Question 1

Vega Corporation's December 31, 2018 balance sheet showed the following:
8% preferred stock, $20 par value, cumulative, 10,000 shares 
Vega declared and paid a $58,000 cash dividend on December 15, 2018. If the company's dividends in arrears prior to that date were $10,000, Vega's common stockholders received

Accepted Answer

The answer of Vega Corporation's December 31, 2018 balance sheet...

Question 2

When preferred stock is cumulative, preferred dividends not declared in a period are

Accepted Answer

When preferred stock is cumulative, any preferred dividends not declared in a period accumulate and become dividends in arrears, which are owed to the preferred shareholders and must be paid before common shareholders can receive dividends. Dividends in arrears are considered a liability on the company's balance sheet.

Question 3

Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2018. There were no dividends declared in 2017. The board of directors declares and pays a $250,000 dividend in 2018. What is the amount of dividends received by the common stockholders in 2018?

Accepted Answer

The answer of Lakeland, Inc. has 25,000 shares of 6%,...

Question 4

The following data is available for Blaine Corporation at December 31, 2018:  Based on the data, how many shares of common stock have been issued?

Accepted Answer

The answer of The following data is available for Blaine...

Question 5

Treasury stock is generally accounted for by the

Accepted Answer

Treasury stock is generally accounted for using the cost method, which records the amount paid to repurchase the shares as a reduction in shareholders' equity. The market value method is not appropriate because the market value of treasury stock is not typically used to account for it. Neither the par value nor the stated value method relate to the accounting for treasury stock.

Question 6

Salon Company originally issued 4,000 shares of $10 par value common stock for $120,000 ($30 per share). Salon subsequently purchases 400 shares of treasury stock for $27 per share and resells the 400 shares of treasury stock for $29 per share. In the entry to record the sale of the treasury stock, there will be a

Accepted Answer

When treasury stock is sold, the debit is made to Cash and the credit is made to Treasury Stock for the cost of the shares sold. Any excess of the sale price over the cost is recorded in the account Paid-In Capital from Treasury Stock, which is a component of shareholders' equity. In this case, the cost of the 400 shares of treasury stock was $10,800 (400 shares x $27 per share) and the sale price was $11,600 (400 shares x $29 per share), resulting in a credit of $800 to Paid-In Capital from Treasury Stock. None of the other answer choices reflect this transaction accurately.

Question 7

Dividends in arrears on cumulative preferred stock

Accepted Answer

Dividends in arrears on cumulative preferred stock must be paid before any dividends can be distributed to common stockholders. This ensures that preferred stockholders receive their specified dividends before common stockholders are allocated any dividends.

Question 8

Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock outstanding at December 31, 2018. No dividends have been paid on this stock for 2017 or 2018. Dividends in arrears at December 31, 2018 total

Accepted Answer

The preferred stock is cumulative, which means that any dividends that were not paid in previous years have to be paid before any dividends can be paid to common stockholders. Since no dividends have been paid for either 2017 or 2018, the dividends in arrears at December 31, 2018 would be for both years, totaling $10,000 (2 years x 1,000 shares x $5 dividend per share). Therefore, the correct answer is D.

Question 9

Ranier Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Ranier issues 5,000 shares of preferred stock for land with an asking price of $575,000 and a market value of $550,000, which of the following would be the journal entry for Ranier to record?

Accepted Answer

The answer of Ranier Company is authorized to issue 10,000...

Question 10

Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $60 per share. In the stockholders' equity section, the effects of the transaction above will be reported

Accepted Answer

The issuance of preferred stock for cash involves both the par value of the stock (capital stock section) and the difference between the selling price and par value (additional paid-in capital section). Therefore, the effects of the transaction will be reported under both the capital stock and additional paid-in capital sections.

Question 11

The following data is available for Blaine Corporation at December 31, 2018:  Based on the data, how many shares of common stock are outstanding?

Accepted Answer

The answer of The following data is available for Blaine...

Question 12

Seven thousand shares of treasury stock of Marker, Inc., previously acquired at $14 per share, are sold at $20 per share. The entry to record this transaction will include a

Accepted Answer

The answer of Seven thousand shares of treasury stock of...

