ACCT 211 Read & Interact Chapter 11 Corporate Reporting and Analysis solutions complete answers

ACCT 211 Read & Interact Chapter 11 Corporate Reporting and Analysis solutions complete answers 

 

Keys, Inc. purchased 100 shares of its own common stock for $10 per share. The stock is now classified as ______ stock, a contra equity account, reported on the statement of stockholder's equity.

 

Stock that typically includes preference for receiving dividends and for distribution of corporate assets during a liquidation is called  _ stock.

 

A ___________ is an entity created by law that is separate from its owners. Owners are called stockholders or shareholders. These entities can be privately or publicly held.

 

In the computation of basic earnings per share, a company will use the _____.

 

A statement of stockholders' equity lists balances of:

 

The amount of income earned per each share of a company's outstanding common stock is known as:

 

The account that consists of a company's cumulative net income less any losses and dividends declared since its inception is called _________.

 

Ivers, Inc. purchased 100 shares of its own $10 par value common stock for $20 per share. The journal entry to record this transaction would include which of the following entries?

 

              is an account that consists of a company's cumulative net income less any losses and dividends declared since its inception.

 

Corporations purchase and hold their own stock, known as treasury stock, for several reasons. Identify which of the following is not a reason that a corporation would buy treasury stock.

 

True or false: Preferred stock can be issued to raise money with voting rights.

 

Cameron, Inc. held 1,000 shares of its own $10 par value common stock purchased for $20 per share. In March, Cameron sold 10 shares at $20 per share. The journal entry to record the sale of treasury stock would include a (debit/credit) ________ to Treasury Stock in the amount of ________.

 

Blink, Inc. has 1,000 shares of $10 par, 5% preferred stock, and 20,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $20,000 dividend, the payment to common shareholders will total $      .

 

Mario, Inc. declares a 2-for-1 stock       . This means that Mario will "call in" its outstanding shares and issue two shares in exchange for each old share of stock.

 

John Kim agrees to contribute equipment with a fair market value of $5,000 in exchange for 100 shares of Rio Inc.'s common stock with a par value of $1 per share. Rio will record this transaction as a credit to which of the following accounts? (Check all that apply.)

 

A corporation is created by obtaining a charter from:

 

A charter application usually must be signed by the prospective stockholders called incorporaters or       . Then, it is filed with the appropriate state official.

 

____ _____ is an account that consists of company's cumulative net income less any losses and dividends declared since its inception.

 

A stock dividend that is greater than 25% of the previously outstanding shares of stock is considered to be a ____ stock dividend.

 

When a corporation declares and pays a cash dividend, there are three notable important dates. Which date does not require a formal journal entry to the financial statements?

 

Rank the following groups in order of authority-- with the highest authority at the top.

 

A ____ is an entity created by law that is separate from its owners. Owners are called stockholders or shareholders. These entities can be privately or publicly held.

 

Gomez Inc.'s charter authorizes 1,000 shares of stock at a par value of $1 per share. Gomez sells 200 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include which of the following entries? (Check all that apply.)

 

_____ stock is the number of shares that a corporation's charter allows it to sell. The number of these shares usually exceeds the number of shares issued (and outstanding), often by a large amount.

 

Josie Inc.'s charter authorizes 1,000 shares of stock with no par value. Josie sells 100 shares of stock at its initial offering for $5 per share. The journal entry to record this transaction will include a     to Common Stock, for $__________.

 

Vernon, Inc.'s charter did not assign a par-value to its authorized stock. However, Vernon's directors assigned a(n) _____ value per share. This value becomes a minimum legal capital per share in this case.

 

The board of directors of Anchor, Inc. authorizes at $0.50 cash dividend to its 100,000 shares of common stock issued and outstanding. On the date of payment, a journal entry will include which of the following accounts?

 

A small stock dividend is a distribution of __% of less of previously outstanding shares.

 

Jordan Inc.'s charter states that there are 50,000 shares of stock authorized with a par value of $5 per share. This typically means that investors must pay a _____ of $5 per share to invest in the corporation.

 

John Kim agrees to contribute equipment with fair market value of $5,000 in exchange for 100 shares of Rico Inc.'s common stock with a par value of $1 per share. Rico will record this transaction as a credit to which of the following accounts?

 

     has/have special rights that give it priority over other types of stock in one or more areas.

 

Blink, Inc. has a 1,000 shares of $10 par, 5% preferred stock, and 20,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $20,000 dividend, the payment to common shareholders will total    .

 

Vanya Inc.'s charter authorizes 1,000 shares of stock at a stated value of $1 per share. Vanya sells 50 shares of stock at its initial offering for $10 per share. The journal entry to record this transaction will include which of the following entries? (Check all that apply.)

 

Payton, Inc.'s charter authorized 100,000 shares of stock with a par value of $1 per share. Payton issues 100 shares at a market value of $5 per share. The journal entry to record this transaction will include a credit to __________ in the amount of __________.



