Multiple choice questions: (Each question carries I mark)

Boney Corporation reports the following information in its January 1, 2015, balance sheet:

Stockholders' Equity Amounts in $

Preferred stock, $ ? stated value,7% cumulative,300 shares authorized,100 issued and outstanding $1,000

Paid-in capital in excess of stated value- preferred 800

Common stock, $ 10 per value,

50,000 shares authorized,? shares issues and outstanding 350,000

Paid-in capital, in excess of par value - Common Stock 150000

Retained earnings 100,000

Total stockholders' equity $550,000

Required:

1. What is the par value per share of the preferred stock?

A) $10

B) $12

C) $80

D) None of the above.

2. What is the number of common stock shares outstanding?

A) 50,000

B) 35,000

C) 1,000

D) None of the above

When Hallmark Corporation was organized in 2017; it immediately issued 10,000 shares of $ 50 par, 4 percent, cumulative preferred stock and 10,000 shares of $10 par common stock. The company's earnings history is as follows:

2017- Net loss of 18,000;

2018- Net income of $100,000;

2019- Net income of $90,000.

The corporation did not pay a dividend in 2017.

Assume that the board of directors declares cash dividend of $80,000 at the end of 2018.

3. How much dividend will be paid to preferred stockholders at the end of 2018?

A) $ 20,000

B) $ 40,000

C) $65,000

D) None of the above

4. How much dividend will be paid to common stockholders at the end of 2018?

A) $ 20,000

B) $ 50,000

C) $40,000

D) None of the above

The market value of Dillon's Corporation's common stock had become excessively high. The stock was currently selling for $240 per share. To reduce the market price of the common stock, Dillon's declared a 3-for-1 stock split for the 200,000 outstanding shares of its $15 par common stock.

5. What is the number of common shares outstanding after the split?

A)200,000

B)400,000

C)600,000

D) None of the above

6. What is the par value per common shares outstanding after the split?

A)$10

B)$5

C)$15

D) None of the above

(Answer Question # 7 - # 12, using the following information)

The following is the balance sheet of Harper Company as at Dec. 31, 2019.

Assets

Cash

$15,000

Notes receivable-current

11,000

Accounts receivable

10,000

Inventory

11,000

Property and equipment net

150,000

Furniture

3,000

Total assets

$200,000

Equities

Accounts payable

$8,500

Current notes payable

3,500

Mortgage payable-long term

4,500

Bonds payable-long term

21,000

Common stock

110,000

Retained earnings

52,500

Total liabilities and stockholders' equity

$200,000

Other Information:

• Net income (before interest and taxes) for the year was $ 10,000.
• Interest expenses for 2019 $ 2000.
• Cost of goods sold for 2019 was $ 66,000.

7. Which of the following is correct current ratio for Harper Company as at Dec. 31, 2019?

A) 1:1

B) 3.92:1

C) 2.80:1

D) None of the above

8. Which of the following is correct Quick Ratio (acid-test) for Harper Company as at Dec. 31, 2019?

A) 1:1

B) 3.92:1

C) 3.00:1

D) None of the above

9. Which of the following is correct Debt to equity ratio for Harper Company as at Dec. 31, 2019?

A) 0.23

B) 1.00

C) 2:1

D) None of the above

10. Which of the following is correct Return on Equity (ROE) for Harper Company as at Dec. 31, 2019?

A) 7%

B) 8%

C) 6.15%

D) None of the above

11. Which of the following is correct Inventory Turnover Ratio for Harper Company as at Dec. 31, 2019?

A) 3 times

B) 6 times

C) 5 times

D) None of the above

12. Which of the following is correct answer for Times Interest Earned for Harper Company as at Dec. 31, 2019?

A) 3 times

B) 4 times

C) 5 times

D) None of the above