1. As compared with preferred stock, common stock usually has favorable preferences in terms of

a.dividends.

b.liquidated assets.

c.voting rights.

d.both liquidated assets and voting rights.

2. Dividends in arrears on preferred stock are

a.a stockholder's equity account.

b.a current liability account.

c.disclosed in the notes to the financial statements.

d.a long-term liability account.

3. Dividends in arrears on preferred stock are classified as

a.a long-term liability account.

b.a current liability account.

c.a stockholder's equity account.

d.None of these are correct.

4. Which of the following dividend preferences is associated with common stock?

a.Cumulative-dividend preference.

b.Current-dividend preference.

c.Both cumulative-dividend and current-dividend preference.

d.Neither cumulative-dividend nor current-dividend preference.

5. The declaration and payment of cash dividends

a.reduces the amount of resources a company has to invest in productive assets.

b.sometimes does not reduce a company's cash balance.

c.sometimes does not reduce a company's retained earnings balance.

d.reduces a company's net income.

6. The declaration of a common cash dividend

a.decreases the number of shares of outstanding stock.

b.decreases a company's retained earnings balance.

c.decreases the amount of cash.

d.decreases the par value of outstanding stock.

7. When do cash dividends become liabilities?

a.On the payment date.

b.On the date of record.

c.On the declaration date.

d.Cash dividends are never liabilities because a company is not legally required to pay cash dividends.

8. Which of the following statements about retained earnings is true?

a.It is the amount of corporate earnings that have been reinvested in the business.

b.It is the amount of creditors' claims on assets.

c.It is increased when treasury stock is bought.

d.It is the amount of cash that has been retained from a company's earnings.

9. Which of the following is NOT an important date associated with dividends?

a.Declaration date

b.Dividend payment date

c.Date of record

d.Date of information

10. During the year, Trenton Company purchased 3,000 shares of its $10 par common stock at $50 per share and later sold it for $40 per share. How much did total equity change because of these treasury stock transactions?

a.$150,000 decrease

b.$120,000 increase

c.$20,000 decrease

d.$30,000 decrease

11. Moony Corporation had 20,000 shares of $4 par-value common stock outstanding on January 1, 2018. On January 10, 2018, the firm purchased 2,000 of its outstanding shares for $18 per share. On July 22, 2018, it reissued 1,000 shares at $22 per share. Given this information, the entry to record the reissuing of the remaining 1,000 shares on August 17, 2018, at $12 per share would probably include a

a.credit to treasury stock of $4,000.

b.debit to paid-in capital, treasury stock of $6,000.

c.debit to loss on sale of stock of $6,000.

d.debit to retained earnings of $2,000.

12. Moony Corporation had 20,000 shares of $4 par-value common stock outstanding on January 1, 2018. On January 10, 2018, the firm purchased 2,000 of its outstanding shares for $18 per share. On July 22, 2018, it reissued 1,000 shares at $22 per share. Given this information, the entry to record the reissuance of the stock on July 22 would include a credit to

a.paid-in capital, treasury stock of $4,000.

b.common stock of $4,000.

c.paid-in capital, $18,000.

d.treasury stock of $4,000.

13. Moony Corporation had 20,000 shares of $4 par-value common stock outstanding on January 1, 2018. On January 10, 2018, the firm purchased 2,000 of its outstanding shares for $18 per share. On July 22, 2018, it reissued 1,000 shares at $22 per share. Given this information, the entry to record the purchase of this stock on January 10 would include a debit to

a.treasury Stock of $8,000.

b.treasury Stock of $36,000.

c.common Stock of $8,000.

d.common Stock of $36,000.

14. At the beginning of the year, Brandt Company issued 5,000 shares of $1 par common stock in exchange for land with a book value of $130,000 and a fair value of $100,000. The market value of the stock at the date of the transaction was $20 per share. The entry to record this transaction would include a

a.credit to common stock for $100,000.

b.debit to common stock for $5,000.

c.credit to paid-in capital in excess of par, common stock of $95,000.

d.debit to land of $130,000.

15. At the beginning of the year, Salina Company issued 10,000 shares of no par common stock for $100 each. The journal entry to record this transaction would include a

a.credit to common stock of $1,000,000.

b.credit to cash of $1,000,000.

c.debit to common stock of $1,000,000.

d.debit to cash of $20,000.

