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Exam 11: Reporting and Interpreting Stockholders Equity

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Question 21

True/False

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The declaration and distribution of a 2-for-1 stock split results in a reduction of retained earnings.

A) True
B) False

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Question 22

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HighRise Company reported the following amounts of contributed capital in the stockholders' equity accounts as of January 1, 2016:

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Question 23

True/False

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The issue of $5 par value common stock for $18 per share results in an $18 credit to the common stock account for each share issued.

Survivor Company was formed on January 1, 2016 by selling and issuing 20,000 shares of common stock at $15 per share. On December 1, 2016, the company declared a cash dividend of $10,000, which will be paid in cash on January 15, 2017. Required: A.Prepare the journal entry to record the sale and issuance of the common stock on January 1, 2016 under each of the following independent assumptions: 1.The common stock has a par value of $10 per share.2.The common stock was no-par with a stated value of $5 per share.3.The common stock was no-par and had no stated value. B.Prepare the journal entry to record the dividend declaration on December 1, 2016. C.Prepare the journal entry to record payment of the dividend on January 15, 2017.

Tractor Corporation was just formed. The following accounts with code letters are given below. Required: Indicate the appropriate journal entry for each transaction by entering the code letters and the correct amounts (do not use dollar signs). The transactions, including the example, are not interrelated unless otherwise stated.

Which of the following statements is true about partnership accounting?

Net income decreases when treasury stock is sold for an amount less than the original cost when the shares of stock were repurchased.

The following information is provided for Bold Company for the year 2017: • Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding • Common stock, $100 par value, 2,000 shares issued and outstanding • Dividends in arrears for three prior years (2014­­-2016) • Total dividends declared and paid in 2017 were $50,000. How much of the 2017 dividend payment was paid to the common stockholders assuming the preferred stock is noncumulative?

What would be the title for the common stock account on a balance sheet prepared using International Financial Reporting Standards (IFRS) ?

Which of the following statements is correct?

What is the correct entry for the sale of 1,000 shares of $10 par value preferred stock for $50,000 cash?

Constance Corporation reported a $750,000 balance in its common stock account at the end of 2016. The company held 50,000 shares of treasury stock and had 700,000 shares of common stock outstanding. Required: Calculate the par value per share of the company's common stock.

A large stock dividend:

Which of the following statements is false?

Treasury stock is a corporation's own stock that was issued and then repurchased, and is still held by the corporation.

Total assets remain the same when a company uses cash to purchase treasury stock.

The following information is provided for Slickers, Inc. for year 2016: • Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding • Common stock, $100 par value, 2,000 shares issued and outstanding • Dividends in arrears for 2014 and 2015 • Total dividends declared and paid during 2016 totaled $25,000 How much of the dividend is paid to the common stockholders during 2016 assuming the preferred stock is cumulative?

The declaration of a stock dividend by a corporation's board of directors creates a liability on the declaration date.

Which of the following statements is not correct?

Which of the following statements is false?