A. Instructions: Complete each of the following statements by writing the appropriate words or amounts in the
Answers column.
							Answers
0. Corporations whose shares of stock are widely distributed and traded in a
public market are called							public corporations
1-2. A corporation purchases 20,000 shares of its own $25 par common
stock for $1,360,000, recording it at cost. Will the purchase increase,
decrease, or have no effect on the following?
1. Expenses
2. Total stockholders' equity
3-5. The stock in Question 1-2 is resold for $1,400,000. Will the sale
increase, decrease, or have no effect on the following?
3. Revenues
4. Total stockholders' equity
5. Total assets
6. If 90,000 shares of common stock are authorized, 65,000 shares are
issued, and 9,000 shares are held as treasury stock, how many shares
are outstanding.
7. Organization costs are normally classified as an ______________.
8-9. A corporation's outstanding stock is composed of 20,000 shares of $10
preferred, $100 par, and 100,000 shares of common, $50 par. Preferred
dividends were passed in the prior year and no dividends have been paid
thus far in the current year. A total of $200,000 in dividends is to be
distributed. Determine the total amount of the dividends to be paid on the
preferred stock under each of the following assumptions:
8. Preferred is noncumulative and nonparticipating						$
9. Preferred is cumulative and nonparticipating						$
10. The excess of issue price over par of common stock is termed a
11. The term applied to a debit balance in Retained Earnings is
12. The effect on total stockholders' equity of the declaration of a cash
dividend is (increase, decrease, or no effect)
13. Three different dates related to a cash dividend declaration are (1)
date of declaration, (2) date of record, and (3) date of payment. The date
for recording the liability is the date of
14. A corporation with 40,000 shares of common stock issued, of which
4,000 shares are held as treasury stock, declares a cash dividend of $4
a share. The total amount of the dividend is						$
15-17. State the net effect (increase, decrease, no effect) of the
authorization and issuance of stock certificates in a stock split on each
of the following:
15. Paid-in capital
16. Retained earnings
17. Number of shares outstanding
18. Are dividends in arrears on preferred stock a liability of the corporation?
(Answer "yes" or "no"
19-22. State the net effect (increase, decrease, no effect) of the declaration
and payment of a cash dividend on the following:
19. Paid-in capital
20. Retained earnings
21. Total stockholders' equity
22. Cash
23. The liability of the stockholders of a corporation is usually (limited,
unlimited) with respect to debts owed by the corporation