Darby, Inc. has 25,000 shares of stock issued and outstanding. All the shares of stock have the same rights and characteristics; therefore, the stock is called _______ stock.

 

The board of directors authorizes a cash _________ or distribution of cash to its investors.

 

_____________ value stock is stock not assigned a value per share by the corporate charter. Its advantages is that it can be issued at any price without the possibility of a minimum legal capital.

 

Identify the advantages of the corporate form of business.

 

Which of the following is not a characteristic of a corporation?

 

When the board of directors authorizes a cash dividend to investors, there are three important dates involved - the date of declaration, date of record, and date of    .

 

Identify the disadvantages of the corporate form of business. (Check all that apply.)

 

On May 25, Tyler, Inc. issues 100 shares of $10 par value preferred stock for $5,000 cash. The entry to record this transaction would include a     to the preferred stock account in the amount of    .

 

On June 1, the board of directors of Dylan, Inc. declare a cash dividend of $1 per share. On June 1, there are 1,000 shares of stock issued and outstanding. The journal entry require on the date of declaration will include a     to the Common Dividend Payable account.

 

Stockholder's equity, reported on the balance sheet, consists of which of the following accounts?

 

Keys Inc. purchased 100 shares of its own common stock for $10 per share. The stock is now classified as ____ stock, a contra equity account, reported on the statement of stockholder's equity.

 

Martin, Inc.’s charter authorizes 50,000 shares of stock with a par value of $1 per share. 1,000 shares of stock are issued at a market value of $5 per share. This means that the shares of stock are issued at a     .

 

5.
Avery, Inc. held 100 share sof its own $10 par value common stock purchased for $15 per share. On December 1, Avery sold 10 shares for $15 per share. The journal entry to record the sale of treasury stock would include (debit/credit) _____ to Treasury Stock in the amount of $_____
 
 
6.
Bing Inc.'s charter authorizes 500 shares of stock with no par value. Bing sells 100 shares of stock at its initial offering for $5 per share. The journal entry to record this transaction will include a
 
 
9.
The board of directors of Chester Inc. authorizes a $0.10 cash dividend to its 10,000 shares of common stock issued and outstanding. On the date of payment, a journal entry will debit which of the following accounts?
 
 
10.
The board of directors of Visor, Inc. authorize a _____, a distribution of addition shares of the corporation's own stock, to existing shareholders.
 
 
11.
Bryce, Inc. declared a 50% stock dividend on March 15, when there were 1,000 shares of $1 par value stock issued and outstanding, and the market value was $5. The entry to record the declaration will include a _____ to the Retained Earnings accounting, in amount of
 
 
13.
Capital ____ is a general term that refers to any shares issued to obtain capital (owner financing)
 
 
15.
Carin, Inc. declared a 50% stock dividend on January 15, when there were 10,000 shares of $1 par value stock issued and outstanding, and the market value was $20. The entry to record the declaration will include debit to the ______ account, in the amount of ______
 
 
16.
A company has 10,000 shares of $100 par, 6% cumulative preferred stock outstanding. If the company declares a total of $200,000 of cash dividends for the year for both its common and preferred stock and the preferred stock is two years in arrears, how much will be allocated to the (1) preferred stockholders and (2) the common stockholders?
 
 
20.
Corporations can be separated into two types. A ________ held corporations does NOT offer its stock to the public sale and usually has few stockholders. A ______ held corporation offers its stock for public sale and can have thousands of stockholders
 
 
21.
A corporation with a (debit/credit) ______ balance for retained earnings is said to have a retained earnings deficit. This can arise when a company incurs cumulative losses or pays more dividends than total earnings.
 
 
22.
Crystal, Inc. has 500 shares of outstanding $10 par common stock, with a current market value of $20 per share. Earnings per share is $2.99. The price earnings ratio is
 
 
23.
(Cumulative/noncumulative) preferred stockholders have the right to be paid both the current and all prior periods' unpaid dividend's before any dividend is paid to common stockholders
 
 
24.
Dean Inc.'s charter indicates a par value of $1 per share. Dean issues a 100 shares at a market value of $8 per share. The journal entry to record this transaction will be include
 
 
25.
A _____ dividend, declared a corporation's directors, is a distribution of addition shares of the corporation's own stock
 
 
 
 
 
 
 
 
 
 
 
 

26.
A ______ dividend, declares by a corporation's directors, is a distribution of addition shares of the corporation's own stock
 
 
28.
The entry to close a Income Summary account, when a company has net income, will include a _____ to the Retained Earnings account
 
 
29.
The formula for the price-earnings ratio is _______ value per share/earnings per share
 
 
30.
Fortune, Inc. holds 50 shares of treasury stock purchased for $20 per share. In March, Fortune sold 10 shares for $50 per share. In December, Fortune sold another 5 shares at only $10 per share. The journal entry to rector the transaction for December will include a (debit/credit) _____ to the Paid-In Capital, Treasury Stock account in the amount of _____
 
 
31.
Franz Inc. declared a 50% stock dividend when there were 10,000 shares of $1 par value stock issued and outstanding, and the market value was $5 per share. on the date of payment, the entry to record distribution of stock will include a (debit/credit) _____ to common stock dividend distributable account, in the amount of $0.
 
