Question

1. Organization costs should be categorized as intangible asset long-term investments. operating expenses. operating revenues   2....

1. Organization costs should be categorized as

  1. intangible asset
  2. long-term investments.
  3. operating expenses.
  4. operating revenues

  2. In the event that a corporation was liquidated, preferred stockholders would be paid before common stockholders.

True

False

3. The amount per share of stock that must be retained in the business for the protection of corporate creditors is called:

  1. Retained Earnings
  2. Legal capital
  3. Common Stock
  4. Authorized shares

4.Carey Company is a publicly held corporation whose $2 par value stock is actively traded at $30 per share. The company issued 5,000 shares of stock to acquire land recently advertised at $157,000. When recording this transaction, Carey Company will

  1. debit Land for $157,000.
  2. credit Common Stock for $157,000.
  3. debit Land for $150,000.
  4. debit Land for $300,000

5. The formula for computing outstanding shares is:

  1. Authorized shares minus issued shares.
  2. Issued shares minus treasury shares.
  3. Issued shares plus treasury shares.
  4. Authorized shares minus treasury shares.

6. The par value of common stock is usually different from the market value of stock.

True

False

7. Retained earnings represents:

  1. cash available for dividends.
  2. income retained in a corporation.
  3. cash available for expansion and growth.
  4. the amount initially invested in the business by stockholders.

8. An important disadvantage of the corporate form of ownership is double taxation.

True

False

9. In the presentation of stockholders' equity, what information is listed last?

  1. Retained earnings
  2. Preferred Stock
  3. Treasury Stock
  4. Common Stock

10. Jim Croce Corporation's stockholders' equity at December 31 consists of the following:

Preferred stock, 8%; $50 par value; call price $55 per share; 100,000 shares authorized; 15,000 shares issued and outstanding ...........$ 750,000

Common stock, $4 par value; 600,000 shares authorized; _???? shares issued; and ____???? shares outstanding................................$2,000,000

Additional paid-in-capital in excess of par-Common..............................................$1,000,000

Retained Earnings……………………............................................................................ $ 500,000

Treasury Stock (16,000shares).................................................................................$200,000

Compute the total Paid-In -Capital:

  1. $3,750,000
  2. $4,050,000.
  3. $4,450,000.
  4. $4,250,000

11. On January 2, 2007, Poi Dog Corporation issued 10,000 shares of 5% cumulative preferred stock at $100 par value. On December 31, 2007, Poi Dog Corporation declared and paid its first dividend. Compute the amount of the dividend:

  1. $500.
  2. $50,000.
  3. $90,000.
  4. $120,000.

12. Jim Croce Corporation's stockholders' equity at December 31 consists of the following:

Preferred stock, 8%; $50 par value; call price $55 per share; 100,000 shares authorized; 15,000 shares issued and outstanding ...........$ 750,000

Common stock, $4 par value; 600,000 shares authorized; _???? shares issued; and ____???? shares outstanding................................$2,000,000

Additional paid-in-capital in excess of par-Common..............................................$1,000,000

Retained Earnings……………………............................................................................ $ 500,000

Treasury Stock (16,000shares).................................................................................$200,000

Compute the number of common shares issued:

  1. 200,000.
  2. 208,000.
  3. 500,000.
  4. 600,000.

13.            The liability of stockholders is normally limited to their investment in the corporation.

True

False

14. A characteristic of a corporation is that it is an entity that is separate and distinct from its owners.

True

False

15.  Dividends in arrears on cumulative preferred stock are a long-term liability to the company.

True

False

QUESTION 16

1. 4000 shares of treasury stock of Meyer, Inc., previously acquired at $15 per share, are sold at $21 per share. The entry to record this transaction will include a

  1. credit to Treasury Stock for $84,000.
  2. debit to Paid-In Capital from Treasury Stock for $14,000.
  3. credit to Treasury Stock for $60,000.
  4. credit to Paid-In Capital from Treasury Stock for $60,000.

17. Treasury stock is a contra-asset account.

True

  False

18. If Vickers Company issues 1,000 shares of $2 par value common stock for $8,000, then recording the journal entry would involve:

  1. Common Stock will be credited for $6,000.
  2. Paid-In Capital in Excess of Par Value will be credited for $6,000.
  3. Paid-In Capital in Excess of Par Value will be credited for $8,000.
  4. Cash will be debited for $2,000.

19. Dugan Corporation had net income of $300,000. To close net income would involve:

  1. Credit Capital $300,000
  2. Debit Income Summary $300,000
  3. Credit Income Summary $300,000
  4. Debit Retained Earnings $300,000

20.            Authorized shares of common stock require a journal entry to record the information.

True

False

21.            Jim Croce Corporation's stockholders' equity at December 31 consists of the following:

Preferred stock, 8%; $50 par value; call price $55 per share; 100,000 shares authorized; 15,000 shares issued and outstanding ...........$ 750,000

Common stock, $4 par value; 600,000 shares authorized; _???? shares issued; and ____???? shares outstanding................................$2,000,000

Additional paid-in-capital in excess of par-Common..............................................$1,000,000

Retained Earnings……………………............................................................................ $ 500,000

Treasury Stock (16,000shares).................................................................................$200,000

Compute the number of common shares outstanding:

  1. 600,000.
  2. 484,000.
  3. 584,000.
  4. 500,000.

22. Jim Croce Corporation's stockholders' equity at December 31 consists of the following:

Preferred stock, 8%; $50 par value; call price $55 per share; 100,000 shares authorized; 15,000 shares issued and outstanding ...........$ 750,000

Common stock, $4 par value; 600,000 shares authorized; _???? shares issued; and ____???? shares outstanding................................$2,000,000

Additional paid-in-capital in excess of par-Common..............................................$1,000,000

Retained Earnings……………………............................................................................ $ 500,000

Treasury Stock (16,000shares).................................................................................$200,000

Compute total stockholders' equity:

  1. $4,050,000
  2. $4,250,000.
  3. $4,450,000.
  4. $3,750,000
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Homework Answers

Answer #1
1 c. operating expenses
2 TRUE
3 b. Legal capital
4 c. debit land for $150,000
5 b. issued shares minus treasury shares
6 TRUE
7 b. income retained in a coporation
8 TRUE
9 c. treasury stock
10 A. $3,750,000
11 10,000 x 5% x100 = 50,000 (Ans. B. $50,000)
12 $2,000,000/4 (Ans. C. 500,000)
13 TRUE
14 TRUE
15 FALSE
16 c. Credit to treasury stock for $60,000     (4,000 x $15)
17 FALSE
18 b. Paid in capital in excess of par value will be credited for $6,000
19 b. Debit income summary $300,000
20 FALSE
21 Issued shares = $2,000,000/4 = 500,000.        Outstanding share = 500,000 - 16,000 = 484,000 shares Answer b. 484,000 shares
22 c. $4,450,000
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