16. On January 1, 2018, Georgi Company was authorized to issue 10,000 shares of $2 par common stock and 5,000 shares of $5 par preferred stock. Given this information, if Georgi Company issued 2,000 shares of preferred stock for $20 per share on January 31, 2018, the entry to record the issuance of the stock would include a

a.credit to preferred stock of $40,000.

b.credit to paid-in capital in excess of par, preferred stock of $10,000.

c.debit to cash of $30,000.

d.debit to cash of $40,000.

17. On January 1, 2018, Georgi Company was authorized to issue 10,000 shares of $2 par common stock and 5,000 shares of $5 par preferred stock. Given this information, if Georgi Company issued 3,000 shares of common stock for $7 per share on January 10, 2018, the entry to record the issuance of the stock would include a

a.debit to cash of $15,000.

b.credit to paid-in capital in excess of par, common stock of $6,000.

c.debit to cash of $6,000.

d.credit to common stock of $6,000.

18. On January 1, 2018, Georgi Company was authorized to issue 10,000 shares of $2 par common stock and 5,000 shares of $5 par preferred stock. Given this information, if Georgi Company issued 2,000 shares of common stock (with no known market value) for land with a book value of $15,000 (fair value $10,000), the entry to record the transaction would include a

a.credit to paid-in capital in excess of par, common stock of $11,000.

b.debit to land of $15,000.

c.credit to common stock of $15,000.

d.debit to land of $10,000.

19. When 30,000 shares of $10 par-value common stock are issued at $30 per share, Paid-In Capital in Excess of Par, Common Stock is credited for

a.$300,000.

b.$30,000.

c.$600,000.

d.$900,000.

20. A corporation's contributed capital is

a.the total par value of the preferred stock and the associated amounts of paid-in capital in excess of par.

b.the total par value of the common and preferred stock.

c.the total par value of the common stock and the associated amounts of paid-in capital in excess of par.

d.the total par value of the common and preferred stock, along with the associated amounts of paid-in capital in excess of par.

21. Which of the following statements is true of treasury stock?

a.It usually has a debit balance.

b.It is classified as an asset on the balance sheet.

c.It is considered outstanding stock.

d.It allows management to vote for members of the board of directors.

22. When common stock is issued in exchange for a noncash asset and the market value of the stock cannot be determined, the acquired asset should usually be recorded at an amount equal to the

a.book value of the noncash asset.

b.fair value of the noncash asset.

c.undepreciated cost of the noncash asset.

d.book value of the stock.

23. If treasury stock is sold for less than its cost, and there were no previous treasury stock sales, the difference between the sales price and cost is debited to

a.paid-In capital, treasury stock.

b.paid-in capital in excess of par.

c.retained earnings.

d.common stock.

24. Treasury stock is classified on the balance sheet as what type of account?

a.Current asset

b.Contributed capital

c.Long-term investment

d.Contra-equity

25. A loss on the sale of treasury stock is recognized when treasury stock is sold at

a.a higher price than the stock's market value.

b.a higher price than the stock's cost.

c.a higher price than the stock's par or stated value.

d.None of these are correct.

26. Treasury stock is stock that is

a.issued and outstanding.

b.authorized and outstanding.

c.issued but not outstanding.

d.authorized but not issued.

27. A Paid-In Capital account can be credited with all of the following transactions EXCEPT

a.the issuance of no-par stock with a stated value.

b.the purchase of treasury stock.

c.the issuance of par stock issued at a price greater than par value.

d.the reissuance of treasury stock.

28. When common stock is issued in exchange for a noncash asset and the market value of the stock is determinable, the acquired asset should usually be recorded at an amount equal to

a.the market value of the stock.

b.the par value of the stock.

c.the book value of the noncash asset.

d.the fair value of the noncash asset.

29. Which of the following is NOT true regarding "legal capital"?

a.The dollar amount of legal capital is established by federal statutes.

b.It is intended as a means to protect a company's creditors.

c.It is intended to prevent corporations from paying excessive dividends.

d.It represents an amount that cannot be returned to the owners so long as the corporation exists.

30. Compared with preferred stock, common stock usually has a favorable preference in terms of

a.dividends.

b.resale value.

c.voting rights.

d.liquidated assets.