 
34.
Identify which of the following is NOT generally a right of common stockholders.
 
 
35.
In January, Stripe, Inc. purchased 50 shares of its own $10 par value common stock for $20 per share. In March, Stripe sold 10 shares at $25 per share. The journal entry to record the sale of treasury stock using the cost method would include a (debit/credbit) _____ to Treasury Stock in the amount of _____
 
 
37.
A ______ is the distribution of cash to its owners. This is determined by the board of directors
 
 
38.
J. Flores owns a business and is trying to decide whether to incorporate. While researching corporations, she has determined the following facts. Which of these facts is not correct?
 
 
45.
Logan, Inc. held 500 shares of treasury stock with a cost of $10 per share. In December, Logan sold 10 shares at $20 per share. The journal entry to record the sale of treasury stock using the cost method would include a (debit/credit) ______ to Treasury Stock in the amount of ______
 
 
46.
Long, Inc. purchased 50 shares of its own $10 par value common stock for $50 per share. The journal entry to record this transaction would include a debit to the _______ Stock account in the amount of _____
 
 
47.
Mario Hernandez owns 25 shares at $100 par, 5% cumulative preferred stock. During the current year, no dividends are declared or paid. The unpaid amount of _______ is considered dividends in ______
 
 
48.
The market value per share is the price at which stock is bought and sold. Which of the following factors does NOT influence market value?
 
 
51.
No-par value stock not assigned a value per share by the corporation charter. Its advantage is that it can be issued _____ without the possibility of minimum legal capital
 
 
52.
On January 1, Lang Inc. has 100,000 shares of stock issued and outstanding. The board of directors of Lang wants to authorize a large stock dividend. This means that they must authorize a stock dividend of at least ____ shares of stock
 
 
53.
On January 1, the board of directors of Shante, Inc. declared a 10% stock dividend. On this date, there were 10,000 shares of $1 par value stock issued and outstanding and the market value was $5 per share. The entry to record this transaction would include a debit to _____ in the amount of _____
 
 
54.
On June 1, the board of directors of Big, Inc. declare a 20% stock dividend. On this date, there were 10,000 shares of $1 par value stock issued and outstanding and the market value was $5 per share. The entry to record this transaction include a (debit/credit) ______ to Retained Earnings in the amount of _____
 
 
56.
Organizations expenses, or the costs to organize a corporation, include which of the following?
 
 
59.
Peas, Inc. has 1,000 shares of $5 par value common stock outstanding. The annual cash dividend per share was $6.00; market value per share was $30; and net income during the period was $65,000. Dividend yield equals _____%
 
 
60.
Philips Inc. reports stockholder's equity on its financial statement. The two items reported in the stockholder's equity section of Philip's balance sheet are _____ Capital and Retained Earnings
 
 
 
 
 
 
 
 
 

61.
Preferred sock usually carries a preference of dividends, meaning that:
 
 
62.
_____ preferred stock confers no right to prior period unpaid dividends
 
 
63.
_____ reflects the amount of equity applicable to common shares on a per share basis. It is computed by taking stockholders' equity applicable to common hares and dividing it by the number of share outstanding.
 
 
64.
Rush Inc.'s charter authorized 500,000 shares of stock with a par value of $1 per share. Rush issues 10 shares at a market value of $10 per share. The journal entry to record this transaction will include
 
 
70.
Stockholder's equity consists of _____ and retained earnings
 
 
72.
Stockholders have the right to _____ at stockholders' meetings
 
 
73.
____ stock is a general term that refers to any shares issued to obtain owner financing
 
 
74.
A stock _____ is the _____ distribution of additional shares to stockholders according to their percent ownership. When this occurs, the corporation "calls in" its outstanding shares and issues more than one new share in exchange for each old share
 
 
75.
______ stock is the number of shares that a coloration's charter allows it to sell
 
 
76.
_______ stock refers to issued stock that is currently held by stockholders
 
 
77.
Stock splits are different from stock dividends but both of them result in an increase in the number of outstanding shares. A corporation has 10,000 shares of outstanding stock. Which of the following pairs of numbers will yield the same number of new shares outstanding?
 
 
78.
_____ stock typically includes preference for receiving dividends and for the distribution of corporate assets during liquidation
 
 
79.
Transferable Ownership Rights
 
 
80.
True or False: A corporation has agreed to pay a $0.10 cash dividend on shares of common stock. On the date of record, no formal journal entry is required
 
 
81.
True or False: To record a stock split, debit Retained Earnings and credit Common Stock
 
 
82.
The ____ value per share is the price at which a stock is bought and sold
 
 
 
 
 
 
 
 
 

85.
Visor, Inc. had net income during the period of $10,000. Preferred dividends were $2,000 and the weighted-average common shares outstanding were 500. Basic earnings per share equal.
 
