7 multiple choice questions, and three short problems.

HW5 Q1. Multiple Choice questions: 1. Which of the following statements about stock dividends is true? a) Stock dividends are reported on the statement of cash flows. b) Stock dividends are reported on the statement of retained earnings. c) Stock dividends increase total equity. d) Stock dividends decrease total equity. 2. Which order best describes the largest number of shares to the smallest number of shares? a) Shares authorized, shares issued, shares outstanding. b) Shares issued, shares outstanding, shares authorized. c) Shares outstanding, shares issued, shares authorized. d) Shares in the treasury, shares outstanding, shares issued. 3. A company issued 100,000 shares of common stock with a par value of $1 per share. The stock sold for $20 per share. By what amount does stockholders' equity increase? a) $100,000 b) $1,900,000 c) $2,000,000 d) No change in stockholders' equity 4. A journal entry is not recorded on what date? a) Date of declaration. b) Date of record. c) Date of payment. d) A journal entry is recorded on all of these dates. 5. A company has net income of $225,000 and declares and pays dividends in the amount of $75,000. What is the net impact on retained earnings? a) Increase of $225,000 b) Decrease of $75,000 c) Increase of $150,000 d) Decrease of $150,000 6. Which statement regarding dividends is false? a) Dividends represent a sharing of corporate profits with owners. b) Both stock and cash dividends reduce retained earnings. c) Cash dividends paid to stockholders reduce net income. d) None of the above statements are false. 7. When treasury stock is purchased with cash, what is the impact on the balance sheet equation? a) No change: the reduction of the asset cash is offset with the addition of the asset treasury stock. b) Assets decrease and stockholders' equity increases. c) Assets increase and stockholders' equity decreases. d) Assets decrease and stockholders' equity decreases. Q2. Recording Treasury Stock Transactions and Analyzing Their Impact During 2014 the following selected transactions affecting stockholders' equity occurred for Orlando Corporation: Required: 1. Give journal entries for each of these transactions. 2. Describe the impact, if any, that these transactions have on the income statement. Q3. The records of Hollywood Company reflected the following balances in the stockholders' equity accounts at December 31, 2013: Common stock, par $12 per share, 50,000 shares outstanding Preferred stock, 10 percent, par $10 per share, 5,000 shares outstanding Retained earnings, $216,000 On September 1, 2014, the board of directors was considering the distribution of an $85,000 cash dividend. No dividends were paid during the previous two years. Assume that the preferred stock's dividends preference is cumulative. Required: Determine the total and per share amounts that would be paid to the common stockholders and to the preferred stockholders. Q4. On July 1, 2014, Davidson Corporation had the following capital structure: Required: Complete the following comparative tabulation based on two independent cases: Case 1: The board of directors declared and issued a 50 percent stock dividend when the stock was selling at $12 per share. Case 2: The board of directors voted a 6-to-5 stock split (i.e., a 20 percent increase in the number of shares). The market price prior to the split was $12 per share