Question 1

Corporations generally issue stock dividends in order to

Accepted Answer

Stock dividends are often issued to increase the marketability of the stock by increasing the number of shares available, which can make the stock more accessible to a wider range of investors due to a lower price per share. This does not directly aim to increase the market price per share, exceed dividend expectations, or decrease the corporation's capital.

Question 2

On the dividend record date

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The answer of On the dividend record date
...

Question 3

The per share amount normally assigned by the board of directors to a small stock dividend is

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Question 4

CAB Inc. has 1,000 shares of 6%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock?

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The answer of CAB Inc. has 1,000 shares of 6%,...

Question 5

Watson, Inc. has 10,000 shares of 6%, $100 par value, cumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2014. There were no dividends declared in 2012. The board of directors declares and pays a $100,000 dividend in 2013 and in 2014. What is the amount of dividends received by the common stockholders in 2014?

Accepted Answer

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Question 6

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

Accepted Answer

When a board of directors assigns a per share value to a stock dividend, it must be at least equal to the par or stated value. This ensures that the stock's value is not diluted and maintains the integrity of the existing shares' value.

Question 7

A stockholder who receives a stock dividend would

Accepted Answer

When a stockholder receives a stock dividend, they are given additional shares of stock in the company. This means that they will own more shares of stock than they did before the dividend was issued, but the market price per share should not necessarily increase. The retained earnings of the company may also increase, as the dividend is paid out of those earnings. The par value of the stock usually does not change with a stock dividend.

Question 8

Brewer Inc. has 5,000 shares of 8%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2014, and December 31, 2013. The board of directors declared and paid a $15,000 dividend in 2013. In 2014, $60,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2014?

Accepted Answer

The answer of Brewer Inc. has 5,000 shares of 8%,...

Question 9

A small stock dividend is defined as

Accepted Answer

A small stock dividend is typically defined as less than 20-25% of the corporation's issued stock. This means that Option D is the correct choice. Options A and C both have percentages that exceed this range, while Option B includes a range that is too broad and not specific to a small stock dividend.

Question 10

Which of the following statements regarding the date of a cash dividend declaration is not accurate?

Accepted Answer

Once a cash dividend has been declared, it cannot be rescinded. The corporation is committed to a legal, binding obligation, and the board of directors formally authorizes the dividend. Increasing a liability account is also necessary to reflect the obligation to pay the dividend.

Question 11

Sizemore, Inc. has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2014. If the board of directors declares a $30,000 dividend, the

Accepted Answer

Since the preferred stock is cumulative, any unpaid dividends from previous periods must be paid before any dividends can be paid to common stockholders. Therefore, the preferred stockholders will receive the entire $30,000 before any dividends are paid to common stockholders.

Question 12

Which of the following statements is not true about a 2-for-1 split?

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The answer of Which of the following statements is not...

Question 13

When stock dividends are distributed,

Accepted Answer

When stock dividends are distributed, the Common Stock Dividends Distributable account is decreased to reflect the fact that the dividend has been paid out to shareholders. Retained earnings and Paid-in Capital in Excess of Par Value are not affected by the distribution of stock dividends.

Question 14

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

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Question 15

The per share amount normally assigned by the board of directors to a large stock dividend is

Accepted Answer

The per share amount assigned by the board of directors to a large stock dividend is usually the par or stated value of the stock. This is because a large stock dividend does not represent a distribution of earnings or profits but rather a transfer from the paid-in capital account to the common stock account. As such, the par value of the shares being issued is simply transferred from paid-in capital to common stock.

Question 16

Which of the following statements about dividends is not accurate?

Accepted Answer

The board of directors is not obligated to declare dividends, as it is a discretionary decision based on the company's financial situation and goals.

Question 17

Denson, Inc. has 10,000 shares of 7%, $100 par value, non-cumulative preferred stock and 40,000 shares of $1 par value common stock outstanding at December 31, 2014. There were no dividends declared in 2013. The board of directors declares and pays a $120,000 dividend in 2014. What is the amount of dividends received by the common stockholders in 2014?

Accepted Answer

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Question 18

Berman Inc. has 6,000 shares of 8%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2013, and December 31, 2014. The board of directors declared and paid an $18,000 dividend in 2013. In 2014, $72,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2014?

Accepted Answer

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Question 19

Which of the following is not a significant date with respect to dividends?

Accepted Answer

The incorporation date is not relevant to dividends. The declaration date is when the company announces its intention to pay a dividend, the record date is when shareholders must be on record to receive the dividend, and the payment date is when the dividend is actually paid out.

Question 20

Ace Inc. has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock?

Accepted Answer

The answer of Ace Inc. has 10,000 shares of 5%,...

Quiz 11: Reporting and Analyzing Stockholders Equity