 
86.
What is the accounting treatment for corporate organization costs?
 
 
87.
When all authorized shares of stock have the same rights and characteristics, the stock is called
 
 
89.
When _____ value stock is issued, the value per share is assigned by the board of directors
 
 
90.
Which of the following characteristics applies to both a sole proprietor and a general partnership but not a corporation?
 
 
91.
Which of the following is not a reason that a corporation would issue preferred stock?
 
 
92.
Which of the following statements if FALSE regarding stock splits?
 
 
93.
Zinc, Inc. has 10,000 shares of $5 par, 5% preferred stock, and 5,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $15,000 dividend, the payments to preferred shareholders
 
 
94.
Zion, In. declares a 10% stock dividend when there are 10,000 shares of $1 per value stock issued and outstanding and the market value is $5 per share. on the date of payment, Zion will issue the stock and record the translation with which of the following entries?
 
 
 
 
 
 
 
 
 

1.
The account that consists of a company's cumulative net income net income less any losses and dividends declared since its inception is called __________.
 
 
2.
Authorizing a cash dividend payment to investors requires three crucial dates. Identify which of the following is not a correct term to describe these dates.
 
 
3.
Avery, Inc held 100 shares of its own $10 par value common stock purchased for $15 per share. On December 1, Avery sold 10 shares at $15 per share. The journal entry to record the sale of treasury stock would include a _________ to treasury Stock in the amount of $_________________
 
 
4.
Bing Inc.'s charter authorizes 500 shares of stock with no par value. Bing Inc. sells 100 shares of stock at its initial offering for $5 per share. The journal entry to record this transaction will include a (debit/credit) _______ to Common Stock for ______.
 
 
8.
Carefree, Inc. has 20,000 shares issued and outstanding. On August 1, the board authorizes a 20% stock dividend. This is considered a ___________ stock dividend.
 
 
9.
Carin, Inc. declared a 50% stock dividend on January 15, when there were 10,000 shares if $1 par value stock issues and outstanding, the market value was $20. The entry to record the declaration will include debit to the _________ account, in the amount of _____________.
 
 
10.
Corporations can be separated into two types. A ___________ held corporation does not offer its stock for public sale and usually has a few stockholders. A _____________ held corporation offers its stock for public sale and can have thousands of stockholders.
 
 
11.
A ______________ dividend, declared by a corporation's directors, is a distribution of additional shares of the corporation's own stock.
 
 
14.
In January, Stripe, Inc. purchased 50 shares of its own $10 par value common stock for $20 per share. In March, Stripe sold 10 shares at $25 pr share. The journal entry to record the sale of treasury stock using the cost method would include a ___________________ to Treasury Stock in the amount of $____________
 
 
17.
Mario Hernandez owns 25 shares of $100 par, 5% cumulative preferred stock. During the current year, no dividends are declared or paid. The unpaid amount of $___________________ is considered dividends in ____________.
 
 
19.
Niren, Inc.'s charter authorizes 1,000,000 shares of stock at a par value of $1 per share. Niren sells 100 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include a (debit/credit)        to Common Stock, $1 par for $      .
 
 
20.
On August 20, Max, inc. issues 100 shares of $1 par value preferred stock for $3,000 cash. The entry to record this transaction would include a _________________ to the preferred stock account in the amount of $______________
 
 
21.
On March 15, the board of directors of Richmond, Inc. declare a cash dividend of $1 per share. On March 15, there are 1,000 shares of stock issued and outstanding. The journal entry required on the date of declaration will include a debit to the ____________ account
 
 
22.
Organization expenses, or the costs to organize a corporation. include which of the following?
 
 
23.
________________ preferred stockholders have a right to be paid both the current and all prior periods' unpaid dividends before any dividend is paid to common stockholders
 
 
25.
Riley Inc's charter authorizes 1,000 shares of stock at a stated value of $10 per share. Riley issues 50 shares of stock at its initial offering for $20 per share. The journal entry to record this transaction will include a _______ to common stock, $_____________
 
 
 
 
 
 
 
 
 
 
 
 
 

26.
Rush, Inc's charter authorized 500,000 shares of stock with a par value of $1 per share. Rush issues 10 shares at a market value of $10 per share. The journal entry to record this transaction will include a ______________ to the common stock, $1 par account in the amount of $______________________
 
 
27.
A stock divided that is greater that 25% of the previously outstanding shares of stock is considered to be a ________ stock dividend.
 
 
29.
A stock _________ is the distribution of additional shares to stockholders according to their percent ownership. When this occurs, the corporation "calls in" its outstanding shares and issues more than one new share in exchange for each old share.
 
 
30.
_____ stock is the number of shares that a corporation's charter allows it to sell.
 
 
31.
______ stock typically includes preferences for receiving dividends and for the distribution of corporate assets during a liquidation.
 
 
32.
The _____ value of stock is an amount assigned per share by the corporation in its charter. In many states, this amount establishes the minimum legal capital, which refers to the least amount that the buyers of the stock must contribute or be subject to paying at future dates.
 
