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Exam 11: Corporations: Organization,stock Transactions,and Dividends

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Question 21

True/False

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Before a stock dividend can be declared or paid,there must be sufficient cash.

A) True
B) False

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Question 22

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Sabas Company has 20,000 shares of $100 par,2% cumulative preferred stock and 100,000 shares of $50 par common stock.The following amounts were distributed as dividends: $\begin{array}{rr}\text { Year 1: } & \$ 10,000 \\\text { Year 2: } & 45,000 \\\text { Year 3: } & 90,000\end{array}$ Determine the dividends in arrears for preferred stock for the second year.

A) $25,000
B) $10,000
C) $0
D) $30,000

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

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Question 23

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On January 1,Vermont Corporation had 40,000 shares of $10 par value common stock issued and outstanding.All 40,000 shares had been issued in a prior period at $20.00 per share.On February 1,Vermont purchased 3,750 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1. The journal entry to record the purchase of the treasury shares on February 1,would include a

A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

166. The following transactions took place for the XYZ Corporation: November 12 - Declared a total cash dividend of $45,000 for stockholders of record November 20 payable on December 1. Record the journal entries required by these events. Briefly describe the significance of November 20.

Earnings per share

Characteristics of a corporation include

A reduction of par or stated value of stock results from a

Which of the following is not a right possessed by common stockholders of a corporation?

For accounting purposes,stated value is treated the same way as par value.

The declaration of a cash dividend decreases a corporation's stockholders equity and decreases its assets.

Texas Inc.has 10,000 shares of 6%,$125 par value,cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31.What is the annual dividend on the preferred stock?

A corporation purchased 1,000 shares of its own $5 par common stock at $10 and subsequently sold 500 of the shares at $20.What is the amount of revenue realized from the sale?

The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial statements.

The excess of sales price of treasury stock over its cost should be credited to

If a corporation is liquidated,preferred stockholders are paid before the creditors and before the common stockholders.

Under the Internal Revenue Code,corporations are required to pay federal income taxes.

The liability for a dividend is recorded on which of the following dates?

The two main sources of stockholders' equity are

Paid-in capital may originate from real estate transactions.