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Exam 11: Reporting and Analyzing Stockholders Equity

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Question 31

Multiple Choice

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The Paid-in Capital in Excess of Par Value is increased in the accounting records when

A) the number of shares issued exceeds par value.
B) the stated value of capital stock is greater than the par value.
C) the market value of the stock rises above par value.
D) capital stock is issued at an amount greater than par value.

E) None of the above
F) B) and C)

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Question 32

Multiple Choice

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Stockholders of a corporation directly elect

A) the president of the corporation.
B) the board of directors.
C) the treasurer of the corporation.
D) all of the employees of the corporation.

E) None of the above
F) A) and B)

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Question 33

Multiple Choice

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In published annual reports

The two ways that a corporation can be classified by ownership are

Green, Inc. had 200,000 shares of common stock outstanding before a stock split occurred and 800,000 shares outstanding after the stock split. The stock split was

If the market value of the assets received and the market value of the stock issued are both available, then what amount should be used to value the assets?

Outstanding stock of the West Corporation included 40,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par non-cumulative preferred stock. In 2013, West declared and paid dividends of $4,000. In 2014, West declared and paid dividends of $12,000. How much of the 2014 dividend was distributed to preferred shareholders?

Those most responsible for the major policy decisions of a corporation are the

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

When no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock become legal capital.

S. Lawyer performed legal services for E. Corp. Due to a cash shortage, an agreement was reached whereby E. Corp. would pay S. Lawyer a legal fee of approximately $15,000 by issuing 8,000 shares of its common stock (par $1) . The stock trades on a daily basis and the market price of the stock on the day the debt was settled is $1.80 per share. Given this information, the best journal entry for E. Corp. to record for this transaction is

The per share amount normally assigned by the board of directors to a small stock dividend is

During 2014 Kenton Corporation had the following transactions and events: 1. Issued par value preferred stock for cash at par value 2. Issued par value common stock for cash at an amount greater than par value 3. Completed a 2 for 1 stock split in which the $10 par value common stock was changed to $5 par value stock *4. Declared a small stock dividend when the market value was higher than the par value 5. Declared a cash dividend *6. Issued the shares of common stock required by the stock dividend declaration in 4. above 7. Issued par value common stock for cash at par value 8. Paid the cash dividend Instructions Indicate the effect(s) of each of the foregoing items on the subdivisions of stockholders' equity. Present your answers in tabular form with the following columns. Use (I) for increase, (D) for decrease, and (NE) for no effect.

Why must a corporation have sufficient retained earnings before it may declare cash dividends?

Dawson Company issued 600 shares of no-par common stock for $5,400. Which of the following journal entries would be made if the stock has stated value of $2 per share?

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

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

Stock dividends and stock splits have the following effects on retained earnings:

What is the formula for the payout ratio? What does it indicate?

If a stockholder cannot attend a stockholders' meeting, he may delegate his voting rights by means of a(n)