 
33.
The __________ value per share is the price at which a stock is bought and sold.
 
 
38.
When a corporation purchases shares of its own, it is called _____________ stock.
 
 
39.
When all authorized shares of stock have the same rights and characteristics, the stock is called ______________________ stock.
 
 
41.
Zion, Inc. declares a 10% stock dividend when there are 10,000 shares of $1 par value stock issued and outstanding and the market value is %5 per share. On the date of the payment, Zion will issue the stock and record the transaction with which of the following entries
 
 
 
 
 
 
 
 
 

1.
Avery, Inc. held 100 shares of its own $10 par value common stock purchased for $15 per share. On December 1, Avery sold 10 shares at $15 per share. The journal entry to record the sale of treasury stock would include a (debit/credit)        to Treasury Stock in the amount of $      .
 
 
5.
The board of directors of Visor, Inc. authorize a _________, a distribution of additional shares of the corporation's own stock, to existing shareholders.
 
 
6.
Capital __________ is a general term that refers to any shares issues to obtain capital (owner financing).
 
 
7.
Carin, Inc. declared a 50% stock dividend on January 15, when there were 10,000 shares of $1 par value stock issued and outdenting, and the market value for $20. The entry to record the declaration will include debit to the __________ account, in the amount of __________.
 
 
8.
a charter application usually must be signed by the prospective stockholder called incorporates or _________. Then, it is filed with the appropriate state official.
 
 
9.
Dane Inc. purchased 10 shares of its own $5 par value common stock for $20 per share. The journal entry to record this transaction would include a __________ to the Treasury Stock account in the amount of __________.
 
 
10.
A ______________ dividend, declared by a corporation's directors, is a distribution of additional shares or the corporation's own stock.
 
 
11.
The formula for book value per common share is stockholders' equity applicable to common shares divided by:
 
 
12.
The formula for the price-earnings ratio is __________ value per share/earnings per share
 
 
13.
Identify the formula to compute basic earnings per share:
 
 
15.
The _____________ lists the beginning and ending balances of key equity accounts and described the changes that occur during the period.
 
 
16.
Logan Inc. held 500 shares of treasury stock with a cost of $10 per share. In December, Logan sold 10 shares at $20 per share. The journal entry to record the sale of treasury stock using the cost method would include a ___________ to Treasury Stock in the amount of ____________.
 
 
17.
Long Inc. purchased 50 shares of its own $10 par value common stock for $50 per share. The journal entry to record this transaction would include a debit to the ____________ Stock account in the amount of _________.
 
 
18.
Mario Hernandez owns 25 shares of $100 par, 5% cumulative preferred stock. During the current year, no dividends are declared or paid. The unpaid amount fo $_________ is considered in __________.
 
 
19.
One June 1, the board of directors of Dylan INC., declared a cash dividend of $1 per share. On June 1, there are 1,000 shares of stock issued and outstanding. The journal entry required on the date of declaration will include a __________ to the Common Dividend Payable account.
 
 
20.
One way to help identify whether a stock is an income stock or a growth stock is to analyze its _________, by taking annual cash dividends per share divided by market value per share.
 
 
22.
Organization expenses, or the costs to organize a corporation, include which of the following?
 
 
23.
__________ preferred stockholders have the right to be paid both the current and all prior periods' unpaid dividends before any dividend is paid to common stockholders
 
 
24.
Rank the positions of a corporation in order of authority:
 
 
25.
A ratio that divides market value (price) per share by earnings per share is called:
 
 
 
 
 
 
 
 
 
 
 
 

26.
Riley Inc.'s character authorizes 1,000 shares of stock at a stated value of $10 per share. Riley issues 50 shared of stock at its initial offering for $20 per share. The journal entry to record this transaction will include a __________ to Common stock, $__________.
 
 
28.
Stockholders' equity, reported on the balance sheet consists of which of the following accounts?
 
 
29.
Stockholders have the right to __________ at stockholders' meetings.
 
 
30.
A stock __________ is the distribution of additional shares to stockholders according to their percent ownership. When this occurs, the corporation "calls in" its outstanding shares and issues more than one new share in exchange for each old share.
 
 
31.
__________ stock is the number of shares that a corporation's charter allows it to sell
 
 
32.
__________ stock typically includes preference for receiving dividends and for the distribution of corporate assets during a liquidation.
 
 
33.
Treasury stock is a(n) ___________ equity account, with a normal debit balance. It is reported on the stockholders' equity section of the balance sheet as a reduction to stockholders' equity.
 
 
34.
When a corporation purchases shares of its own stock, it is called __________ stock.
 
 
36.
Zinc, Inc. has 10,000 shares of $5 par, 5% preferred stock, and 5,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $15,000 dividend, the payments to preferred shareholders will total _________.
 
