Weiss Company declared a cash dividend on its common stock on December 15, Year 1, payable on January 12, Year 2. How should this dividend affect equity on the following date?

December 15,December 31,January 12,

Year 1Year 1Year 2

1. DecreaseNo effectDecrease
2. DecreaseNo effectNo effect
3. No effectDecreaseNo effect
4. No effectNo effectDecrease

Jordan Corp. declared a 5% stock dividend on its 10,000 issued and outstanding shares of $2 par value common stock, which had a fair value of $5 per share before the stock dividend was declared. This stock dividend was distributed 60 days after the declaration date. By what amount did Jordans current liabilities increase as a result of the stock dividend declaration?

1. $0
2. $500
3. $1,000
4. $2,500

McGlinchy Company had 100,000 shares of $4 par value common stock outstanding on June 12 of the current year. On this date, McGlinchy acquired 1,000 of its own shares as treasury stock at a cost of $12 per share. The acquisition was accounted for by the cost method. As a result of this treasury stock purchase:

1. Total assets and total equity decreased
2. Total assets and total equity were unaffected
3. Total assets, retained earnings, and total equity decreased
4. Total assets were unaffected, but retained earnings decreased.

Under the treasury stock method, the diluted earnings per share calculation is based on the assumption that stock options and warrants issued by the reporting entity and outstandingfor the entire were exercised at the:

1. End of the period and that the funds obtained thereby were used to purchase common stock at the average market price during the period.
2. Beginning of the period and that the funds obtained thereby were used to purchase common stock at the average market price during the period.
3. End of the period and that the funds obtained thereby were used to purchase common stock at the current market price in effect at the end of the period.
4. Beginning of the period and that the funds obtained thereby were used to purchase common stock at the current market price in effect at the end of the period.

When the fair value of an investment in debt securities exceeds its amortized cost, how should each of the following debt securities be reported at the end of the year?

Debt securities classified as:

Held-to-MaturityAvailable-for-Sale

1. Amortized costAmortized cost
2. Amortized costFair Value
3. Fair Value Fair Value
4. Fair Value Amortized cost

A decline in the fair value of an available-for-sale security below its amortized cost basis that is deemed to be other than temporary should:

1. Be accumulated in a valuationallowance
2. Be treated as a realized loss and included in the determination of the net income for the period
3. Not be realized until the security is sold
4. Be treated as an unrealized loss and included in the equity section of the balance sheet as a separate team.

At the end of the current year, Peek Corp., a newly formed company, had the following stock issued and outstanding:

• Common stock, no par, $1 stated value, 10,000 shares originally issued for $15 per share
• Preferred stock, $10 par value, 3,000 shares originally issued for $25 per share

Peeks statement of equity for the year should report:

Common StockPreferred StockAdditional Paid-in-Capital

1. $150,000$30,000 $45,000
2. $150,000$75,000 $0
3. $10,000 $75,000 $10,000
4. $10,000 $30,000 $185,000

Lunar Corp.s outstanding capital stock at September 15 of the current year consisted of the following:

• 30,000 shares of 5% cumulative preferred stock par value $10 per share, fully participating as to dividends. No dividends were in arrears.
• 200,000 shares of common stock, par value $1 per share.

On September 15 of the current year, Lunar declared dividends of $100,000. What was the amount of dividends payable to Lunars common shareholders?

1. $10,000
2. $34,000
3. $40,000
4. $60,000

Unlike a stock split, a stock dividend requires a formal journal entry in the financial accounting records, because stock ______

1. dividends increase the relative book value of an individuals stock holding
2. splits increase the relative book value of an individuals stock holdings
3. dividends are payable on the date they are declared
4. dividends represent a transfer from retained earnings to capital stock.

Merrilea Goings, Inc. issued preferred stock with detachable common stock warrants. The issue price exceeded the sum of the warrantss fair value and the preferred stocks par value. The preferred stocks fair value was not determinable. What amount should be assigned to the warrants outstanding?

1. Total proceeds
2. Excess of proceeds over the par value of the preferred stock
3. The proportion of the proceeds that the warrants fair value bears to the preferred stocks par value
4. The fair value of the warrants