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Exam 11: Corporations: Organization, Stock Transactions

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Question 51

Multiple Choice

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In published annual reports

A) subdivisions 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.

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Question 52

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Which of the following statements concerning taxation is accurate?

A) Partnerships pay state income taxes but not federal income taxes.
B) Corporations pay federal income taxes but not state income taxes.
C) Corporations pay federal and state income taxes.
D) Only the owners must pay taxes on corporate income.

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Question 53

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Legal capital per share cannot be equal to the

The purchase of treasury stock

Aaron, Inc. paid $120,000 to buy back 10,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $8 per share. The entry to record the sale includes a

Jungle Corporation's stockholders' equity section at December 31, 2017 appears below: On June 30, 2018, the board of directors of Kenner Corporation declared a 15% stock dividend, payable on July 31, 2018, to stockholders of record on July 15, 2018. The fair value of Kenner Corporation's stock on June 30, 2018, was $15. On December 1, 2018, the board of directors declared a 2 for 1 stock split effective December 15, 2018. Jungle Corporation's stock was selling for $20 on December 1, 2018, before the stock split was declared. Par value of the stock was adjusted. Net income for 2018 was $190,000 and there were no cash dividends declared. Instructions (a) Prepare the journal entries on the appropriate dates to record the stock dividend and the stock split. (b) Fill in the amount that would appear in the stockholders' equity section for Jungle Corporation at December 31, 2018, for the following items:

The following information is available for Gaynor Corporation: Instructions Based on the preceding information, calculate return on common stockholders' equity.

The following information is available for Gordon Corporation: $\begin{array} { l r } \text { Common stock } ( \$ 5 \text { par } ) & \$ 600,000 \\\text { Paid-in capital in excess of par-common } & 200,000 \\\text { Retained earnings } & 180,000 \\\text { Treasury stock } & 80,000 \\\text { Common shares issued } & 100,000 \text { shares } \\\text { Common shares outstanding } & 90,000\end{array}$ Instructions Based on the preceding information, calculate the book value per share.

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

In the stockholders' equity section of the balance sheet,

The entry to record the declaration of a stock dividend increases _______________, and decreases ________________.

A corporation acts under its own name rather than in the name of its stockholders.

The cost of a noncash asset acquired in exchange for common stock should be either the fair value of the consideration given up or the consideration received, whichever is more clearly determinable.

Darman Company issued 700 shares of no-par common stock for $7,700. Which of the following journal entries would be made if the stock has a stated value of $2 per share?

Karl Corporation was organized on January 2, 2018. During 2018, Karl issued 40,000 shares at $24 per share, purchased 6,000 shares of treasury stock at $26 per share, and had net income of $600,000. What is the total amount of stockholders' equity at December 31, 2018?

Bellingham Corporation has the following stockholders' equity balances at December 31, 2018.

Each of the following is reported for common stock except the

The return on ________________ shows how many dollars of net income were earned for each dollar invested by owners.

Record the following transactions for Quik Corporation on the dates indicated. 1. On March 31, 2018, Quik Corporation discovered that Depreciation Expense on equipment for the year ended December 31, 2017, had been recorded twice, for a total amount of $84,000 instead of the correct amount of $42,000. 2. On June 30, 2018, the company's internal auditors discovered that the April 2018 telephone bill for $2,400 had erroneously been charged to the Interest Expense account. 3. On August 14, 2018, cash dividends on preferred stock of $150,000 declared on July 1, 2018, were paid.

The par value of common stock must always be equal to its market value on the date the stock is issued.