 
 

2.
Capital _________ is a general term that refers to any shares issued to obtain capital (owner financing):
 
 
3.
Corporations can be separated into two types. A __________ held corporation does not offer its stock for public sale and usually has few stockholders. A _________ held corporation offers its stock for public sale and can have thousands of stockholders:
 
 
5.
Dean Inc.'s charter indicates a par value of $1 per share. Dean issues 100 shares at a market value of $8 per share. The journal entry to record this transaction will include a debit to the _______ account in the amount of ______:
 
 
8.
J. Flores owns a business and is trying to decide whether to incorporate. While researching corporations, she has determined the following facts. Which is not correct:
A. corps have ease of capital accumulation
B. corps incur double taxation
C. corps dissolve when owners transfer rights
D. corps limit shareholders' liability
E. corps have lack of mutual agency
 
 
11.
Mario Hernandez owns 25 shares of $100 par, 5% cumulative preferred stock. During the current year, no dividends are declared or paid. The unpaid amount of ______ is considered dividends in _________:
 
 
12.
The market value per share is the price at which stock is bought and sold. Which of the following factors does not influence market value:
A. Par value
B. Growth
C. Dividends
D. Expected future earnings
 
 
14.
A ______ on stock occurs when a corporation issues its stock for more than par (or stated) value:
 
 
15.
Organization expenses, or the costs to organize a corporation, include:
 
 
16.
_______ preferred stock confers no rights to prior period unpaid dividends:
 
 
17.
_______ preferred stockholders have a right to be paid both the current and all prior periods' unpaid dividends before any dividend is paid to common stockholders:
 
 
18.
Preferred stock usually carries a preference for dividends, meaning that:
 
 
19.
Rank groups in order of authority:
1. President, vice president, and other officers
2. Employees
3. Board of directors
4. stockholders
 
 
20.
Riley Inc.'s charter authorizes 1,000 shares of stock at a stated value of $10 per share. Riley issues 50 shares of stock at its initial offering for $20 per share. The journal entry to record this transaction will include a (debit/credit)        to Common Stock, $      .
 
 
21.
Stockholders' equity, reported on the balance sheet, consists of which of the following accounts:
 
 
22.
Stockholders have the right to _______ at stockholders' meetings:
 
 
24.
__________ stock typically includes preference for receiving dividends and for the distribution of corporate assets during a liquidation:
 
 
25.
Two of the biggest disadvantages of the corporate form of business are government regulation and corporate       .
 
 
26.
The _______ value of stock is an amount assigned per share by the corporation in its charter. In many states, this amount establishes the minimum legal capital, which refers to the least amount that the buyers of stock must contribute or be subject to paying at future dates:
 
 
27.
______ value stock is no-par stock to which to directors assigned a certain value per share. This value becomes the minimum legal capital per share in this case:
 
 
 
 
 
 
 
 
 
 
 
 
 

30.
Zinc Inc. has 10,000 shares of $5 par, 5% preferred stock, and 5,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $15,000 dividend, the payments to preferred shareholders will total:
 
 
 

1.
 
 
Mario Hernandez owns 25 shares of $100 par, 5% cumulative preferred stock. During the current year, no dividends are declared or paid. The unpaid amount of $__________ is considered dividends in __________.
2.
 
 
Organization expenses, or the costs to organize a corporation, include which of the following? (Check all that apply)
1) Legal fees
2) Depreciation
3) Dividends
4) Charter fees
3.
 
 
Zion, Inc. declares a 10% stock dividend when there are 10,000 share of $1 par value stock issued and outstanding and the market value is $5 per share. On the date of payment, Zion will issue the stock and record the transaction with which of the following entries? (Check all that apply)
1) Debit to Common Stock Dividend Distributable for $1,000
2) Debit to Common stock Dividend Distributable for $5,000
3) Credit to Cash for $5,000
4) Credit to Common Stock for $5,000
5) Credit to Common Stock for $1,000
4.
 
 
Identify the disadvantages of the corporate form of business. (Check all that apply)
1) Transferable ownership rights
2) Government regulation
3) Lack of mutual agency
4) Corporate taxation
5) Limited liability
7.
 
 
Of the following statements, which are true for the corporate form of organization? (Select all that apply)
1) Ownership rights cannot be easily transferred
2) Owners have unlimited liability for corporate debts
3) Capital is more easily accumulated than with most other forms of organization
4) Corporate income that is distributed to shareholders is usually taxed twice.
5) It is separate legal entity
6) It has a limited life
7) Owners are not agents of the corporation
9.
 
 
Carin, Inc. declared a 50% stock dividend on January 15, when there were 10,000 shares of $1 par value stock issued and outstanding, and the market value was $20. The entry to record the distribution of stock will include a debit to the __________ account, in the amount of __________.
a. Common Stock Dividend Distributable, $5,000
b. Common Stock; $100,000
c. Common Stock Dividend Distributable; $100,000
d. Common Stock; $5,000
11.
 
