1.

Torino Company has 1,500 shares of $10 par value, 7.0% cumulative and nonparticipating preferred stock and 15,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $500 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

$1,600.

$550.

$1,050.

$2,100.

$500.

A company had a beginning balance in retained earnings of $43,700. It had net income of $6,700 and paid out cash dividends of $5,800 in the current period. The ending balance in retained earnings equals:

$42,800.

$44,600.

$56,200.

$12,500.

$5,800.

A company issued 75 shares of $100 par value common stock for $8,500 cash. The total amount of paid-in capital is:

$100.

$7,500.

$1,000.

$750.

$8,500.

Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 290 shares to its attorneys in payment of a $4,900 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

A debit to Organization Expenses for $4,900.

A debit to Organization Expenses for $2,900.

A credit to Common Stock for $4,900.

A credit to Paid-in Capital in Excess of Par Value, Common Stock for $4,900.

A debit to Paid-in Capital in Excess of Par Value, Common Stock for $2,000.

On September 1, Ziegler Corporation had 65,000 shares of $5 par value common stock, and $195,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

Debit Retained Earnings $975,000; credit Common Stock Split Distributable $975,000.

Debit Retained Earnings $975,000; credit Common Stock $975,000.

Debit Retained Earnings $325,000; credit Common Stock $325,000.

Debit Retained Earnings $325,000; credit Stock Split Payable $325,000.

No entry is made for this transaction.

Global Corporation had 60,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $30. The entry to record this dividend is:

Debit Retained Earnings $180,000; credit Cash $180,000.

No entry is made until the stock is issued.

Debit Retained Earnings $180,000; credit Common Stock Dividend Distributable $180,000.

Debit Retained Earnings $180,000; credit Common Stock Dividend Distributable $120,000; credit Paid-In Capital in Excess of Par Value, Common Stock $60,000.

Debit Retained Earnings $120,000; credit Common Stock Dividend Distributable $120,000.