Choose the correct answer

1. Manning Company issued 10,000 shares of its $5 par value common stock having a fair value of $25 per share and 15,000 shares of its $15 par value preferred stock having a fair value of $20 per share for a lump sum of $530,000. How much of the proceeds would be allocated to the common stock?

a. $250,000

b. $240,909

c. $289,091

d. $281,563

2. Glavine Company issues 6,000 shares of its $5 par value common stock having a fair value of $25 per share and 9,000 shares of its $15 par value preferred stock having a fair value of $20 per share for a lump sum of $297,000. The proceeds allocated to the common stock is

a. $118,800

b. $135,000

c. $150,000

d. $162,000

3. Houser Corporation owns 4,000,000 shares of stock in Baha Corporation. On December 31, 2014, Houser distributed these shares of stock as a dividend to its stockholders. This is an example of a

a. property dividend.

b. stock dividend.

c. liquidating dividend.

d. cash dividend.

4. A mining company declared a liquidating dividend. The journal entry to record the declaration must include a debit to

a. Retained Earnings.

b. a paid-in capital account.

c. Accumulated Depletion.

d. Accumulated Depreciation.

5. Which dividends do not reduce stockholders' equity?

a. Cash dividends

b. Stock dividends

c. Property dividends

d. Liquidating dividends

6. What effect does the issuance of a 2-for-1 stock split have on each of the following?

Par Value per Share Retained Earnings

a. No effect No effect

b. Increase No effect

c. Decrease No effect

d. Decrease Decrease