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Exam 20: Corporations: Formation and Capital Stock Transactions

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Question 21

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A corporation has 4,000 shares of 5 percent, $100 par-value preferred stock and 50,000 shares of $2 par-value common stock outstanding. If the board of the directors decides to distribute dividends totaling $100,000, the common stockholders will receive a dividend of

A) $1.00 a share.
B) $1.60 a share.
C) $2.00 a share.
D) $2.40 a share.

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

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Question 22

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Robert Schuler, the owner of a sole proprietorship, is planning to incorporate his business. His capital account has a balance of $100,000 after revaluation of the assets. His cash account totals $30,000. He will receive 10 percent, $10 par-value preferred stock with a total par value equal to the cash transferred. The balance of his capital is to be exchanged for shares of $20 par-value common stock with a total par value equal to the remaining capital. How many shares of preferred stock should be issued to Schuler? How many shares of common stock should be issued to Schuler?

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Question 23

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The entry to record a subscription for 100 shares of common stock at par value would consist of a debit to Subscriptions Receivable-Common and a credit to Common Stock.

The transfer of stock between shareholders is

The Gibbs Corporation has outstanding 20,000 shares of 10 percent, $50 par-value, cumulative, nonparticipating preferred stock and 80,000 shares of $10 par-value common stock. The board of directors voted to distribute $80,000 as dividends in 2013, $110,000 in 2014, and $130,000 in 2012. Compute the following: 1. Total dividend paid to preferred stockholders in 2013. 2. Total dividend paid to common stockholders in 2013. 3. Total dividend paid to preferred stockholders in 2014. 4. Total dividend paid to common stockholders in 2014. 5. Total dividend paid to preferred stockholders in 2012. 6. Total dividend paid to common stockholders in 2012.

The holder of a share of 12 percent, $100 par-value preferred stock would receive a dividend of ____________________ per share before any dividend was paid to common stockholders.

Which of the following statements is correct?

When shares of a corporation's stock are transferred from one investor to another, an entry is recorded in the capital stock transfer journal.

The amount paid for stock in excess of par value is called a(n) ___________________.

Turque Corporation issued 4,000 shares of its no-par-value common stock (stated value, $20) for cash at $22 a share. Record the issuance of the stock on page 1 of a general journal. Omit the description.

The Lilac Corporation was organized on January 1, 2013. The firm is authorized to issue 160,000 shares of no-par-value common stock with a stated value of $40 per share and 40,000 shares of $100 par-value, 12 percent preferred stock. Record the selected transactions on page 1 of a general journal. Omit descriptions.

The Northwest Corporation has outstanding 20,000 shares of 12 percent, $50 par-value, noncumulative, nonparticipating preferred stock and 80,000 shares of $10 par-value common stock. The board of directors voted to distribute $60,000 as dividends in 2013, $140,000 in 2014, and $200,000 in 2012. Compute the following: 1. Amount paid on each share of preferred stock in 2013. 2. Amount paid on each share of common stock in 2013. 3. Amount paid on each share of preferred stock in 2014. 4. Amount paid on each share of common stock in 2014. 5. Amount paid on each share of preferred stock in 2012. 6. Amount paid on each share of common stock in 2012.

If the issuing corporation retains the right to repurchase the shares of preferred stock from the stockholders at a specified price, the preferred stock is ___________________.

The Paid-in Capital in Excess of Par Value-Preferred Stock account would be shown in the

The entry to record the issuance of 1,000 shares of $10 par-value common stock for $14 a share consists of a debit to Cash for $14,000 and a credit to Common Stock for

The entry to record the issuance of 1000 shares of $2 stated-value common stock for $10 a share consists of a debit to Cash for $10,000 and a credit to Common Stock for

A corporation is owned by

A corporation received a subscription for 200 shares of 10 percent, $100 par-value preferred stock at $103 a share. The entry to record this transaction consists of a debit to Subscriptions Receivable-Preferred for $20,600 and a credit to

A corporation has 10,000 shares of 6 percent, $50 par-value noncumulative preferred stock and 50,000 shares of $4 par-value common stock outstanding. Last year, no dividends were paid. This year, the board of directors decided to pay a dividend of $80,000. The common stockholders will receive a dividend of

The amount received in excess of the par value of preferred stock issued is recorded in an account called Paid-in Capital in Excess of Par Value-Preferred Stock.