.

111) A company has 50,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $1,470,000, and the par value per common share is $5. The book value per share is:

A) $4.75.

B) $14.70.

C) $10.00.

D) $29.40.

E) $47.50.

112) James Company has 1,000 shares of $10 par preferred stock, which were issued at par. It also has 25,000 shares of common stock outstanding, and its total stockholders' equity equals $500,000. The book value per common share is:

A) $16.00.

B) $19.60.

C) $19.96.

D) $20.00.

E) $10.00.

113) MBP Company has 10,000 shares of $10 par preferred stock, which were issued at par. It also has 250,000 shares of common stock outstanding, and its total stockholders' equity equals $4,000,000. The book value per common share is:

A) $16.67.

B) $16.00.

C) $40.00.

D) $15.60.

E) $10.00.

114) A company has 500 shares of $60 par value preferred stock outstanding. It also has 20,000 shares of common stock outstanding, and the total value of its stockholders' equity is $680,000. The company's book value per common share equals:

A) $31.71.

B) $32.50.

C) $32.75.

D) $33.17.

E) $60.00.

115) The Discount on Common Stock account reflects:

A) The difference between the par value of stock and its issue price when it is issued at a price below par value.

B) One share's portion of the issued corporation's net assets recorded in its accounts.

C) The difference between the par value of the stock and the amount paid-in by stockholders when the amount paid-in is more than par value.

D) An amount of assets defined by state law that stockholders must invest and leave invested in a corporation.

E) The amount a corporation must pay in addition to dividends in arrears if and when it exercises its right to retire a share of callable preferred stock.

116) Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 400 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

A) A debit to Organization Expenses for $4,000.

B) A debit to Organization Expenses for $5,000.

C) A credit to Common Stock for $5,000.

D) A credit to Paid-in Capital in Excess of Par Value, Common Stock for $5,000.

E) A debit to Paid-in Capital in Excess of Par Value, Common Stock for $2,000.

117) A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:

A) A debit to Paid-in Capital in Excess of Par Value, Common Stock for $182,000.

B) A debit to Cash for $14,000.

C) A credit to Common Stock for $182,000.

D) A credit to Common Stock for $14,000.

E) A credit to Paid-in Capital in Excess of Par Value, Common Stock for $196,000.

118) Comfort Mattresses, Inc. sold 26,000 shares of its $1 par value common stock at a cash price of $12 per share. The entry to record this transaction would be:

A) Debit Cash $312,000; credit Common Stock $26,000; credit Paid-in Capital in Excess of Par Value, Common Stock $286,000.

B) Debit Cash for $312,000; credit Common Stock $312,000.

C) Debit Common Stock $26,000; debit Paid-in Capital in Excess of Par Value, Common Stock $286,000; credit Cash $312,000.

D) Debit Cash $312,000; credit Stock Liability $286,000; credit Common Stock $26,000.

E) Debit Common Stock $26,000; credit Cash $26,000.

119) A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

A) A debit to Common Stock for $12,000.

B) A debit to Land for $12,000.

C) A credit to Land for $12,000.

D) A credit to Paid-in Capital in Excess of Par Value, Common Stock for $72,000.

E) A credit to Common Stock for $84,000.

120) A corporation issued 100 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include:

A) A $1,800 credit to Common Stock.

B) A $300 debit to Organization Expenses.

C) A $1,300 credit to Paid-in Capital in Excess of Par Value, Common Stock.

D) A $1,800 debit to Legal Expenses.

E) A $1,800 credit to Cash.

121) A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital is:

A) $100.

B) $600.

C) $1,000.

D) $6,000.

E) $7,000.

122) A company issued 60 shares of $100 par value common stock for $7,000 cash. The journal entry to record the issuance is:

A) Debit Cash $7,000; credit Common Stock $7,000.

B) Debit Investment in Common Stock $7,000; credit Cash $7,000.

C) Debit Cash $7,000; credit Common Stock $6,000; credit Paid-in Capital in Excess of Par Value, Common Stock $1,000.

D) Debit Common Stock $6,000, debit Investment in Common Stock $1,000; credit Cash $7,000.

E) Debit Cash $7,000; credit Paid-in Capital in Excess of Par Value, Common Stock $6,000, credit Common Stock $1,000.

123) A company issued 70 shares of $30 par value preferred stock for $4,000 cash. The journal entry to record the issuance is:

A) Debit Cash $2,100; credit Preferred Stock $2,100.

