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Exam 18: Shareholders Equity

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Question 61

Multiple Choice

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Corporations are formed in accordance with:

A) The Model Business Corporation Act.
B) Federal statutes.
C) The laws of individual states.
D) Federal trade commission regulations.

E) C) and D)
F) A) and B)

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Question 62

Multiple Choice

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Which of the following transactions decreases retained earnings?

A) A property dividend
B) A stock dividend
C) A cash dividend
D) All of these are correct.

E) B) and C)
F) B) and D)

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Question 63

Multiple Choice

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When preferred stock carries a redemption privilege, the shareholders may:

A statement of comprehensive income does not include:

During its first year of operations, Cole's Electronics Inc. completed the following transactions relating to shareholders' equity. Jan. 5: Issued 1,000,000 shares of common stock for $25 per share. Feb. 12: Issued 20,000 shares of common stock to accountants for professional services. The articles of incorporation authorize 5,000,000 shares of common stock with a par value of $1 per share and 1,000,000 preferred shares with a par value of $100 per share. Required: Record the above transactions in general journal form.

The par value of common stock represents:

The corporate charter sometimes is known as (a) :

Cal Cookie Company (CCC) has 100 million shares of $1 par common stock authorized. The transactions below caused changes in CCC's outstanding shares. January 4, 2009: Repurchased and retired 1 million shares at $8 per share. June 25, 2009: Repurchased and retired 2 million shares at $2 per share. Prior to the transactions, CCC's shareholders' equity included the following: Required: Record entries for the above transactions. $\begin{array} { l r } \text { Common stock, } 80 \text { million shares at } \$ 1 \text { par } & \$ 80,000,000 \\\text { Paid-in capital excess of par } & 160,000,000 \\\text { Retained earnings } & 120,000,000\end{array}$

Stock designated as preferred usually has preferential rights over other classes of stock relative to dividends and liquidating distributions.

When stock traded on an active exchange is issued for a machine:

What was the fair value of the treasury stock exchanged for asset acquisitions for 2006?

The par value of shares issued is normally recorded in the:

Coy, Inc. initially issued 200,000 shares of $1 par value stock for $1,000,000 in 2007. In 2008, the company repurchased 20,000 shares for $200,000. In 2009, 10,000 of the repurchased shares were resold for $160,000. In its balance sheet dated December 31, 2009, Coy, Inc.'s treasury stock account shows a balance of: