Question 1

Common Stock is an asset.

Accepted Answer

Common stock is considered equity, not an asset, on a company's balance sheet. It represents ownership interest in the company.

Question 2

Morton Corporation issued 350 shares of its $6 par value stock to an attorney. The shares are in full settlement for $8,000 of legal services to help set up the company. Prepare the journal entry for the stock issuance.

Accepted Answer

The answer of Morton Corporation issued 350 shares of its...

Question 3

To calculate dividends on par-value preferred stock:

Accepted Answer

To calculate dividends on par-value preferred stock, you multiply the number of shares outstanding by the dividend rate and then by the par value per share. This gives the total amount of dividends to be paid to preferred stockholders.

Question 4

Birch Company issued 200 shares of common stock with a par value of $10 per share in exchange for equipment with a fair market value of $4,000. Record the journal entry for the stock issuance.

Accepted Answer

The answer of Birch Company issued 200 shares of common...

Question 5

Prepare the journal entries for Blitz Industries:
Aug 10 Issued 12,000 shares of $12 par value common stock for $150,000
Aug 20 Issued 6,000 shares of 8%, $25 par value preferred stock for $200,000

Accepted Answer

The answer of Prepare the journal entries for Blitz Industries:
Aug...

Question 6

When a company distributes some of their profits to shareholders, it is in the form of:

Accepted Answer

Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a company earns a profit or surplus, it is able to pay a proportion of the profit as a dividend to shareholders.

Question 7

Colder Industries has 30,000 shares of $10 par common stock and 8,500 shares of $50 par, 6% preferred stock outstanding. Total dividends available are $80,000. Compute the dividends to be distributed to preferred and common stockholders under the following condition.
The preferred stock is nonparticipating and non-cumulative with no dividends distributed last year.

Accepted Answer

The answer of Colder Industries has 30,000 shares of $10...

Question 8

Jane Kathryn has 15,000 shares outstanding of $15 par value, 5% preferred stock and 100,000 shares outstanding $10 par value common stock. In the first 3 years of operations, the company paid dividends in Year 1, $0; Year 2, $10,000; Year 3, $20,000. Calculate the dividend paid to preferred and common stockholders under the following independent situations:
a) Preferred is non-cumulative and nonparticipating.  
b) Preferred is cumulative and nonparticipating.

Accepted Answer

The answer of Jane Kathryn has 15,000 shares outstanding of...

Question 9

Alpha-Omega Industries has 30,000 shares of $12 par common stock and 15,000 shares of $50 par, 5% preferred stock outstanding. Total dividends available are $162,000. Compute the dividends to be distributed to preferred and common stockholders under the following condition.
The preferred stock is participating and cumulative with no dividends distributed last year.

Accepted Answer

The answer of Alpha-Omega Industries has 30,000 shares of $12...

Question 10

Jane Kathryn has 30,000 shares outstanding of $10 par value, 10% preferred stock and 100,000 shares outstanding $5 par value common stock. In the first 3 years of operations, the company paid dividends in Year 1, $0; Year 2, $40,000; Year 3, $100,000. Calculate the dividend paid to preferred and common stockholders under the following independent situations:
a) Preferred is non-cumulative and nonparticipating. 
 b) Preferred is cumulative and nonparticipating.  
c) Preferred is cumulative and participating.

Accepted Answer

The answer of Jane Kathryn has 30,000 shares outstanding of...

Question 11

R. Red formed a corporation with an authorization of 20,000 shares of $50 par, 6% non-cumulative preferred stock and 100,000 shares of $10 par common stock. The following selected transactions were completed during the first year of operations. Journalize the transactions omitting explanations.
Jan 10 Issued 20,000 shares of common stock at par for cash.
31 Issued 20,000 shares of common stock in exchange for land, buildings, and
equipment with fair market prices of $52,000, $125,000, and $48,000, respectively.
Feb 24 Issued 2,000 shares of preferred stock at $54 for cash.

Accepted Answer

The answer of R. Red formed a corporation with an...

Question 12

A company issues no-par value with no stated value stock. Therefore, the company has a minimum legal capital amount.

Accepted Answer

No-par value stock does not have a stated value, so the company does not have a minimum legal capital amount.

Question 13

Number of preferred shares times market value per share times dividend rate is the formula used to determine the dividends to be paid.

Accepted Answer

The answer of Number of preferred shares times market value...

Question 14

Alpha-Omega Industries has 30,000 shares of $12 par common stock and 15,000 shares of $50 par, 5% preferred stock outstanding. Total dividends available are $162,000. Compute the dividends to be distributed to preferred and common stockholders under the following condition.
The preferred stock is participating and non-cumulative with no dividends distributed last year.

Accepted Answer

The answer of Alpha-Omega Industries has 30,000 shares of $12...

Question 15

Journalize the following independent transactions:
a) Casey Company sells 300 shares of $20 par-value common stock at $20.
b) Jacob Corporation sells 100 shares of $20 par-value common stock at $30.
c) Moss Inc. sells 40 shares of no-par common stock with a $20 stated value for $30 per share.

Accepted Answer

The answer of Journalize the following independent transactions:
a) Casey Company...

Question 16

Journalize the following stock transactions for Rick Corporation.
July 22 Issued 10,000 shares of $6 par common stock for $45,000 cash.
28 Issued 6,000 shares of $4 par common stock for $35,000 cash.
31 Issued 4,000 shares of $10 par, 7% preferred stock for $50,000 cash.

Accepted Answer

The answer of Journalize the following stock transactions for Rick...

Question 17

Colder Industries has 30,000 shares of $10 par common stock and 8,500 shares of $50 par, 6% preferred stock outstanding. Total dividends available are $80,000. Compute the dividends to be distributed to preferred and common stockholders under the following condition.
The preferred stock is nonparticipating and cumulative with no dividends distributed last year.

Accepted Answer

The answer of Colder Industries has 30,000 shares of $10...

Question 18

A company can exchange stock for noncash assets.

Accepted Answer

Companies can issue stock as a form of payment for noncash assets, such as property, plant, and equipment, or in exchange for services. This is often done during mergers and acquisitions or when acquiring assets to expand operations.

Question 19

Elsinore Corporation has been issued a charter by the state of New Hampshire. This charter gives Elsinore the authority to issue 10,000 shares of $16 par value preferred stock and 100,000 shares of $6 par value common stock. Journalize the entries listed below.
June 1 Issued 3,000 shares of preferred stock at $20 per share.
4 Issued 10,000 shares of common stock at $10 per share.
13 Issued 8,000 shares of common stock at $12 per share.
21 Issued 500 shares of preferred stock at $25 per share.

Accepted Answer

The answer of Elsinore Corporation has been issued a charter...

Question 20

Almont Corporation is authorized to issue 2,000 shares of common stock. Record the journal entry for each of the following independent situations. Assume Almont issues 1,000 shares at $14 on August 31.
a) Common stock has a $11 per share par value.
b) Common stock has no par value and no stated amount.
c) Common stock is no-par stock with a stated value of $7 per share.

Accepted Answer

The answer of Almont Corporation is authorized to issue 2,000...

Quiz 18: Corporations: Organizations and Stock