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Exam 10: Reporting and Analyzing Stockholders Equity

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Question 61

Multiple Choice

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When stock is issued in exchange for a noncash asset, the value recorded for the shares issued is best determined by

A) the book value of the noncash asset.
B) the market value of the shares.
C) the par value of the shares.
D) the contributed capital of the shares.

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

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Question 62

Multiple Choice

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In published annual reports

A) subclassifications within the stockholders' equity section are routinely reported in detail.
B) capital surplus is used in place of retained earnings.
C) the individual sources of additional paid-in capital are often combined.
D) retained earnings is often not shown separately.

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

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Question 63

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Johnson Company issued 900 shares of no-par common stock for $17,100. Which of the following journal entries would be made if the stock has no stated value?

On January 1, Swanson Corporation had 80,000 ordinary shares with a €10 par value outstanding. On March 17, the company declared a 15% share dividend to shareholders of record on March 20. Market value of the shares was €13 on March 17. The entry to record the transaction of March 17 would include a

Which of the following show the proper effect of a stock split and a stock dividend?

In the stockholders' equity section of the balance sheet

CAB Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2017. What is the annual dividend on the preferred stock?

La Vida Corporation issued 24,000 shares of no-par value ordinary shares for €29.50 per share. Which of the following statements is true?

Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 10,000 shares of common stock to pay its recent attorney's bill of $50,000 for legal services on a land access dispute, which of the following would be the best journal entry for Retro to record?

Preferred stockholders generally do not have the right to vote for the board of directors.

All of the following statements regarding retained earnings are true except

Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share. In the stockholders' equity section, the effects of the transaction above will be reported

Which of the following would not affect the balance of the Retained Earnings account?

If a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends received from that corporation.

Nance Corporation's December 31, 2017 balance sheet showed the following: $\begin{array}{lr}6 \% \text { preferred stock, } \$ 20 \text { par value, cumulative, }\\30,000 \text { shares authorized; } 20,000 \text { shares issued }&\$400,000\\\text { Common stock, } \$ 10 \text { parvalue, } 3,000,000 \text { shares authorized; }\\1,950,000 \text { shares issued, } 1,920,000 \text { shares outstanding }&19,500,000\\\text { Paid-in capital in excess of parvalue - preferred stock } & 60,000 \\\text { Paid-in capital in excess of parvalue - common stock } & 28,000,000 \\\text { Retained earnings } & 9,650,000 \\\text { Treasury stock (30,000 shares) } & 630,000\end{array}$ Nance declared and paid a $85,000 cash dividend on December 15, 2017. If the company's dividends in arrears prior to that date were $24,000, Nance's common stockholders received

If an investment firm underwrites a stock issue, the

The date on which a cash dividend becomes a binding legal obligation is on the

Herman Corporation had net income of $100,000 and paid dividends of $25,000 to common stockholders and $20,000 to preferred stockholders in 2017. Herman Corporation's common stockholders' equity at the beginning and end of 2017s was $450,000 and $550,000, respectively. Herman Corporation's return on common stockholders' equity is

A stock split results in a transfer at market value from retained earnings to paid-in capital.

Which of the following statements about dividends is not accurate?