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Exam 13: Corporations

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Question 101

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When a stockholder contributes land to a corporation in exchange for stock,________.

A) liabilities and stockholders' equity are increased
B) assets and stockholders' equity are increased
C) one asset is increased and another asset is decreased
D) assets and liabilities are increased

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

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Question 102

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When stock is issued for assets other than cash,the transaction is always recorded at the market value of the stock issued.

A) True
B) False

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Question 103

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Cash dividends cause a decrease in both assets and stockholders' equity of the corporation.

Which of the following best describes the appropriation of retained earnings?

Milton,Inc.had the following transactions in 2019,its first year of operations: • Issued 8000 shares of common stock.Stock has par value of $0.01 per share and was issued at $40.00 per share. • Earned net income of $200,000. • Paid dividends of $8.00 per share. At the end of 2019,what is total stockholders' equity?

A corporation is a business organized under federal law that is a separate legal entity.

Income tax expense is added to arrive at income from continuing operations.

When a corporation issues no-par stock,it debits the asset received and credits the stock account.

On June 30,2018,Dakota,Inc.showed the following data on the equity section of their balance sheet: On July 1,2018,the company declared and distributed a 11% stock dividend.The market value of the stock at that time was $20 per share.As a result of this stock dividend,what is the balance of Retained Earnings?

Corporations may not retire preferred stock in order to avoid paying the preferred dividends.

Discontinued operations are reported without consideration of the income tax effects.

Which of the following occurs when a cash dividend is declared?

A corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $15.00 per share. Which of the following would be included in the entry to record the distribution of a 15% stock dividend?

Ballpark has 61,000 shares of $16.00 par common stock outstanding.Ballpark announces a stock split of 4-for-1.What is the effect of the split?

Stock dividends are declared by the ________.

A corporation has 14,000 shares of 13%,$104 par noncumulative preferred stock outstanding and 22,000 shares of no-par common stock outstanding.At the end of the current year,the corporation declares a dividend of $220,000.What is the dividend per share for preferred stock and for common stock? (Round your answer to the nearest cent. )

Maybridge,Inc.has 3000 shares of common stock outstanding.A stockholder has 300 shares.If the company distributes a 25% stock dividend,the stockholder now holds ________ shares of Maybridge stock.

Home Gallery,Inc.had beginning retained earnings of $125,000 on January 1,2019.During the year,Home Gallery declared and paid $40,000 of cash dividends and earned $55,000 of net income.Prepare a statement of retained earnings for Home Gallery,Inc.for the year ending December 31,2019.

The statement of stockholders' equity has less information than the statement of retained earnings.

A company that reports a discontinued operation item must also report earnings per share for the item.