Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

8. Scrooge Ltd. owns 100,000 shares of Marley Ltd. common shares, which are being accounting for by the equity method. On December 15, 2018, when

8. Scrooge Ltd. owns 100,000 shares of Marley Ltd. common shares, which are being accounting for by the equity method. On December 15, 2018, when Scrooge's "Investment in Common Shares of Marley Ltd." account has a carrying value of $5 per share, Scrooge declares all these shares to its shareholders as a property dividend, to be distributed on December 31, 2018. Scrooge had originally paid $8 for each share. Marley has 1,000,000 shares issued and outstanding, for which the quoted market price was $7 per share on the declaration date and $9 per share on the distribution date. Ignoring income taxes, what would be the reduction in Scrooge's shareholders' equity as a result of the above transactions?

a) $500,000 b) $700,000 c) $800,000 d) $900,000

9. Lisbon Corp. has 1,000,000 no par common shares authorized, of which 800,000 shares are outstanding. The average carrying value of the shares is $5 per share. When the market value was $10 per share, Lisbon declared a 10% stock dividend. What entry, if any, should Lisbon make to record this dividend declaration?

a) No entry b) Retained Earnings

Common Stock Dividend Distributable c) Retained Earnings

Common Stock Dividend Distributable d) Stock Dividend Payable

Common Stock Dividend Distributable

400,000 800,000 800,000

400,000 800,000 800,000

10. On June 30, 2018, when Vienna Inc.'s shares were selling at $65 per share, its capital accounts were as follows:

Common Shares, no par, 60,000 shares issued and outstanding $2,400,000

Retained Earnings 3,600,000

If a 5% stock dividend were declared and distributed, the Common Shares account balance would be a) $2,205,000. b) $2,400,000.

c) $2,595,000. d) $3,600,000.

11. The shareholders' equity section of Zagreb Corp. at December 31, 2017 was: Common shares, no par value; authorized 20,000 shares;

issued and outstanding 10,000 shares $ 50,000 Retained earnings 200,000 $250,000

On February 28, 2018, when the market value of Zagrebs shares was $12 per share, the board of directors declared a 15% stock dividend, and accordingly 1,500 additional shares were issued. For the two months ended February 28, 2018, Zagreb reported a net loss of $20,000. What amount should Zagreb report as retained earnings at February 28, 2018? a) $162,000 b) $180,000 c) $182,000 d) $198,000

12. Cash dividends declared on the no par value common shares of Athens Corp. were as follows:

1st quarter of 2018 2nd quarter of 2018 3rd quarter of 2018 4th quarter of 2018

$330,000 350,000 420,000 450,000

The 4th quarter cash dividend was declared on December 20, 2018, to shareholders of record on December 31, 2018, to be paid on January 9, 2019. In addition, Athens declared a 10% common stock dividend on December 1, 2018, when there were 400,000 shares issued and outstanding, and the market value of the common shares was $16 per share. The shares were issued on December 21, 2018.

What was the effect on Athens' shareholders' equity accounts during 2018 as a result of the above transactions?

Common Shares

  1. a) $ -0-

  2. b) $540,000 credit

  3. c) $640,000 credit

  4. d) $300,000 credit

Retained Earnings $1,550,000 debit $1,740,000 debit $2,190,000 debit $1,950,000 debit

13. The shareholders' equity of Tirana Ltd. at July 31, 2018 is presented below: Common shares, no par value, authorized 400,000 shares,

issued and outstanding 200,000 shares Retained earnings

Total shareholders equity

$4,160,000 2,650,000 $6,810,000

On August 1, 2018, the board of directors declared a 10% stock dividend, to be distributed on September 15. The market price of Tirana's common shares was $35 on August 1 and $38 on September 15. What is the debit to retained earnings as a result of the declaration and distribution of this stock dividend?

a) $ 400,000 b) $ 700,000 c) $ 760,000 d) $1,400,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

TS 16949 Insights From A Third Party Auditor With A Process Approach Audit Checklist

Authors: Karen Welch

1st Edition

0873896548, 978-0873896542

More Books

Students also viewed these Accounting questions

Question

Explain the concepts of shared vision and triple bottom line.

Answered: 1 week ago

Question

Are my points each supported by at least two subpoints?

Answered: 1 week ago