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Which of the following statements about the par value of common stock is not correct?


A) The par value is not the same as the market value of the stock.
B) The par value is a nominal amount identified in the corporate charter.
C) The par value is the amount credited to the common stock account when the stock is issued.
D) The par value is the amount credited to common stock when treasury stock is reissued.

E) All of the above
F) B) and C)

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With regards to the Dividends Payable and Dividends accounts,one of the closing entries required at year end,includes a:


A) credit to Retained Earnings.
B) credit to Dividends Payable.
C) debit to Retained Earnings.
D) debit to Dividends Payable.

E) C) and D)
F) B) and D)

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Queen Creek Co.had total assets of $280,000,total liabilities of $168,000 and stockholders' equity of $112,000 before repurchasing 1,000 shares of its $1 par value common stock for $14 per share.After this repurchase,total assets equal ________,total liabilities equal ________ and stockholders' equity equals ________.


A) $266,000;$168,000;$98,000
B) $280,000;$154,000;$126,000
C) $280,000;$182,000;$98,000
D) $294,000;$168,000;$126,000

E) A) and B)
F) A) and C)

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Which of the following statements about dividends in arrears is correct?


A) Dividends in arrears do not appear on the balance sheet or require a journal entry.
B) Dividends in arrears are not disclosed to stockholders.
C) Dividends in arrears applies to common stock.
D) Dividends in arrears are legal liabilities.

E) A) and D)
F) A) and C)

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Galaxy Industries buys back 600,000 shares of its stock from investors at $45 a share.Two years later it reissues this stock for $65 a share.The stock reissue would be recorded with a debit to Cash for:


A) $39 million and a credit to Treasury Stock for $39 million.
B) $27 million,a debit to Additional Paid-in Capital for $12 million,a credit to Treasury Stock for $27 million,and a credit to Stockholders' Equity for $12 million.
C) $39 million,a credit to Treasury Stock for $27 million,and a credit to Additional Paid-in Capital for $12 million.
D) $39 million,a credit to Treasury Stock for $27 million,and a credit to Gain on Sale of Treasury Stock for $12 million.

E) B) and D)
F) B) and C)

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McEnroe Inc.has outstanding 10 million shares of $2 par value common stock and 1 million shares of $4 par value preferred stock.The preferred stock has a 7% cumulative dividend preference.The company declares total dividends amounting to $50,000,$250,000,and $600,000 during 2017,2018,and 2019,respectively. Required: Part a.Compute the amount of dividends to be distributed to preferred and common shareholders during 2017. Part b.Compute the amount of dividends to be distributed to preferred and common shareholders during 2018. Part c.Compute the amount of dividends to be distributed to preferred and common shareholders during 2019.

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Part a
Current preferred dividend = 1,00...

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Which of the following statements about a stock split is correct?


A) A stock split decreases Retained Earnings.
B) Stock splits do not require a journal entry.
C) Stock splits are the same as stock dividends.
D) Stock splits increase the par value per share.

E) B) and D)
F) B) and C)

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Lenders will sometimes impose dividend restrictions to:


A) prevent the corporation from paying out too much to stockholders.
B) try to limit available dividends.
C) prevent the corporation from paying out too much to other creditors.
D) ensure the lenders will receive more dividends than the stockholders.

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

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The following data are taken from the stockholders' equity section of the balance sheet of Driftwood Company: The following data are taken from the stockholders' equity section of the balance sheet of Driftwood Company: What was the average issue price per share of the common stock? A) $36.40 B) $10.00 C) $42.00 D) $50.40 What was the average issue price per share of the common stock?


A) $36.40
B) $10.00
C) $42.00
D) $50.40

E) A) and C)
F) B) and C)

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A corporation does not have a legal obligation to pay dividends.

A) True
B) False

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Match each term with the appropriate definition.Not all definitions will be used. -Date of Declaration


A) The total number of shares currently owned by stockholders.
B) The amount above the par value of the stock that owners paid the issuer for the stock.
C) When employees of a company have the opportunity to buy a company's stock in the future at a fixed price.
D) The date on which a company determines who receives a dividend.
E) The date on which a liability is recorded for a dividend.
F) When a company sells issues of stock after its IPO.
G) When owners of the company contribute additional capital beyond what they paid for their stock.
H) When cash or stock dividends are issued according to the proportion of stock owned.
I) The date on which a company authorizes a dividend payment.
J) The date on which a company debits dividends payable and credits cash.
K) Dividends that have not had income tax withheld from them.
L) The total number of shares the company has sold,whether held by stockholders or by the company.
M) The accumulation of all the past dividends the company has not paid.
N) When cash or stock dividends are issued in an equal dollar or share amount per stockholder.

O) A) and C)
P) B) and K)

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Which number is potentially the largest?


A) The number of shares authorized.
B) The number of shares issued.
C) The number of shares outstanding.
D) The number of shares certified.

E) B) and D)
F) C) and D)

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Delta Inc.had 1,000,000 shares of $4 par value common stock authorized.On December 31,2018,there were 400,000 shares issued and outstanding.The market value of its common stock on that date was $100 per share.On January 5,2019,the board of directors declared a stock dividend. Required: Part a.Assume that you have 100 shares of Delta Inc.common stock.Determine how many shares will you have after a 100% stock dividend. Part b.Briefly explain the how a 100% stock dividend affects the stockholders' equity accounts and the total resources of the company.(Do not quantify the impacts or prepare a journal entry. ) Part c.Assume instead that the board declared a 10% stock dividend.Briefly explain how that 10% stock dividend affects the stockholders' equity accounts and the total resources of the company.(Do not quantify the impacts or prepare a journal entry. ) Part d.Identify three possible explanations for the declaration of a stock dividend.

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Part a
A 100% stock dividend means that ...

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Ferris Company reported the following on its balance sheet: total contributed capital of $186,000,treasury stock of $19,500 and total stockholder's equity of $237,500.Ferris had 1,000,000 authorized shares of its $0.01 par value common stock of which 200,000 were outstanding. What was the amount of Retained Earnings reported in the balance sheet?


A) $184,000
B) $2,000
C) $71,000
D) $51,500

E) C) and D)
F) A) and C)

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Preferred stockholders:


A) must receive dividends every year.
B) have the right to receive dividends only in the years the board of directors declares dividends.
C) have the right to receive dividends only if there are enough dividends to pay the common stockholders too.
D) must receive more dividends per share than the common stockholders.

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

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At the end of its first year of operations,Alder Co.had 150,000 shares of preferred stock,5% cumulative,$100 par value.It also has 1,000,000 shares of common stock $0.01 par value.(The share information represents the numbers of shares issued and outstanding for both types of stock. ) If sufficient dividends are declared,what is the per share dividend that will be paid on the preferred stock?


A) $0.01 per share.
B) $100.00 per share.
C) $5.00 per share.
D) $7.50 per share.

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

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Which of the following statements about when cash dividends can be paid is not correct?


A) The Retained Earnings account must have an accumulated balance sufficient to cover the amount of the dividends to be paid.
B) The Cash account must have a balance sufficient to pay the dividends.
C) The board of directors must have declared the dividend before it can be paid.
D) Loan covenants cannot restrict the payment of dividends.

E) B) and D)
F) C) and D)

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Flint Corporation's contributed capital totals $54,000,Retained Earnings equals $117,000,Treasury Stock equals $32,400,and Common Stock equals $18,000.If the company does not have any accumulated other comprehensive income (loss) ,stockholders' equity,what is the total amount of stockholders' equity?


A) $203,400
B) $138,600
C) $221,400
D) $156,600

E) A) and B)
F) C) and D)

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