Question 1

The declaration of a stock dividend will
A) increase share capital.
B) change total shareholders' equity.
C) increase total liabilities.
D) increase total assets.

Accepted Answer

A stock dividend increases the share capital as it involves issuing additional shares to shareholders, but it does not change total shareholders' equity, liabilities, or assets.

Question 2

As of December 31, 2017, Shannon Corporation had 500,000 common shares authorized, 100,000 of which had been issued for proceeds of $1.9 million. The Retained Earnings balance was $1,150,000 and Accumulated Other Comprehensive Income was $1,800,000.On January 18, 2018, 50,000 common shares were issued at $25 per share. Net income for 2018 was $275,000. No dividends were declared in 2018.Instructions
a. Prepare the entry to record the common share issue on January 18.
b. Prepare the shareholders' equity section of the statement of financial position at December 31, 2018.

Accepted Answer

The answer of As of December 31, 2017, Shannon Corporation...

Question 3

Maha Corporation has 2,000,000 authorized common shares. As of June 30, 2018, there were 350,000 shares issued. On this date, the board of directors declared a $0.25 per share cash dividend to be paid on August 1, 2018 to shareholders of record on July 7, 2018.InstructionsPrepare the necessary journal entries to be recorded on
a. the date of declaration,
b. the date of record, and
c. the date of payment. If no entry is needed write "No entry required."

Accepted Answer

The answer of Maha Corporation has 2,000,000 authorized common shares....

Question 4

The journal entry to record the declaration of a stock dividend includes
A) a credit to Stock Dividends Distributable.
B) a credit to Stock Dividends Payable.
C) a credit to Dividends Declared.
D) a credit to Cash.

Accepted Answer

When a stock dividend is declared, the journal entry includes a credit to Stock Dividends Distributable, which represents the obligation to issue additional shares to shareholders.

Question 5

Corporations generally issue stock dividends in order to
A) increase the market price per share.
B) exceed shareholders' dividend expectations.
C) increase the marketability of the shares.
D) decrease the amount of capital in the corporation.

Accepted Answer

Corporations issue stock dividends to increase the number of shares outstanding, which can make the shares more affordable and thus more marketable to a broader range of investors.

Question 6

When stock dividends are distributed
A) Stock Dividends Distributable is decreased.
B) Retained Earnings is decreased.
C) Common Shares is debited.
D) no entry is necessary.

Accepted Answer

The answer of When stock dividends are distributed
A) Stock Dividends...

Question 7

Cambridge Corp. declared a 5% stock dividend. Will Wales owned 300 shares of Cambridge before the dividend. Cambridge shares were trading at $21 before the dividend. Which of the following will be true after the dividend is distributed?
A) The total market value of Will's shares was $6,300 before the stock dividend but will probably decrease after the stock dividend.
B) The total market value of Will's shares was $6,300 before the stock dividend and $6,615 after the stock dividend.
C) Will owned 300 shares before the stock dividend and 315 shares after the stock dividend.
D) Fewer investors will be able to buy Cambridge shares.

Accepted Answer

After a 5% stock dividend, Will's shares increase by 5% from 300 to 315 shares. The market value per share may adjust, but the number of shares increases by 5%.

Question 8

The shareholders' equity section of Starr Corporation at December 31, 2017, included the following:  Dividends were not declared on the preferred shares in 2017 and are in arrears.On September 15, 2018, the board of directors declared dividends on the preferred shares for 2017 and 2018, to shareholders of record on October 1, 2018, payable on October 15, 2018.On November 1, 2018, the board of directors declared a $0.50 per share dividend on the common shares, payable November 30, 2018, to shareholders of record on November 15, 2018.InstructionsPrepare the journal entries that should be made by Starr Corporation on the following dates in 2018: September 15, October 1, October 15, November 1, November 15, and November 30. If no entry is needed write "No entry required."

Accepted Answer

The answer of The shareholders' equity section of Starr Corporation...

Question 9

Identify the effect the declaration of a cash dividend and a stock dividend has on the total shareholders' equity of a corporation:

Accepted Answer

The answer of Identify the effect the declaration of a...

Question 10

Coombs Corp. declared a two-for-one stock split. Solly Fogarty owned 500 shares of Coombs that were trading for $20 each before the split. Which of the following is likely to be true after the split?
A) The number of shares Solly owns will increase by 50%.
B) The market price per share will drop by 50%.
C) The total market value of Solly's shares will double.
D) The market price per share will increase by 100%.