B) Debit Investment in Preferred Stock $2,100; credit Cash $2,100.

C) Debit Cash $4,000; credit Preferred Stock $4,000.

D) Debit Preferred Stock $2,100, debit Investment in Preferred Stock $1,900; credit Cash $4,000.

E) Debit Cash $4,000; credit Paid-in Capital in Excess of Par Value, Preferred Stock $1,900, credit Preferred Stock $2,100.

124) A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital in excess of par is:

A) $100.

B) $600.

C) $1,000.

D) $6,000.

E) $7,000.

125) A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000. The entry to record this exchange is:

A) Debit Land $70,000; credit Common Stock $50,000; credit Paid-In Capital in Excess of Par Value, Common Stock $20,000.

B) Debit Land $70,000; credit Common Stock $70,000.

C) Debit Land $50,000; credit Common Stock $50,000.

D) Debit Common Stock $50,000; debit Paid-In Capital in Excess of Par Value, Common Stock $20,000; credit Land $70,000.

E) Debit Common Stock $70,000; credit Land $70,000.

126) A premium on common stock:

A) Occurs when a corporation sells its stock for more than par or stated value.

B) Is the difference between par value and issue price when the amount paid is below par.

C) Represents profit from issuing stock.

D) Represents capital gain on sale of stock.

E) Is prohibited in most states.

127) The date the directors vote to declare and pay a dividend is called the:

A) Date of stockholders' meeting.

B) Date of declaration.

C) Date of record.

D) Date of payment.

E) Liquidating date.

128) A liquidating dividend is:

A) Only declared when a corporation closes down.

B) A return of a portion of the capital contributed back to the stockholders.

C) Not allowed under federal law.

D) Only paid in assets other than cash.

E) Only paid in shares of stock.

129) A liability for dividends exists:

A) When cumulative preferred stock is sold.

B) On the date of declaration.

C) On the date of record.

D) On the date of payment.

E) For dividends in arrears on cumulative preferred stock.

130) A company's board of directors votes to declare a cash dividend of $.75 per share of common stock. The company has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The total amount of the cash dividend is:

A) $10,250.

B) $14,625.

C) $7,125.

D) $7,500.

E) $11,250.

131) A corporation with $10 par common stock issues a small stock dividend. The capitalization of retained earnings is equal to:

A) The par value of the shares to be distributed.

B) The par value of the shares outstanding.

C) The market value of the shares to be distributed.

D) The market value of the shares outstanding.

E) There is no capitalization of retained earnings in the case of a small stock dividend.

132) A corporation with $10 par common stock issues a large stock dividend. The capitalization of retained earnings is equal to:

A) The par value of the shares to be distributed.

B) The par value of the shares outstanding.

C) The market value of the shares to be distributed.

D) The market value of the shares outstanding.

E) There is no capitalization of retained earnings in the case of a large stock dividend.

133) A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the declaration of the cash dividend is:

A) Debit Dividend Expense $12,000; credit Cash $12,000.

B) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000.

C) Debit Common Dividend Payable $12,000; credit Cash $12,000.

D) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000.

E) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000.

134) A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the payment of the cash dividend is:

A) Debit Dividend Expense $12,000; credit Cash $12,000.

B) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000.

C) Debit Common Dividend Payable $12,000; credit Cash $12,000.

D) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000.

E) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000.

135) Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding. The journal entry to record the dividend declaration is:

A) Debit Retained Earnings $4,000; credit Common Dividends Payable $4,000.

B) Debit Common Dividends Payable $4,000; credit Cash $4,000.

C) Debit Retained Earnings $4,500; credit Common Dividends Payable $4,500.

D) Debit Common Dividends Payable $4,500; credit Cash $4,500.

E) Debit Retained Earnings $10,000; credit Common Dividends Payable $10,000.

136) Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding. The journal entry to record the dividend payment is:

A) Debit Retained Earnings $4,000; credit Common Dividends Payable $4,000.

B) Debit Common Dividends Payable $4,000; credit Cash $4,000.

C) Debit Retained Earnings $4,500; credit Common Dividends Payable $4,500.

D) Debit Common Dividends Payable $4,500; credit Cash $4,500.

E) Debit Retained Earnings $10,000; credit Common Dividends Payable $10,000.

137) A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

A) Stock dividend.

