Question 15

Amos Company acquired land in exchange for 10,000 shares of its $10 par common stock. The fair market value of the land is NOT determinable, but the stock is widely traded and was selling for $25 per share when exchanged for the land. At what amount should the land be recorded by Amos Company?

Select one:

a. $150,000

b. $250,000

c. $350,000

d. $100,000

Question 16

A corporation purchases 10,000 shares of its own $20 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity?

Select one:

a. increase, $200,000

b. increase, $350,000

c. decrease, $200,000

d. decrease, $350,000

Question 17

Which of the following is NOT a prerequisite to paying a cash dividend?

Select one:

a. formal action by the board of directors

b. market value in excess of par value per share

c. sufficient cash

d. sufficient retained earnings

Question 18

The liability for a dividend is recorded on which of the following dates?

Select one:

a. the date of record

b. the date of payment

c. the date of announcement

d. the date of declaration

Question 19

Tom owns 2,000 shares of common stock in Phillips, Inc. These shares represent a 5% interest in the company. If Phillips issues a 10% stock dividend (a) how many shares will Phillips own after the dividend, and (b) what percentage ownership will he have in the company?

Select one:

a. 2200 shares; 5% ownership

b. 2200 shares; 5.5% ownership

c. 2100; 5% ownership

d. 2100; 5.5% ownership

Question 20

What is the effect of a stock dividend on the Balance Sheet?

Select one:

a. Decrease total assets and decrease total stockholders equity

b. Decrease total assets and total increase stockholders equity

c. Increase total liabilities and decrease total stockholders equity

d. No effect on total assets, total liabilities or total stockholders equity