Multiple Choice Choose the best answer for each of the following questions and record one of the corresponding letters on the line. 1. VAS Corporation had set income of $500,000 and paid dividends of $800,000 to common stockholders and $20,000 to preferred stockholders in 2014. VAS Corporation's common stockholders' equity at the beginning and end of 2014 was $1,740,000 and $2,260,000, respectively. There are 200,000 weighted-average shares of common stock outstanding. VAS Corporation's return on common stockholders' equity was a. 10%. b. 24%% C. 2096. 2. When computing earmings per share, an adjustment related to preferred stock dividends is made in the numerator and denominator of the a. earnings per share formula b. an adjustment for the preferred dividends is made in the denominator of the earnings per share formula. the dividends for cumulative preferred stock are deducted from net income only if the preferred c dividends have been declared d. the dividends for cumulative preferred stock are deducted from net income whether or not preferred dividends have been declared. 3. A prior period adjustment for understatement of net income will a. be credited to the Retained Earnings account b. be debited to the Retained Earnings account. c. show as a gain on the current years Income Statement. d. show as an asset on the current year's Balance Sheet. 4. The Sorrento Skies Corporation issues 16,000 shares of S100 par value preferred stock for cash at $120 per share. The entry to record the transaction will consist of a debit to Cash for $1,920,000 and a credit or credits to a. Preferred Stock for $1,920,000. b. Paid-in Capital from Preferred Stock for $1,920,000. c. Preferred Stock for $1,600,000 and Retained Earnings for $320,000. d. Preferred Stock for S1,600,000 and Paid-in Capital in Excess of Par-Preferred Stock for $320,000. Kagan Corporation was organized on January 2, 2014. During 2014, Kagan issued 40,000 shares at $24 per share, purchased 6,000 shares of treasury stock at $26 per share, and had net income of $600.000. What is the total amount of stockholders' equity at December 31, 2014 5. a. $1,280,000 b $1,404,000 c. $1,416,000 d. $1,440,000 6 Conecuh Manufacturing Corporation purchased 8,000 shares of its own previously issued $10 par common stock for $184,000. As a result of this event, Conecuh's Common Stock account decreased $80,000. a. b. Conecuh's total stockholders' equity decreased $184,000 c. Conecuh's Paid-in Capital in Excess of Par account decreased $104,000 d. All of these answer choices are correct If the market interest rate is greater than the contractual interest rate, bonds will sell 7. a. at a premium. b. at face value c. at a discount