B) Stock subscription.

C) Premium on stock.

D) Discount on stock.

E) Treasury stock.

138) Which of the following is true of a stock dividend?

A) It is a liability on the balance sheet.

B) The decision to declare a stock dividend resides with the shareholders.

C) Transfers a portion of equity from retained earnings to a cash reserve account.

D) Does not affect total equity, but transfer amounts between the components of equity.

E) Reduces a corporation's assets and stockholders' equity.

139) On September 1, Ziegler Corporation had 50,000 shares of $5 par value common stock, and $1,500,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

A) Debit Retained Earnings $750,000; credit Common Stock Split Distributable $750,000.

B) Debit Retained Earnings $750,000; credit Common Stock $750,000.

C) Debit Retained Earnings $250,000; credit Common Stock $250,000.

D) Debit Retained Earnings $250,000; credit Stock Split Payable $250,000.

E) No entry is made for this transaction.

140) All of the following statements regarding stock dividends are true except:

A) Directors can use stock dividends to keep the market price of the stock affordable.

B) Stock dividends provide evidence of management's confidence that the company is doing well.

C) Stock dividends do not reduce assets or equity.

D) Stock dividends decrease the number of shares outstanding.

E) Stock dividends transfer a portion of equity from retained earnings to contributed capital.

141) A stock dividend is recorded with a transfer from:

A) Contributed capital to retained earnings.

B) Retained earnings to paid-in capital.

C) Retained earnings to assets.

D) Contributed capital to assets.

E) Assets to contributed capital.

142) A corporation declared and issued a 15% stock dividend on October 1. The following information was available immediately prior to the dividend:

The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

A) $45,000.

B) $135,000.

C) $(45,000).

D) $(135,000).

E) $0.

143) Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27. The entry to record the dividend declaration is:

A) Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000.

B) Debit Retained Earnings $135,000; credit Cash $135,000.

C) Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000.

D) Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000.

E) No entry is made until the stock is issued.

144) Eastline Corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares. At the time of the stock dividend, the market value per share was $12. The entry to record this dividend is:

A) Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $36,000.

B) Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $30,000; credit Paid-In Capital in Excess of Par Value, Common Stock $6,000.

C) Debit Common Stock Dividend Distributable $36,000; credit Retained Earnings $36,000.

D) Debit Retained Earnings $30,000; credit Common Stock Dividend Distributable $30,000.

E) No entry is needed.

145) Preferred stock that has the right to prior periods' unpaid dividends even if they were not declared is called:

A) Noncumulative preferred stock.

B) Participating preferred stock.

C) Callable preferred stock.

D) Cumulative preferred stock.

E) Convertible preferred stock.

146) Preferred stock that allows preferred stockholders to share with common stockholders any dividends paid in excess of the percent or dollar amount stated on the preferred stock is called:

A) Convertible preferred stock.

B) Participating preferred stock.

C) Premium stock.

D) Cumulative preferred stock.

E) Common stock.

147) When the dividend rate on preferred stock is less than the rate of return earned on a corporation's assets, it is called: 

A) Financial leverage.

B) Discount on stock.

C) Premium on stock.

D) Preemptive right.

E) Capital gain.

148) Preferred stock that limits stockholders to receiving only the stated amount as a dividend is called:

A) Cumulative preferred stock.

B) Callable preferred stock.

C) Nonparticipating preferred stock.

D) Convertible preferred stock.

E) Participating preferred stock.

149) Ultimate Sportswear has $100,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $500,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $30,000. This dividend should be distributed as follows:

A) $8,000 preferred; $22,000 common.

B) $16,000 preferred; $14,000 common.

C) $7,500 preferred; $22,500 common.

D) $15,000 preferred; $15,000 common.

E) $0 preferred; $30,000 common.

150) Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. Gracey's also has $600,000 of common stock outstanding. During its first year, the company paid cash dividends of $30,000. This dividend should be distributed as follows:

A) $15,000 preferred; $15,000 common.

B) $6,000 preferred; $24,000 common.

C) $30,000 preferred; $0 common.

D) $12,000 preferred; $18,000 common.

E) $0 preferred; $30,000 common.

151) Torino Company has 10,000 shares of $5 par value, 4% cumulative and nonparticipating preferred stock and 100,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $1,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

A) $1,000.

B) $2,000.

C) $3,000.

D) $4,000.

E) $0.

152) Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

A) Participating preferred stock.

B) Callable preferred stock.

C) Cumulative preferred stock.

D) Convertible preferred stock.

E) Noncumulative preferred stock.

153) A dividend preference for preferred stock means that:

A) Preferred stockholders are allocated their dividends before dividends are allocated to common shareholders.

B) Preferred shareholders are guaranteed dividends.

C) Dividends are paid quarterly.

D) Preferred stockholders prefer dividends more than common stockholders.

E) Dividends must be declared on preferred stock.

154) Alto Company issued 7% preferred stock with a $100 par value. This means that:

A) Preferred shareholders have a guaranteed dividend.

B) The amount of the potential dividend is $7 per year per preferred share.

C) Preferred shareholders are entitled to 7% of the annual income.

D) The market price per share will approximate $100 per share.

E) Only 7% of the total paid-in capital can be preferred stock.

155) Stock that was reacquired and is still held by the issuing corporation is called:

A) Capital stock.

B) Treasury stock.

C) Redeemed stock.

D) Preferred stock.

E) Callable stock.

156) Treasury stock is classified as:

A) An asset account.

B) A contra asset account.

C) A revenue account.

D) A contra equity account.

E) A liability account.

157) The following data were reported by a corporation:

The number of outstanding shares is:

A) 12,000.

B) 15,000.

C) 17,000.

D) 20,000.

E) 23,000.

158) Corporations may buy back their own stock for any of the following reasons except to:

A) Avoid a take-over.

B) Have shares available for a merger or acquisition.

C) Have shares available for employee compensation.

D) Maintain market value for the company stock.

E) Allow management to assume the voting rights.

159) The following data has been collected about Keller Company's stockholders' equity accounts:

Assuming the treasury shares were all purchased at the same price, the cost per share of the treasury stock is:

A) $1.15.

B) $1.28.

C) $11.50.

D) $10.50.

E) $10.00.

160) The following data has been collected about Keller Company's stockholders' equity accounts:

Assuming the treasury shares were all purchased at the same price, the number of shares of treasury stock is:

A) 1,150.

B) 1,000.

C) 575.

D) 11,000.

E) 21,000.

161) Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the balance in the Treasury Stock account on August 2?

A) $5,050.

B) $2,600.

C) $100.

D) $1,200.

E) $0.

162) Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 100 shares of its common stock on May 1 for $5,000. On July 1, it reissued 50 of these shares at $52 per share. On August 1, it reissued the remaining treasury shares at $49 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2?

A) $5,050.

B) $2,600.

C) $100.

D) $50.

E) $0.

163) All of the following regarding accounting for Treasury Stock are true except:

A) Corporations do not record gains or losses on transactions involving their own stock.

B) Treasury Stock receives cash dividends but not stock dividends.

C) Purchasing Treasury Stock reduces the corporation's assets and equity by equal amounts.

D) Treasury Stock is presented on the balance sheet as a contra equity account.

E) Treasury Stock does not have voting rights.

164) Fetzer Company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 shares in treasury stock. The journal entry to record the dividend declaration is:

A) Debit Retained Earnings $104,500; credit Common Dividends Payable $104,500.

B) Debit Common Dividends Payable $104,500; credit Cash $104,500.

C) Debit Retained Earnings $100,100; credit Common Dividends Payable $100,100.

D) Debit Common Dividends Payable $100,100; credit Cash $100,100.

E) Debit Retained Earnings $110,000; credit Common Dividends Payable $110,000.

165) West Company declared a $0.50 per share cash dividend. The company has 190,000 shares issued, and 10,000 shares in treasury stock. The journal entry to record the dividend declaration is:

A) Debit Retained Earnings $90,000; credit Common Dividends Payable $90,000.

B) Debit Common Dividends Payable $95,000; credit Cash $95,000.

C) Debit Retained Earnings $5,000; credit Common Dividends Payable $5,000.

D) Debit Common Dividends Payable $90,000; credit Cash $90,000.

E) Debit Retained Earnings $95,000; credit Common Dividends Payable $95,000.

166) West Company declared a $0.50 per share cash dividend. The company has 190,000 shares issued, and 10,000 shares in treasury stock. The journal entry to record the payment of the dividend is:

A) Debit Retained Earnings $90,000; credit Common Dividends Payable $90,000.

B) Debit Common Dividends Payable $95,000; credit Cash $95,000.

