Question 51

The date on which a cash dividend becomes a binding legal obligation is on the

	A.	date of record.
	B.	payment date.
	C.	last day of the fiscal year-end.
	D.	declaration date.

Question 52

Additional paid-in capital includes all of the following except the amounts paid in

	A.	over par value.
	B.	for the par value of common stock.
	C.	from treasury stock.
	D.	over stated value.

Question 53

Kerwin Packaging Corporation began business in 2008 by issuing 45,000 shares of $5 par common stock for $6 per share and 8,200 shares of 6%, $8 par preferred stock for par. At year end, the common stock had a market value of $7. On its December 31, 2008 balance sheet, Kerwin Packaging would report

	A.	Common Stock of $270,000.
	B.	Common Stock of $225,000.
	C.	Paid-In Capital of $290,600.
	D.	Common Stock of $450,000.

Question 54

A corporation has the following account balances: Common stock, $1 par value, $212,000; Paid-in Capital in Excess of Par Value, $1,591,000. Based on this information, the

	A.	legal capital is $1,803,000.
	B.	number of shares outstanding are 1,803,000.
	C.	number of shares issued are 212,000.
	D.	average price per share issued is $0.85.

Question 55

When computing earnings per share,

	A.	the dividends for cumulative preferred stock are deducted from net income whether or not preferred dividends have been declared.
	B.	an adjustment for the preferred dividends is made in the denominator of the earnings per share formula.
	C.	the dividends for cumulative preferred stock are deducted from net income only if the preferred dividends have been declared.
	D.	an adjustment related to preferred stock dividends is made in the numerator and denominator of the earnings per share formula.

Question 56

The sale of common stock below par

	A.	is a common occurrence in most states.
	B.	is a practice that most stockholders encourage.
	C.	is not permitted in most states.
	D.	requires that a liability be recorded for the difference between the sales price and the par value of the shares.

Question 57

Treasury stock should be reported in the financial statements of a corporation as a(n)

	A.	deduction from total paid-in capital.
	B.	deduction from total paid-in capital and retained earnings.
	C.	liability.
	D.	investment.

Question 58

If no-par stock is issued without a stated value, then

	A.	there is no legal capital.
	B.	the corporation is automatically in violation of its state charter.
	C.	the entire proceeds are considered to be legal capital.
	D.	the par value is automatically $1 per share.

Question 59

Of the various dividends types, the two most common types in practice are

	A.	cash and small stock.
	B.	cash and large stock.
	C.	property and small stock.
	D.	cash and property.

Question 60

Rancho Corporation sold 130 shares of treasury stock for $30 per share. The cost for the shares was $28. The entry to record the sale will include a

	A.	credit to Treasury Stock for $3,900.
	B.	debit to Paid-in Capital in Excess of Par Value for $260.
	C.	credit to Gain on Sale of Treasury Stock for $3,640.
	D.	credit to Paid-in Capital from Treasury Stock for $260.