Question 13

If preferred stock is cumulative, the

Accepted Answer

Cumulative preferred stock means that if dividends are not paid in a given year, they accumulate and become dividends in arrears. These dividends must be paid before any dividends can be paid to common stockholders or any dividends declared in the future.

Question 14

Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $80 per share. The entry to record the transaction will consist of a debit to Cash for $800,000 and a credit or credits to

Accepted Answer

The preferred stock has a par value of $50, so the total par value of 10,000 shares is $500,000. However, they were sold at $80 per share, which is $30 above par value. Therefore, the cash received is $800,000 (10,000 shares x $80 each), which is $300,000 above the total par value of the preferred stock. This $300,000 is recorded as a credit to Paid-in Capital in Excess of Par-Preferred Stock. The remaining $500,000 is credited to Preferred Stock.

Question 15

Era Company has 3,000 shares of 6%, $100 par non-cumulative preferred stock outstanding at December 31, 2018. No dividends have been paid on this stock for 2017 or 2018. Dividends in arrears at December 31, 2018 total

Accepted Answer

The answer of Era Company has 3,000 shares of 6%,...

Question 16

Accounting for treasury stock is done by the

Accepted Answer

Treasury stock is recorded at cost in the balance sheet using the cost method. This means that the cost of the shares repurchased is deducted from the total shareholders’ equity in the balance sheet. The FIFO, LIFO, and lower of cost or market methods are not applicable for accounting for treasury stock.

Question 17

The Northern Corporation issues 7,000 shares of $100 par value preferred stock for cash at $120 per share. The entry to record the transaction will consist of a debit to Cash for $840,000 and a credit or credits to

Accepted Answer

The preferred stock has a par value of $100 per share, so the total par value of 7,000 shares is $700,000. However, the shares were sold for $120 each, which means that the company received $20 per share above par value. The excess amount is considered to be paid-in capital in excess of par value, which is credited separately from the par value of the stock. Therefore, the entry to record the issuance of preferred stock is a debit to Cash for $840,000, a credit to Preferred Stock for $700,000, and a credit to Paid-in Capital in Excess of Par-Preferred Stock for $140,000.

Question 18

Which of the following is not a right or preference associated with preferred stock?

Accepted Answer

Preferred stock typically does not carry voting rights.

Question 19

Dividends in arrears on cumulative preferred stock

Accepted Answer

Dividends in arrears on cumulative preferred stock are not recognized as liabilities until they are declared. However, they should be disclosed in the notes to the financial statements to inform users about the potential obligation and its impact on future cash flows.

Question 20

Treasury Stock is a(n)

Accepted Answer

Treasury Stock is a contra stockholders' equity account because it represents the company's own shares that have been repurchased and are no longer outstanding. This reduces the overall amount of stockholders' equity on the balance sheet.

Quiz 11: Corporations: Organization, Stock Transactions, and Stockholders Equity

When preferred stock is cumulative, preferred dividends not declared in a period are

The following data is available for Blaine Corporation at December 31, 2018: Based on the data, how many shares of common stock have been issued?

Treasury stock is generally accounted for by the

Dividends in arrears on cumulative preferred stock

Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock outstanding at December 31, 2018. No dividends have been paid on this stock for 2017 or 2018. Dividends in arrears at December 31, 2018 total

Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $60 per share. In the stockholders' equity section, the effects of the transaction above will be reported

The following data is available for Blaine Corporation at December 31, 2018: Based on the data, how many shares of common stock are outstanding?

Seven thousand shares of treasury stock of Marker, Inc., previously acquired at $14 per share, are sold at $20 per share. The entry to record this transaction will include a

If preferred stock is cumulative, the

Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $80 per share. The entry to record the transaction will consist of a debit to Cash for $800,000 and a credit or credits to

Era Company has 3,000 shares of 6%, $100 par non-cumulative preferred stock outstanding at December 31, 2018. No dividends have been paid on this stock for 2017 or 2018. Dividends in arrears at December 31, 2018 total

Accounting for treasury stock is done by the

The Northern Corporation issues 7,000 shares of $100 par value preferred stock for cash at $120 per share. The entry to record the transaction will consist of a debit to Cash for $840,000 and a credit or credits to

Which of the following is not a right or preference associated with preferred stock?

Dividends in arrears on cumulative preferred stock

Treasury Stock is a(n)