C) Debit Retained Earnings $5,000; credit Common Dividends Payable $5,000.

D) Debit Common Dividends Payable $90,000; credit Cash $90,000.

E) Debit Retained Earnings $95,000; credit Common Dividends Payable $95,000.

167) Fetzer Company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 shares in treasury stock. The journal entry to record the payment of the dividend is:

A) Debit Retained Earnings $104,500; credit Common Dividends Payable $104,500.

B) Debit Common Dividends Payable $104,500; credit Cash $104,500.

C) Debit Retained Earnings $100,100; credit Common Dividends Payable $100,100.

D) Debit Common Dividends Payable $100,100; credit Cash $100,100.

E) Debit Retained Earnings $110,000; credit Common Dividends Payable $110,000.

168) Fargo Company's outstanding stock consists of 400 shares of noncumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

The amount of dividends paid to preferred and common shareholders in year 1 is:

A) $200 preferred; $19,800 common.

B) $4,000 preferred; $16,000 common.

C) $17,000 preferred; $3,000 common.

D) $10,000 preferred; $10,000 common.

E) $20,000 preferred; $0 common.

169) Sweet Company's outstanding stock consists of 1,000 shares of cumulative 5% preferred stock with a $100 par value and 10,000 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

The amount of dividends paid to preferred and common shareholders in year 3 is:

A) $7,000 preferred; $25,000 common.

B) $5,000 preferred; $27,000 common.

C) $15,000 preferred; $17,000 common.

D) $32,000 preferred; $0 common.

E) $0 preferred; $32,000 common.

170) Sweet Company's outstanding stock consists of 1,000 shares of noncumulative 5% preferred stock with a $100 par value and 10,000 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

The total amount of dividends paid to preferred and common shareholders over the three-year period is:

A) $15,000 preferred; $25,000 common.

B) $11,000 preferred; $29,000 common.

C) $5,000 preferred; $35,000 common.

D) $12,000 preferred; $28,000 common.

E) $10,000 preferred; $30,000 common.

171) Sweet Company's outstanding stock consists of 1,000 shares of cumulative 5% preferred stock with a $100 par value and 5,000 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

The total amount of dividends paid to preferred and common shareholders over the three-year period is:

A) $15,000 preferred; $25,000 common.

B) $11,000 preferred; $29,000 common.

C) $5,000 preferred; $35,000 common.

D) $12,000 preferred; $28,000 common.

E) $10,000 preferred; $30,000 common.

172) Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

The amount of dividends paid to preferred and common shareholders in Year 2 is:

A) $3,500 preferred; $2,500 common.

B) $3,000 preferred; $3,000 common.

C) $0 preferred; $6,000 common.

D) $4,200 preferred; $1,800 common.

E) $6,000 preferred; $0 common.

173) Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the journal entry necessary to record the repurchase of stock on June 30?

A) Debit Common Stock $4,000; credit Cash $4,000.

B) Debit Common Stock $100; debit Treasury Stock $3,900; credit Cash $4,000.

C) Debit Treasury Stock $3,900; debit Paid-in Capital, Treasury Stock $100; credit Cash $4,000.

D) Debit Treasury Stock, Common $4,000; credit Cash $4,000.

E) Debit Cash $4,000; credit Treasury Stock $4,000.

174) Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the journal entry necessary to record the reissuance of treasury stock on July 20?

A) Debit Common Stock $2,300; credit Cash $2,300.

B) Debit Common Stock $20; debit Treasury Stock $2,290; credit Cash $2,300.

C) Debit Common Stock $2,300; credit Treasury Stock $2,000; credit Paid-In Capital, Treasury Stock $300.

D) Debit Cash $2,300; credit Paid-in Capital, Treasury Stock $300; credit Treasury Stock $2,000.

E) Debit Cash $2,300; credit Treasury Stock $2,300.

175) A corporation issued 2,500 shares of its no par common stock at a cash price of $11 per share. The entry to record this transaction would be:

A) Debit Cash $27,500; credit Paid-in Capital in Excess of Par Value, Common Stock $2,500; credit Common Stock $25,000.

B) Debit Cash $27,500; credit Common Stock $27,500.

C) Debit Common Stock $27,500; credit Cash $27,500.

D) Debit Treasury Stock $27,500; credit Cash $27,500.

E) Debit Treasury Stock $2,500; debit Paid-in Capital in Excess of Par Value, Treasury Stock $25,000; credit Common Stock $27,500.

176) A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share. The issue price was $10 per share. The entry to record this transaction would be:

A) Debit Cash $50,000; credit Paid-in Capital in Excess of Stated Value, Common Stock $45,000; credit Common Stock $5,000.

B) Debit Cash $50,000; credit Common Stock $50,000.

C) Debit Common Stock $50,000; credit Cash $50,000.

D) Debit Treasury Stock $50,000; credit Cash $50,000.

E) Debit Common Stock $25,000; debit Paid-in Capital in Excess of Par Value, Common Stock $5,000; credit Common Stock $45,000.

177) What is a corporation? Identify the key advantages and disadvantages of corporations.

178) What are the rights generally granted to common stockholders?

179) Explain how to calculate the price-earnings ratio and describe how it is used in analysis of a company's financial condition and performance.

180) Explain how to compute dividend yield and discuss how it is used in analysis of a company's financial condition.

181) Explain how to compute book value per common share and discuss how it can be used to analyze the financial condition of a corporation.

182) What is a stock split? How is a stock split different from a stock dividend?

183) Explain the difference between a large stock dividend and a small stock dividend. In addition, explain how to record these two types of stock dividends.

184) What is treasury stock? What reasons might a company hold treasury stock?

185) Boron Company is authorized to issue 50,000 shares of $50 par value, 8%, cumulative, fully participating preferred stock, and 750,000 shares of $5 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

186) A corporation received its charter and began business this year. The company is authorized to issue 500,000 shares of $100 par, 6%, noncumulative, nonparticipating preferred stock, and 1,000,000 shares of no-par common stock. The following selected transactions occurred during this year:

Prepare journal entries to record these transactions.

187) Rhoads Corporation is authorized to issue 250,000 shares of $50 par, 10%, noncumulative, nonparticipating preferred stock and 5,000,000 shares of no-par common stock. Prepare journal entries to record the following selected transactions that occurred during this year:

188) Given the following information about a corporation's current year activities, compute the retained earnings for the current year.

189) Given the following information about a corporation's current year activities, compute the retained earnings for the current year.

190) Explain how each of the following items should be reported by a corporation:

(1) The accounting department discovered that an entry was made last year to Insurance Expense instead of to Prepaid Insurance. The after-tax effect of the charge to Insurance Expense was $5,000.

(2) The accounting department determined the depreciable lives of equipment will be five years instead of the original estimate of seven years.

191) Shaw Corporation reported stockholders' equity on December 31 of the prior year as follows:

The following selected transactions occurred during the current year:

Prepare a statement of retained earnings as of December 31 of the current year.

192) Beagle Company earned $90,000 in income and paid cash dividends of $7,000 to preferred shareholders during the current year. Beagle had 15,500 weighted-average shares of common stock outstanding for the year. Calculate the company's earnings per share.

193) Slate Corporation had the following balances in its stockholders' equity accounts at December 31, 2017:

The following transactions occurred during 2018:

Based on the above information, prepare a statement of stockholders' equity for 2018. Use the form below.

Slate Corporation

Statement of Stockholders' Equity

December 31, 2018

194) A corporation had current year net income of $237,500. It paid preferred dividends of $40,000 cash and had 480,000 weighted-average shares of common stock outstanding. Calculate the corporation's earnings per share.

195) A company's stock is selling for $63.20 per share and its earnings per share is $3.60 for the current year. Calculate the price-earnings ratio.

196) A company reported net income of $836,000 for the current year. The year-end market price per common share was $12 and there were 475,000 weighted-average shares of common stock outstanding. Calculate the company's price-earnings ratio.

197) A company reported $960,000 in net income for the current year. Total weighted-average common shares outstanding are 150,000 shares, and the year-end market price is $67.20 per common share. Calculate the company's price earnings ratio.

198) A company reported $1,050,000 in net income for the current year. Earnings per common share is $1.75 and the year-end market price of the shares is $31.50. Calculate the company's price earnings ratio.

199) A corporation reported net income of $2,730,000 and paid preferred cash dividends of $120,000 during the current year. There were 600,000 weighted-average shares of common stock outstanding and the market price per common share at year-end was $58.30. Calculate the company's price-earnings ratio.

