Question
Pink Corp. is in need of cash. It decided to issue 1,000 shares of its $1 par value common stock. The current price of its
Pink Corp. is in need of cash. It decided to issue 1,000 shares of its $1 par value common stock. The current price of its common stock (the fair market value of the common stock) is $20 per share. Please provide the journal entry Pink Corp. will record upon issuance of its common stock.
Question 1 options:
Dr. Cash $20,000
Cr. Common Stock $1,000
Cr. APIC $19,000
Dr. Cash $20,000
Cr. Common Stock $20,000
Dr. Cash $20,000
Cr. Retained Earnings $20,000
N/A; No journal entry is required.
Question 2
Cards, Inc. issues 15,000 common shares with a par value of $0.10 per share and a fair market value of $1.65/share to acquire Paper, Inc.'s assets having the following fair market values:
Accounts Receivable $4,000
Inventory $15,750
Supplies $5,000
Please provide the journal entry Cards, Inc. will record upon the purchase of Paper, Inc.'s assets.
Question 2 options:
Dr. Accounts Receivable $4,000
Dr. Inventory $15,750
Dr. Supplies $5,000
Cr. Common Stock $1,500
Cr. APIC $23,250
Dr. Accounts Receivable $4,000
Dr. Inventory $15,750
Dr. Supplies $5,000
Cr. Retained Earnings $24,750
Dr. Accounts Receivable $4,000
Dr. Inventory $15,750
Dr. Supplies $5,000
Cr. Common Stock $24,750
N/A; No journal entry is required.
Question 3
On 4/15 Blue Corp. declares a $4.85 cash dividend. On that date, the company had 45,000 shares issued, 40,000 of which were outstanding (5,000 were held in treasury). Blue Corp. paid the dividend to its shareholders on 4/20.
______________________
What journal entry will Blue Corp. record on 4/15, when the cash dividend isdeclared?
Question 3 options:
Dr. Stock Dividends $194,000
Cr. Dividends Payable $194,000
Dr. Cash Dividends $218,250
Cr. Dividends Payable $218,250
N/A; No journal entry is required.
Dr. Cash Dividends $194,000
Cr. Dividends Payable $194,000
Dr. Stock Dividends $218,250
Cr. Dividends Payable $218,250
Question 4
On 4/15 Blue Corp. declares a $4.85 cash dividend. On that date, the company had 45,000 shares issued, 40,000 of which were outstanding (5,000 were held in treasury). Blue Corp. paid the dividend to its shareholders on 4/20.
______________________
What is the impact of declaring the cash dividend on Blue Corp.'s Net Income?
Question 4 options:
Declaring a cash dividend does not impact net income.
Blue Corp.'s net income will be reduced by $194,000.
Blue Corp.'s net income will be reduced by $218,250.
Blue Corp.'s net income will be increased by $194,000.
Blue Corp.'s net income will be increased by $218,250.
Question 5
On 4/15 Blue Corp. declares a $4.85 cash dividend. On that date, the company had 45,000 shares issued, 40,000 of which were outstanding (5,000 were held in treasury). Blue Corp. paid the dividend to its shareholders on 4/20.
______________________
What journal entry will Blue Corp. record on 4/20, when the cash dividend ispaid?
Question 5 options:
Dr. Dividends Payable $194,000
Cr. Cash Dividends $194,000
N/A; No journal entry is required.
Dr. Dividends Payable $218,250
Cr. Cash Dividends $218,250
Dr. Dividends Payable $194,000
Cr. Cash $194,000
Dr. Dividends Payable $218,250
Cr. Cash $218,250
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Systems Analysis and Design
Authors: Shelly Cashman, Gary B. Shelly and Harry J. Rosenblatt
9th Edition
978-1133274056, 9780538481618, 1133274056, 538481617, 978-1133274636
