Alpha Corporation is authorized to issue 2,000,000 shares of $3 par value capital stock. The corporation issued half the stock for cash at $8 per share, earned $90,000 during the first three months of operation, and declared a cash dividend of $15,000. The total paid-in capital of Alpha Corporation after three months of operation is:

A) $7,985,000.

B) $8,000,000.

C) $8,090,000.

D) $8,075,000.

5. On January 1, 2002, Moon Corporation issued 80,000 shares of its total 200,000 authorized shares of $3 par value common stock for $10 per share. On December 31, 2002, Moon Corporation's common stock is trading at $15 per share.

Assuming Moon Corporation did not issue any more common stock in 2002, how does the increase in value of its outstanding stock affect Moon?

A) Moon should recognize additional net income for 2002 of $5 per share, or $400,000.

B) Paid-in capital at December 31, 2002, is $1,200,000 (i.e. 80,000 shares times $15 per share).

C) This increase in market value of outstanding stock is not recorded in the financial statements of Moon Corporation.

D) Each shareholder must pay an additional $5 per share to Moon.

Use the following to answer questions 6 - 8:

Shown below is information relating to the stockholders' equity of Surf Corporation as of December 31, 2010:

8% cumulative preferred stock, $100 par, $600,000

Common stock, $10 par, 500,000 shares Authorized, 120,000 shares issued and outstanding, $1,200,000

Additional paid-in capital: common stock, $600,000

Retained earnings (Deficit), ($60,000)

Dividends in arrears, $48,000

6. Refer to the above data. How many shares of preferred stock are issued and outstanding?

A) 75,000 shares

B) 60,000 shares.

C) 6,000 shares.

D) 120,000.

7. Refer to the above data. What was the original issue price per share of common stock?

A) $10.00 per share.

B) $15.00 per share.

C) $2.40 per share.

D) $8.00 per share

8. Refer to the above data. Total Stockholders Equity is.

A) $2,400,000.

B) $2,340,000.

C) $2,460,000.

D) $2,292,000.

9. Coronet Corp. has total stockholders' equity of $7,400,000. The company's outstanding capital stock includes 100,000 shares of $10 par value common stock and 20,000 shares of 6%, $100 par value preferred stock. (No dividends are in arrears.) The book value per share of common stock is:

:

A) $54.

B) $49.

C) $39.

D) $74.

10. Which of the following individuals has the most power to influence corporate policy on a long-term basis?

A) A shareholder owning 60% of the outstanding common stock.

B) A shareholder owning 80% of the outstanding preferred stock.

C) The treasurer of the corporation.

D) The controller of the corporation.

12. Shore and Gardiner each own 10,000 shares of S&G Corporation $12 par value stock which they purchased for $38 per share directly from the corporation. If Shore sells his stock to Gardiner for $475,000:

A) Stockholders' equity of S&G Corporation increases.

B) Assets of S&G Corporation increase.

C) No account of S&G Corporation is affected.

D) Stockholders' equity of S&G Corporation decreases

14. The par value of the common stock of a large listed corporation: Answer A) Tends to establish a ceiling for the market price of the stock.

B) Tends to establish a floor for the market price of the stock.

C) Represents legal capital and is not related to the market price of the stock.

D) Is increased by net income and decreased by dividends.