200) Gershwin Company reported net income of $428,000 and paid $8,500 in preferred cash dividends during the current year. The company had 110,000 common shares issued, and 10,000 common shares in treasury during the year. The year-end market price per common share was $41.05. Calculate the company's price-earnings ratio.

201) A company's stock is selling for $35.70 per share at year-end. This current year it paid shareholders a $1.43 per share cash dividend, reported earnings per share of $11.00, and had 750,000 common shares outstanding at year-end. Calculate the company's dividend yield.

202) A corporation paid a cash dividend of $0.85 per share during the current year. It had 1,550,000 common shares outstanding at year-end, its current year earnings per share was $3.45, and the stock's year-end market price was $10.63 per share. Calculate the company's dividend yield.

203) Lafferty Corporation reported earnings per share of $9.75, paid a $6.00 cash dividend per share to preferred shareholders, and paid a $0.54 cash dividend per share to common shareholders. There were 10,000 shares of preferred stock outstanding and 600,000 shares of common stock outstanding during the year, and the market price per share of common stock was $41.60. Calculate the company's dividend yield for common stock.

204) A company paid a cash dividend of $0.88 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.

205) A company has 2,000,000 common shares authorized, 400,000 common shares issued, and 15,000 common shares in treasury stock at the current year-end. It paid $0.96 per share cash dividends during the year. The year-end market price of the stock is $15. Calculate (1) the total dividends paid and (2) the dividend yield.

206) Avro Corporation has $875,000 in stockholders' equity and 350,000 weighted-average shares of common stock outstanding. Calculate the book value per common share.

207) A company has $2,400,000 in stockholders' equity that includes 500 shares of $50 par value preferred stock outstanding and 250,000 shares of common stock outstanding. Calculate the book value per (1) preferred share, and (2) common share.

208) A company reports the following stockholders' equity:

Paid-in Capital:

Compute the (1) number of common shares outstanding and (2) book value per common share.

209) The stockholders' equity section of a company's year-end balance sheet follows:

The preferred stock has one year of dividends in arrears. Calculate the book value per common share.

210) A corporation reports the following year-end stockholders' equity:

Determine the following:

(1) Par value for the preferred stock.

(2) Book value per share for common stock

211) The stockholders' equity section of a corporation's balance sheet follows:

(1) Assuming that no dividends are in arrears, compute the book values per preferred share and per common share.

(2) Assuming that one year of cumulative preferred dividends is in arrears, compute the book value per common share.

212) A company is authorized to issue 750,000 shares of $2 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

213) On July 1, a corporation issued 15,000 shares of no-par common stock with a stated value of $3 per share in exchange for a tract of land having a market value of $215,000. Prepare the general journal entry to record this transaction.

214) On September 20, Fletcher Corporation issued 25,000 shares of no-par common stock for equipment having a market value of $85,000. Prepare the general journal entry to record this transaction.

215) A corporation had the following stock outstanding when the company's board of directors declared a $75,000 cash dividend in the current year:

Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is noncumulative and nonparticipating.

216) A corporation had the following stock outstanding when the company's board of directors declared a $55,000 cash dividend during the current year:

Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is cumulative and nonparticipating and dividends are one year in arrears.

217) A company has $200,000 of 10% noncumulative, nonparticipating, preferred stock outstanding, and $150,000 of common stock outstanding. In the company's first year of operation, no dividends were paid, but during the second year, it paid cash dividends of $25,000. Compute the dividends to be distributed to (1) preferred shares and (2) common shares.

218) A company was organized in January Year 1 and has 20,000 shares of $10 par value, 10%, nonparticipating preferred stock outstanding and 150,000 shares of $2 par value common stock outstanding. It has declared and paid cash dividends each year as shown below. Calculate the total dividends distributed to each class of stockholder under each of the assumptions given.

219) On June 30, a company declared a cash dividend of $0.35 per common share to the shareholders of record on July 15. The cash dividend will be paid on July 31. This company has 500,000 shares authorized and 100,000 shares outstanding. Prepare the journal entries required on June 30, July 15 and July 31.

220) The following selected transactions took place during the current year for a company:

(a) Prepare the journal entries for these transactions.

(b) If Retained Earnings had a $155,000 credit balance on January 1, calculate its year-end balance as of December 31.

221) Cactus Joe Corporation 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, $1,850,000. Prepare journal entries to record the following transactions:

222) For each of the following independent transactions a through d, prepare the necessary journal entry:

(a) Declared a $0.40 per share cash dividend on 300,000 shares of preferred stock outstanding.

