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Exam 12: Corporations: Organization, Stock Transactions, and Dividends

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Question 21

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A corporation, which had 18,000 shares of common stock outstanding, declared a 3-for-1 stock split. (a) What will be the number of shares outstanding after the split? (b) If the common stock had a market price of $\$ 240$ per share before the stock split, what would be an approximate market price per share after the split? (c) Joumalize the entry to record the stock split.

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Question 22

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Macy Company has 10,000 shares of 2% cumulative preferred stock of $50 par and 25,000 shares of $75 par common stock. The following amounts were distributed as dividends: ​ $\begin{array} { | l | r | } \hline \text { Year 1: } & \$ 30,000 \\\hline \text { Year 2: } & 6,000 \\\hline \text { Year 3: } & 80,000 \\\hline\end{array}$ ​ Determine the dividends per share for preferred and common stock for each year.

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Question 23

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The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

When Wisconsin Corporation was formed on January 1, the corporate charter provided for 100,000 shares of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 8,500 shares of stock at a price of $16 per share. The entry to record the above transaction would include a

The authorized stock of a corporation

When common stock is issued in exchange for land, the land should be recorded in the accounts at the par value of the stock issued.

A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following: (a) Purchased 1,000 shares of treasury stock at $\$ 12$ . The treasury stock is accounted for by the cost method. There were no previous purchases of treasury shares. (b) Sold 500 shares of treasury stock at $\$ 15$ . (c) Purchased equipment for $\$ 75,000$ , paying $\$ 25,000$ in cash and issuing 4,000 shares of common stock for the remaining. (d) Sold 500 shares of treasury stock at $\$ 11$ .

Treasury Stock is listed in the stockholders' equity section on the balance sheet.

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: $\begin{array}{lr}\text { Year 1: } & \$ 10,000 \\\text { Year 2: } & 45,000 \\\text { Year 3: } & 90,000\end{array}$ Determine the dividends per share for preferred and common stock for the third year.

A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following: (a) Purchased 1,500 shares of treasury stock at $\$ 16$ . The treasury stock is accounted for by the cost method. There were no previous purchases of treasury shares. (b) Sold 1,000 shares of treasury stock at $\$ 19$ . (c) Purchased equipment for $\$ 80,000$ , paying $\$ 25,000$ in cash and issuing 4,000 shares of common stock for the remaining. (d) Sold 500 shares of treasury stock at $\$ 14$ .

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

On April 10, a company acquired land in exchange for 1,000 shares of $20 par common stock with a current market price of $73. Journalize this transaction.

On January 1, Vermont Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, Vermont purchased 3,750 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1. The journal entry to record the purchase of the treasury shares on February 1 would include a

The main source of paid-in capital is from issuing stock.

On May 10, a company issued for cash 1,500 shares of no-par common stock (with a stated value of $2) at $14, and on May 15, it issued for cash 2,000 shares of $15 par preferred stock at $58. What is the amount of paid-in capital in stated value at May 10 and paid-in capital in excess of par at May 15, assuming that the common stock is to be credited with the stated value?

Vincent Corporation has 100,000 shares of $100 par common stock outstanding. On June 30, Vincent Corporation declared a 5% stock dividend to be issued on July 30 to stockholders of record July 15. The market price of the stock was $132 a share on June 30. Journalize the entries required on June 30, July 15, and July 30.

Which of the following is not a characteristic of a corporation?

A large public corporation normally uses registrars and transfer agents to maintain records of the stockholders.

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

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: $\begin{array}{lr}\text { Year 1: } & \$ 10,000 \\\text { Year 2: } & 45,000 \\\text { Year 3: } & 90,000\end{array}$ Determine the dividends in arrears for preferred stock for the second year.