 
Bryce, Inc. declared a 50% stock dividend on March 15, when there were 1,000 shares of $1 par value stock issued and outstanding, and the market value was $5. The entry to record the declaration will include (debit/credit) to the Retained Earnings account, in the amount of __________.
a. debit; $500
b. debit; $1,000
c. credit; $500
d. credit; $1,000
12.
 
 
The market value per share is the price at which stock is bought and sold. Which of the following factors does not influence market value?
a. Par value
b. Expected future earnings
c. Dividends
d. Growth
13.
 
 
Which of the following is not a characteristic of a corporation?
a. Unlimited liability of stockholders
b. Government regulation
c. Continuous life
d. Transferable ownership rights
e. Corporate taxation
15.
 
 
Zinc, Inc. has 10,000 shares of $5 par, 5% preferred stock, and 5,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $15,000 dividend, the payments to preferred shareholders will total __________.
a. $750
b. $2,500
c. $500
16.
 
 
When stock is cumulative preferred stock and the board of directors does not declare a dividend, the unpaid dividend amount is called:
a. dividend payable
b. dividend in arrears
c. dividend distributable
17.
 
 
__________ value stock is no-par stock to which the directors assigned a certain value per share. This value becomes the minimum legal capital per share in this case.
a. General
b. Stated
c. Adjusted-par
18.
 
 
Which of the following statements is false regarding stock splits?
a. Stock splits decrease the par value of each share of stock
b. Stock splits increase retained earnings
c. Stock splits increase the number of shares of stock issued
 
 
 
 
 
 
 
 
 
 
 

19.
 
 
When a corporation purchases shares of its own stock, it is called __________ stock.
a. preferred
b. treasury
c. convertible
d. callable
20.
 
 
On January 1, Lang, Inc. has 100,000 shares of stock issued and outstanding. The board of directors of Lang wants to authorize a large stock dividend. This means that they must authorize a stock dividend of at least __________ shares of stock.
a. 50,001
b. 20,001
c. 25,001
d. 30,001
21.
 
 
Dean, Inc.'s charter indicates a par value of $1 per share. Dean issues 100 shares at a market value of $8 per share. The journal entry to record this transaction will include a debit to the __________ account in the amount of __________.
22.
 
 
No-par value stock is stock not assigned a value per share by the corporate charter. Its advantage is that is can be issued __________ without the possibility of a minimum legal capital.
a. only to preferred stockholders
b. only to friends and family
c. at any price
23.
 
 
Darby, Inc. has 25,000 shares of stock issued and outstanding. All the shares of stock have the same rights and characteristics; therefore, the stock is called __________ stock.
24.
 
 
On June1, the board of directors of Dylan, Inc. declare a cash dividend of $1 per share. On June 1, there are 1,000 shares of stock issued and outstanding. The journal entry required on the date of declaration will include a (debit/credit) to the Common Dividend Payable account.
25.
 
 
Rush, Inc.'s charter authorized 500,000 shares of stock with a par value of $1 per share. Rush issues 10 shares at a market value of $10 per share. The journal entry to record this transaction will include a (debit/credit) to the Common Stock, $1 par account in the amount of $__________.
26.
 
 
On August 20, Max, Inc. issues 100 shares of $1 par value preferred stock for $3,000 cash. The entry to record this transaction would include a (debit/credit) to the preferred stock account in the amount of $__________.
27.
 
 
Niren, Inc.'s charter authorizes 1,000,000 shares of stock at a par value of $1 per share. Niren sells 100 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include a (debit/credit) to Common Stock, $1 par for $__________.
29.
 
 
Riley Inc.'s charter authorizes 1,000 shares of stock at a stated value of $10 per share. Riley issues 50 shares of stock at its initial offering for $20 per share. The journal entry to record this transaction will include a (debit/credit) to Common Stock, $__________.
31.
 
 
The closing process requires that end of the year revenue accounts are close with a (debit/credit).
32.
 
 
On June 1, the board of directors of Big, Inc. declare a 20% stock dividend. On this date, there were 10,000 shares of $1 par value stock issued and outstanding and the market value was $5 per share. The entry to record this transaction would include a (debit/credit) to Retained Earnings in the amount of $__________.
33.
 
 
Dane, Inc. purchased 10 shares of its own $5 par value common stock for $20 per share. The journal entry to record this transaction would include a (debit/credit) to the Treasury Stock account in the amount of $__________.
34.
 
 
The board of directors authorizes a cash __________ or distribution of cash to its investors.
 
 
 
 
 
 
 

35.
 
 
Jose Garcia agrees to contribute land with a fair market value of $10,000 in exchange for 200 shares of Damian Inc.'s common stock with a par value of $10 per share. The journal entry to record this transaction in the books of Damian, Inc., will include a credit to _________ in the amount of _______.
36.
 
 
__________ preferred stock confers no right to prior period unpaid dividends.
37.
 
 
Philip's Inc. reports stockholders' equity on its financial statements. The two items reported in the stockholders' equity section of Philip's balance sheet are __________ Capital and Retained Earnings.
38.
 
