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Exam 12: Corporations: Organization, Stock Transactions, and Dividends

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Question 91

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Marcos Company, which had 35,000 shares of common stock outstanding, declared a 4-for-1 stock split. (a) What will be the number of shares outstanding after the split? (b) If the common stock had a market price of $\$ 280$ per share before the stock split, what would be an approximate market price per share after the split?

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(a) 140,000 shares (...

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Question 92

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Par value

A) is the monetary value assigned per share in the corporate charter
B) represents what a share of stock is worth
C) represents the original selling price for a share of stock
D) is established for a share of stock after it is issued

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

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Question 93

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Journalize the following selected transactions completed during the current fiscal year: Mar. 4 The board of directors of New Town, Inc. declared a stock split that reduced the par of common shares from $\$ 100$ to $\$ 20$ . This action increased the number of outstanding shares to 500,000 . 26 Declared a dividend of $\$ 1.75$ per share on the outstanding shares of common stock. Apr. 5 Paid the dividend declared on March 26. Nov. 1 Declared a $5 \%$ stock dividend on the common stock outstanding (the fair market value of the stock to be issued is $\$ 25$ ). Dec. 1 Issued the certificates for the common stock dividend declared on November 1.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

The following transactions took place for the XYZ Corporation: ​ November 12 - Declared a total cash dividend of $45,000 for stockholders of record November 20 payable on December 1. Record the journal entries required by these events. ​ Briefly describe the significance of November 20.

A corporation has 10,000 shares of $100 par stock outstanding. If the corporation issues a 5-for-1 stock split, the number of shares outstanding after the split will be 40,000.

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

The primary purpose of a stock split is to

A stock split results in a transfer at market value from retained earnings to paid-in capital.

Cash dividends become a liability to a corporation on the date of record.

On February 1 of the current year, Motor, Inc. issued 700 shares of $2 par common stock to an attorney in return for preparing and filing the articles of incorporation. The value of the services is $9,600. Journalize this transaction.

While some businesses have been granted charters under state laws, most businesses receive their charters under federal laws.

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: $\begin{array}{lr}\text { Year 1: } & \$ 10,000 \\\text { Year 2: } & 45,000 \\\text { Year 3: } & 90,000\end{array}$ ​ Determine the dividends per share for preferred and common stock for each year.

Alma Corp. issues 1,000 shares of $10 par common stock at $14 per share. Journalize the transaction.

A company had stock outstanding as follows during each of its first three years of operations: 2,500 shares of 10%, $100 par, cumulative preferred stock and 50,000 shares of $10 par common stock. The amounts distributed as dividends are presented below. Determine the total and per-share dividends for each class of stock for each year by completing the schedule.

What is the total stockholders' equity based on the following account balances $\begin{array} { l r } \text { Common Stock } & \$ 375,000 \\\text { Paid-In Capital in Excess of Par } & 90,000 \\\text { Retained Earnings } & 190,000 \\\text { Treasury Stock } & 15,000\end{array}$

The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial statements.

A corporation purchases 10,000 shares of its own $10 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity?

If 50,000 shares are authorized, 41,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 43,000.

Indicate whether the following actions would (+) increase, (-) decrease, or (0) not affect a company's total assets, liabilities, and stockholders' equity.