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

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Question 61

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The balance in Retained Earnings at the end of the period is created by closing entries.

A) True
B) False

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Question 62

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While some businesses have been granted charters under state laws,most businesses receive their charters under federal laws.

A) True
B) False

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Question 63

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Which one of the following would not be considered an advantage of the corporate form of organization?

The following transactions took place for the XYZ Corporation; a.November 12th - Declared a total cash dividend of $45,000 for stockholders of record November 20th payable on December 1st.Record the journal entry,if necessary,for the following events; Nov.12 - Nov.20 - Dec.1 - b.Briefly describe the significance of November 20th.

On January 1,20xx,Swenson 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 1,20xx,Swenson purchased 4,000 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1,20xx. The journal entry to record the purchase of the treasury shares on February 1,20xx,would include a

The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a

The initial owners of stock of a newly formed corporation are called directors.

The retained earnings statement may be combined with the income statement.

On April 1,10,000 shares of $5 par common stock were issued at $22,and on April 7,5,000 shares of $50 par preferred stock were issued at $104.Journalize the entries for April 1 and 7.

Which statement below is not a reason for a corporation to buy back its own stock.

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

Paid-in capital may originate from real estate donated to the corporation.

The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to

A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made.

Indicate whether the following actions would (+)increase, (-)decrease,or (0)not affect a company's total assets,liabilities,and stockholders' equity.

Treasury stock which was purchased for $3,000 is sold for $3,500.As a result of these two transactions combined

Treasury stock shares are

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: Determine the dividends in arrears for preferred stock for the second year.