Accepted Answer

After a two-for-one stock split, the number of shares doubles, and the price per share typically halves, so the market price per share will drop by 50%.

Question 11

In its first year of operations, Jagger Ltd. had the following transactions relating to its common shares:  InstructionsRecord the above transactions.

Accepted Answer

The answer of In its first year of operations, Jagger...

Question 12

If the statement of financial position is prepared after a stock dividend has been declared but before it has been distributed, the stock dividend distributable would be reported in the
A) liabilities section.
B) contributed capital section of shareholders' equity.
C) assets section.
D) It would not be reported in the statement of financial position.

Accepted Answer

A stock dividend distributable is reported in the contributed capital section of shareholders' equity because it represents an amount that will be transferred from retained earnings to common stock when the dividend is distributed.

Question 13

The board of directors must assign a per share value to a stock dividend declared that is equal to the
A) average cost.
B) zero.
C) original issue price.
D) fair value.

Accepted Answer

The board of directors must assign a per share value to a stock dividend declared that is equal to the fair value of the stock at the time the dividend is declared.

Question 14

Glenn Corporation's shareholders' equity section at December 31, 2017 appears below:Shareholders' equity  On June 30, 2018, the board of directors declared a 15% stock dividend, distributable on July 31 to shareholders of record on July 15. The fair value of Glenn Corporation's shares on June 30 was $14.On December 1, 2018, the board of directors declared a 2-for-1 stock split effective December 15. Glenn Corporation's shares were selling for $20 on December 1, 2018, before the stock split was declared. Net income for 2018 was $230,000 and there were no cash dividends declared.Instructions 
a. Prepare the journal entries on the appropriate dates to record the stock dividend and the stock split. If no entry is needed write "No entry required."
b. Prepare all closing entries required on December 31, 2018.
c. Fill in the amounts that would appear in the shareholders' equity section for Glenn Corporation at December 31, 2018, for the following items:

Accepted Answer

The answer of Glenn Corporation's shareholders' equity section at December...

Question 15

Determine whether a cash dividend, stock dividend, or stock split will result in the effect listed in the first column. For example, for the first item, indicate by inserting a yes or no in the space provided whether a cash dividend will result in a decrease in total assets; whether a stock dividend will result in a decrease in total assets; and whether a stock split will result in a decrease in total assets.

Accepted Answer

The answer of Determine whether a cash dividend, stock dividend,...

Question 16

As of December 31, 2018, Shaka Son Inc. had the following share capital:1. 750,000 common shares authorized, 350,000 of which had been issued for a total of $5,250,000.2. 100,000 noncumulative, $10.50 preferred shares authorized, 10,000 of which had been issued at $200 per share.InstructionsPrepare the share capital section of the statement of financial position at December 31, 2018.

Accepted Answer

The answer of As of December 31, 2018, Shaka Son...

Question 17

Identify (by letter) each of the following characteristics as being an advantage, a disadvantage, or not applicable to the corporate form of business organization.

Accepted Answer

The answer of Identify (by letter) each of the following...

Question 18

A stock dividend results in a decrease in
A) current liabilities.
B) net income.
C) share capital.
D) retained earnings.

Accepted Answer

A stock dividend decreases retained earnings because it is a distribution of additional shares to shareholders, which is accounted for by transferring an amount from retained earnings to share capital.

Quiz 11: Reporting and Analyzing Shareholders Equity

The declaration of a stock dividend will

The journal entry to record the declaration of a stock dividend includes

Corporations generally issue stock dividends in order to

When stock dividends are distributed

Cambridge Corp. declared a 5% stock dividend. Will Wales owned 300 shares of Cambridge before the dividend. Cambridge shares were trading at $21 before the dividend. Which of the following will be true after the dividend is distributed?

Identify the effect the declaration of a cash dividend and a stock dividend has on the total shareholders' equity of a corporation:

Coombs Corp. declared a two-for-one stock split. Solly Fogarty owned 500 shares of Coombs that were trading for $20 each before the split. Which of the following is likely to be true after the split?

In its first year of operations, Jagger Ltd. had the following transactions relating to its common shares: InstructionsRecord the above transactions.

If the statement of financial position is prepared after a stock dividend has been declared but before it has been distributed, the stock dividend distributable would be reported in the

The board of directors must assign a per share value to a stock dividend declared that is equal to the

Identify (by letter) each of the following characteristics as being an advantage, a disadvantage, or not applicable to the corporate form of business organization.

A stock dividend results in a decrease in