 
The __________ value of stock is an amount assigned per share by the corporation in its charter. In many states, this amount establishes the minimum legal capital, which refers to the least amount that the buyers of stock must contribute or be subject to paying at future dates.
40.
 
 
__________ stock typically includes preference for receiving dividends and for the distribution of corporate assets during a liquidation.
41.
 
 
A __________ on stock occurs when a corporation issues its stock for more than par (or stated) value.
42.
 
 
Corporations can be separated into two types. A __________ held corporation does not offer its stock for public sale and usually has few stockholders. A __________ held corporation offers its stock for public sale and can have thousands of stockholders.
44.
 
 
Capital __________ is a general term that refers to any shares issued to obtain capital (owner financing).
45.
 
 
A __________ dividend, declared by a corporation's directors, is a distribution of additional shares of the corporation's own stock.
46.
 
 
True or false: Stockholders do not have the power to bind the corporation to contracts. This is referred to as lack of mutual agency.
 
 
 
 
 
 
 

1.
(Ch13) A corporation can purchase its own stock and retire it. Retiring stock reduces the number of _____ shares.
 
 
2.
(Ch13) A _____ dividend, declared by a corporation's directors, is a distribution of additional shares of the corporation's own stock.
 
 
3.
(Ch13)A _____ dividend, declared by the corporation's board of directors, is a distribution of additional shares of the corporation's own stock.
 
 
5.
(Ch13)A proxy is:
 
 
7.
(Ch13) A stock ____ is the distribution of additional shares to stockholders according to their percent ownership. When this occurs, the corporation "calls in" its outstanding shares and issues more than one new share in exchange for each old share.
 
 
8.
(Ch13) A treasury stock, is a _____ equity account, and is reported on the statement of ________________________.
 
 
9.
(Ch13)Authorizing a cash dividend payment to investors requires 3 crucial dates. What are they?
 
 
10.
(Ch13) Common stockholders usually have the general right to: (5 rights)
 
 
11.
(Ch13) Fortune sold 5 shared of treasury stock for $10 per share. The journal entry to record this transaction would include a (debit/credit)_____ to the Paid-In Capital, Treasury Stock account in the amount of $___
 
 
15.
(Ch13) Long INC purchased 50 shares of its own $10 par value common stock for $50 per share. The journal entry to record this transaction would include a debit to the _____ Stock Account in the amount of $______.
 
 
16.
(Ch13)Mario owns 25 shares of $100, par, 5% cumulative preferred stock. During the current year no dividends are declared or paid. The unpaid amount of $___ is considered dividends in _____
 
 
17.
(Ch13) Martin Inc's authorizes 50,000 shares of stock with a par value of $1 per share. 1000 shares of stock are issued at market value of $5 per share this means that the share of stock are issued at a _________.
 
 
18.
(Ch13) No-par value stock is not assigned a value per share by the corporate charter. Its advantage is that it can be issued _____ without the possibility of a minimum legal capital.
 
 
19.
(Ch13)On August 20th Max Inc. issues 100 shares of $1 par value preferred stock for $3000 cash. The entry to record this transaction would include a _____ to the preferred stock account in the amount of $____.
 
 
20.
(Ch13)On June 1, the board of directors of Dylan, INC. declare a cash dividend of $1 per share. On June 1 there are 1,000 shares of stock issued and outstanding. The journal entry required on the date of declaration will include a (Debit/Credit) _____ to the Common Dividend Payable Account.
 
 
21.
(Ch13)Par value of a stock refers to the:
 
 
22.
(Ch13)_____ preferred stockholders have a right to be paid both the current and all prior periods' unpaid dividends before any dividend is paid to common stockholders.
 
 
23.
(Ch13)Stockholders' equity, reported on the balance sheet, consists of which of the following accounts? PICK ALL THAT APPLY:
1) Corporate Liabilities
2)Contributed Capital
3)Dividends
4)Retained Earnings
 
 
 
 
 
 
 
 
 
 
 
 

24.
(Ch13) Stockholders have the right to _____ at stockholder's meetings
 
 
27.
(Ch13) The market value per share is the price at which stock is bought and sold. Which of the following factors does NOT influence market value: 1)Growth 2)Par Value 3)Dividends 4)Expected Future Earnings
 
 
28.
(Ch13)The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a:
 
 
29.
(Ch13)TRUE/FALSE : A stock split decreases retained earnings?
 
 
30.
(Ch13) TRUE/FALSE: Managers are motivated to set a lower par value when minimum legal capital or state issuance taxes are based on par value.
 
 
31.
(Ch13)TRUE/FALSE: To record a stock split, debit Retained Earnings, and credit Common Stock.
 
 
32.
(Ch13) TRUE/FASLE: Par, no-par, and stated value do NOT set the stock's market value
 
 
33.
(Ch13) Two of the biggest disadvantages to the corporate form of business are government regulation and corporate ____ ____.
 
 
34.
(Ch13)____ value stock is no-par stock to which the directors assigned a certain value per share. This value becomes the minimum legal capital per share in this case.