31. Which of the basic stockholder rights do preferred stockholders normally give up?

a.The right to vote.

b.The right to receive dividends when they are declared.

c.The right to excess assets after creditor claims are satisfied.

d.All of the above.

32. Which of the following is a basic right of a preferred stockholder?

a.The preemptive right.

b.The right to receive a dividend.

c.The right to vote for the board of directors.

d.All of these.

33. The investors in a corporation are called

a.board of directors.

b.corporate owners.

c.stockholders.

d.management.

34. Which of the following is NOT a basic right of a common stockholder?

a.The right to receive a dividend.

b.The preemptive right.

c.The right to vote for the board of directors.

d.All of these are basic rights of a common stockholder.

35. Which type of business organization is characterized by limited liability?

a.Proprietorship

b.Partnership

c.Corporation

d.Corporation, proprietorship, and partnership

36. Which of the following is NOT true of a corporation?

a.A corporation has the ability to raise large amounts of capital.

b.The owners of a corporation have unlimited liability.

c.A corporation has easy transferability of ownership.

d.A corporation is taxed separately from its owners.

37. The right of current stockholders to purchase additional shares in order to maintain the same percentage ownership of new shares is called

a.the voting rights privilege.

b.preemptive right.

c.liquidation.

d.the cumulative preference.

38.

39.

40.

41.

The equity section of the balance sheet for Beryl Corporation as of December 31, 2018, is as follows: Equity Preferred stock (6 percent, $24 par, cumulative, 100,000 shares authorized) $1,200,000 Common stock (no par, $10 stated value, 200,000 shares authorized) 1,600,000 Paid-in capital in excess of stated value, common stock 900,000 Total contributed capital $3,700,000 Retained earnings: Retained earnings, unrestricted $1,200,000 Retained earnings, restricted 400,000 1,600,000 Total contributed capital and retained earnings $5,300,000 Less: Treasury stock, common (5,000 shares at $30 per share) (150,000) Total equity $5,150,000 a. How many shares of preferred stock have been issued? shares b. How many shares of common stock have been issued? shares c. How many shares of preferred stock are outstanding? shares d. How many shares of common stock are outstanding? shares Assume that 2,000 shares of common stock with a par value of $12 and a market price of $16 per share are issued in exchange for land with a fair market value of $32,000. If an amount box does not require an entry, leave it blank. a. Prepare the journal entry to record the transaction. b. If the land's appraised fair market value were $33,000, what would be the correct entry to record the C. Prepare the necessary journal entry, assuming the same facts as in (b), except that the stock is not actively traded and therefore its market price is unknown. d. Prepare the necessary journal entry, assuming the stock has a par value of $10 and a market price of $15 per share. Brockbank Corporation was organized on July 15, 2018. a. The state authorized 30,000 shares of 7% preferred stock ($20 par) and 100,000 shares of no-par common stock. b. Brockbank gave 6,000 shares of common stock to its attorney in return for her help in incorporating the business. Fees for this work are normally about $18,000. (Note: The debit is to Legal Expense.) c. Brockbank gave 15,000 shares of common stock to an individual who contributed a building worth $50,000. d. Brockbank issued 5,000 shares of preferred stock at $25 per share. e. Peter Brockbank paid $70,000 cash for 30,000 shares of common stock. f. Another individual donated a $15,000 machine and received 4,000 shares of common stock. g. The attorney sold all her shares to her brother-in-law for $18,000. Record the journal entries for Brockbank to account for each of the above transactions. If no entry is required, select "No Entry Required" and leave the amount boxes blank. If an amount box does not require an entry, leave it blank. II II II III II II II III DDD Provide the necessary journal entries to record the following: a. Delta Corporation was granted a charter authorizing the issuance of 1,200,000 shares of $2 par value common stock. b. The company issued 300,000 shares of common stock at a price of $12 per share. c. The company reacquired 8,000 shares of its own stock at $14 per share, to be held in treasury. d. Another 8,000 shares were reacquired at $16 per share. e. of the shares reacquired in (c), 3,000 were reissued for $18 per share. f. Of the shares reacquired in (d), 2,000 were reissued at $12.80 per share. If no entry is required, select "No Entry Required" and leave the amount boxes blank. If an amount box does not require an entry, leave it blank. a. No Entry Required No Entry Required II III II II 101 011 III g. Given the preceding transactions, what is the balance in the treasury stock account