(b) Declared and distributed an 8% stock dividend on 800,000 shares of $5 par value common stock outstanding. Market price per common share on this date was $25.

(c) Declared and distributed a 2-for-1 stock split on 400,000 shares of $10 par value common stock outstanding.

(d) Declared and distributed a 35% stock dividend on 700,000 common shares of $1 par value common stock outstanding. Market price per common share on this date was $20.

223) Parlay Corporation has 2,000,000 shares of $0.50 par value common stock outstanding. The following selected transactions related to the company's stock took place during the current year:

Prepare necessary journal entries to record the events of April 15, May 1 and May 10.

224) On August 1, a company's board of directors declared a 10% stock dividend to be distributed on September 1 to the stockholders of record on August 20. The company had 1,000,000 shares of $2.50 par value common stock outstanding with a market value of $23 per share. Prepare the journal entries required on August 1, August 20, and September 1.

225) Dynasty Corporation had stockholders' equity on January 1 as follows: Common Stock, $5 par value, 1,000,000 shares authorized, 400,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $800,000; Retained Earnings, $3,600,000. Prepare journal entries to record the following transactions:

226) A corporation had stockholders' equity on January 1 as follows: Common Stock, $1 par value, 1,500,000 shares authorized, 600,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $1,100,000; Retained Earnings, $2,300,000. Prepare journal entries to record the following transactions:

227) A company had the following stockholders' equity on January 1:

On January 10, the company declared a 40% stock dividend to stockholders of record on January 25, to be distributed January 31. The market value of the stock on January 10 prior to the dividend was $20 per share. What is the book value per common share on February 1?

228) A company reported the following stockholders' equity on January 1 of the current year:

Prepare journal entries for the following selected transactions related to this company's stock during the current year:

229) Underwood Company's only treasury stock transactions for the current year follow: (1) 2,000 shares of its common stock were purchased on June 1 for $80,000; (2) On July 1 it reissued 500 of these shares at $45 per share; (3) On August 1 it reissued an additional 500 treasury shares at $38 per share.

1) Prepare the journal entries required to record these transactions.

2) Calculate the balance in Paid-in Capital, Treasury Stock, on September 1 assuming its beginning-year balance is zero.

230) On January 10, Mood Corporation purchased 15,000 shares of its own common stock at $17.50 per share. On August 4, a total of 2,000 treasury shares were sold at $19.00 per share. These are the only treasury stock transactions ever made by the corporation. Prepare the journal entries required on January 10 and August 4.

231) Record the following transactions of Naches Corporation in general journal form:

(a) Reacquired 8,000 of its own $3 par value common stock at $20 cash per share. The stock was originally issued at $15 per share.

(b) Sold 2,000 shares of the stock reacquired under part (a) at $23 cash per share.

(c) Sold 3,000 shares of the stock reacquired under part (a) at $19 cash per share.

232) The group responsible for overseeing the corporation's activities is (are) the ________.

233) A corporation is responsible for its own acts and debts because it is considered a ________.

234) The ________ protects stockholders' proportional interest in a corporation by allowing them to purchase their proportional share of any common stock later issued by the corporation.

235) A stock ________ keeps stockholder records and prepares official lists of stockholders for stockholder meetings and dividend payments.

236) The number of shares that a corporation's charter allows it to sell is the ________ stock.

237) The total amount of cash and other assets the corporation receives from its stockholders in exchange for common stock is called ________.

238) The cumulative net income and loss not distributed as dividends to a corporation's shareholders is called ________.

239) Stock that has been issued and is held by stockholders is ________ stock.

240) The amount assigned per share to stock by the corporation in its charter is the ________.

241) Stock not assigned a value per share by the corporate charter, allowing it to be issued at any price, is called ________.

242) ________ is a general term that refers to any shares issued to obtain owner financing in a corporation.

243) The least amount that the buyers of stock must contribute to the corporation or be at risk to pay creditors at a future date is called ________.

244) ________ are corrections of material errors in prior period financial statements.

245) ________ is the amount of income earned per share of a company's outstanding common stock.

246) ________ is the stockholders' equity applicable to common shares divided by the number of common shares outstanding.

247) ________ is the annual amount of cash dividends per share distributed to common shareholders relative to the stock's market price.

248) When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends, the unpaid amount is called ________.