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Exam 12: Stockholders Equity

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Question 21

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Convertible preferred stock is preferred stock that may be exchanged for

A) cash at the option of the corporation.
B) common stock at the option of the corporation.
C) cash at the option of the stockholder.
D) common stock at the option of the stockholder.

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Question 22

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Which of the following statements is true of stock option plans?

A) They give employees the right to purchase stock in the company at a fixed price on a future date.
B) They are not a form of motivating employees.
C) The compensation expense from stock option plans is not tax deductible.
D) They must be offered to all employees.

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Question 23

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The company issued 7,000 shares of stock in exchange for equipment that had a fair market value of $320,000. The entry to record transaction 2 would be:

On January 1,2013,Belmont Corporation had 50,000 shares of $10 par value common stock issued and outstanding.All 50,000 shares had been issued in a prior period at $15 per share.On February 1,2013,Belmont purchased 2,000 shares of treasury stock for $18 per share and later sold the treasury shares for $20 per share on March 2,2013.The entry to record the sale of the treasury shares on March 2,2013,would be:

A 3-for-1 stock split will have the same effect on the number of shares outstanding as a 300 percent stock dividend.

A corporation should account for the declaration of a 10 percent stock dividend by

Use the following information to answer the question below. On January 1,2013,Falcon 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 $17 per share.On February 1,2013,Falcon purchased 6,100 shares of treasury stock for $19 per share and later sold the treasury shares for $26 per share on March 2,2013. What amount of gain due to these treasury stock transactions should be reported on the income statement for the year ended December 31,2013?

Par value is the minimum cushion of capital established for the protection of

modified Prepare entries in journal form without explanations to record the following transactions involving Dailey Corporation's $10 par value common stock:

Tallapoosa Corporation has total contributed capital of $300,000 and retained earnings of $170,000.It has 1,000 shares of $50 par value preferred stock with no dividends in arrears and 5,000 shares of $50 par value common stock.The preferred stock is callable at 105.The book value of each share of common stock is

The entry required to record start-up and organization costs will cause a decrease in net income for the period.

Define outstanding stock.

Match each definition with the correct term below. -No-par stock

The limited liability of a stockholder can be viewed as both an advantage and a disadvantage.

Walker Corporation has 40,000 shares of $20 par value common stock outstanding.Prepare entries in journal form without explanations for the following transactions.(Market value of the stock was $30.00 on December 16 and $31.00 on December 23.)

Tallaposa Corporation issued 4,000 shares of its $20 par value common stock for some land.The land had a fair market value of $120,000. Prepare the entries in journal form necessary to record the stock issue for the land under each of the following conditions: a.The stock was selling for $28 per share on the day of the transaction. b.Management attempted to place a market value on the common stock but could not do so.

Holders of common stock must be made aware of possible restrictions on common dividends when the preferred stock is

Which of the following phrases is not descriptive of the corporate form of business?

On May 1,2013,Monroe Corporation had 200,000 shares of $200 par value common stock outstanding with a market value of $320 per share.On May 2,2013,Monroe announced a 4-for-1 stock split.After the split,the par value of the stock

The declaration of a cash dividend causes an increase in a corporation's liabilities at the date of record.