Question 1

Prepare the journal entries for Mayhem Manufacturing:
July 21 Issued 6,000 shares of $10 par common stock for $65,000.
July 29 Issued 3,000 shares of 7%,$30 par preferred stock for equipment with a fair market value of $93,000.

Accepted Answer

The answer of Prepare the journal entries for Mayhem Manufacturing:
July...

Question 2

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.
 $\begin{array} { l } 
\underline{\text { Year }}& \underline{\text {Preferred}}&\underline{\text {Common}}\
1 &\underline{\quad\quad}&\underline{\quad\quad}\
2&\underline{\quad\quad} &\underline{\quad\quad}\
3&\underline{\quad\quad}&\underline{\quad\quad}
\end{array}$ b)Preferred is cumulative and nonparticipating.
 $\begin{array} { l } 
\underline{\text { Year }}& \underline{\text {Preferred}}&\underline{\text {Common}}\
1 &\underline{\quad\quad}&\underline{\quad\quad}\
2&\underline{\quad\quad} &\underline{\quad\quad}\
3&\underline{\quad\quad}&\underline{\quad\quad}
\end{array}$  c)Preferred is cumulative and participating.
 $\begin{array} { l } 
\underline{\text { Year }}& \underline{\text {Preferred}}&\underline{\text {Common}}\
1 &\underline{\quad\quad}&\underline{\quad\quad}\
2&\underline{\quad\quad} &\underline{\quad\quad}\
3&\underline{\quad\quad}&\underline{\quad\quad}
\end{array}$

Accepted Answer

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

Question 3

What is the entry to record subscriptions received for 1,700 shares of $100 par value common stock at $130 per share?

Accepted Answer

The correct entry should be to debit Cash for $221,000 and credit Common Stock Subscribed for $170,000 and Paid-in Capital in Excess of Par for $51,000.

Question 4

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 nonparticipating and non-cumulative with no dividends distributed last year.

Accepted Answer

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

Question 5

When a stock subscription is received,Common Stock subscribed is credited for the total par value.

Accepted Answer

When a stock subscription is received, Common Stock subscribed is credited for the total par value, which is the predetermined value assigned to each share of stock.

Question 6

Nature's Honey Corporation received the final installment of $1,000 on a stock subscription for 20 shares of $100 par value common stock.After recording the cash receipt,the entry to issue the stock would include a:

Accepted Answer

When the final installment of $1,000 is received for a subscription of 20 shares of $100 par value common stock, the total amount received is $2,000 (20 shares x $100 par value = $2,000).

The entry to issue the stock would include a credit to Common Stock for $2,000, representing the par value of the stock issued. The stockholders' equity section of the balance sheet would now include an increase in the Common Stock account for $2,000.

There is no excess of par value paid in, so options A and B do not apply. Option D is incorrect since it refers to Organization Cost, which is not relevant in this situation.

Question 7

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.
 $\begin{array} { l } 
\underline{\text { Year }}& \underline{\text {Preferred}}&\underline{\text {Common}}\
1 &\underline{\quad\quad}&\underline{\quad\quad}\
2&\underline{\quad\quad} &\underline{\quad\quad}\
3&\underline{\quad\quad}&\underline{\quad\quad}
\end{array}$   b)Preferred is cumulative and nonparticipating.
 $\begin{array} { l } 
\underline{\text { Year }}& \underline{\text {Preferred}}&\underline{\text {Common}}\
1 &\underline{\quad\quad}&\underline{\quad\quad}\
2&\underline{\quad\quad} &\underline{\quad\quad}\
3&\underline{\quad\quad}&\underline{\quad\quad}
\end{array}$

Accepted Answer

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

Question 8

In the stockholders' equity section of a balance sheet:

Accepted Answer

Preferred stock is typically listed first in the stockholders' equity section of a balance sheet because it has a higher claim on assets and earnings than common stock.

Question 9

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

Accepted Answer

This is the correct formula to determine dividends to be paid on preferred shares.

Question 10

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 11

The journal entry for the receipt of a cash payment on common stock subscriptions would include:

Accepted Answer

When a company receives a cash payment on common stock subscriptions, it increases its cash asset, which is recorded by debiting the Cash account. At the same time, the amount due from the subscriber (previously recognized as Subscriptions Receivable-Common Stock) decreases, which is recorded by crediting Subscriptions Receivable-Common Stock.

Question 12

Monarch Company reported Subscriptions Receivable-Common Stock of $1,500 and Common Stock Subscribed of $3,200 on its balance sheet.All the following are true except:

Accepted Answer

The answer of Monarch Company reported Subscriptions Receivable-Common Stock of...

Question 13

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 nonparticipating and cumulative with no dividends distributed last year.

Accepted Answer

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

Question 14

Tory Company received the first installment of $3,200 on a common stock subscription.The entry to record the collection would include a:

Accepted Answer

The answer of Tory Company received the first installment of...

Question 15

The Bean Counter Corporation received subscriptions for 100 shares of its $10 par value common stock at $13 per share.The entry to record receipt of the subscriptions would include a:

Accepted Answer

The correct entry for recording subscriptions received for common stock above par value involves recognizing the receivable for the subscription amount, recording the common stock at par value, and recognizing any excess over par as paid-in capital in excess of par. This is accurately reflected in option D, where the debit to Subscriptions Receivable-Common Stock represents the amount due from subscribers, and the credits to Common Stock Subscribed and Paid-in Capital in Excess of Par represent the allocation of the subscription amount to the par value of the stock and the excess over par, respectively.

Question 16

Most preferred stock currently being issued is participating,while it is very unusual to find cumulative preferred stock.

Accepted Answer

Most preferred stock issued is cumulative, which means that if any dividends are missed, they must be paid out before common stock dividends. Participating preferred stock, which allows shareholders to receive additional dividends beyond the stated amount under certain conditions, is less common.

Question 17

Diamonds Forever Corporation received subscriptions for 80 shares of its $100 par value common stock for $120 per share.The entry to record the receipt of the subscriptions would include a:

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The answer of Diamonds Forever Corporation received subscriptions for 80...

Question 18

Common Stock Subscribed is:

Accepted Answer

Common Stock Subscribed is shown as an equity account below Issued Common Stock on the balance sheet. It represents a commitment by investors to purchase shares of the company's stock, indicating an agreement but not yet a final transaction.

Question 19

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 20

Prepare the journal entries for Mayhem Manufacturing:
June 10 Incurred organization costs totaling $4,200
June 14 Issued 9,000 shares of $10 par value common stock for $110,000
June 22 Issued 3,500 shares of 7%,$30 par value preferred stock for $115,000.

Accepted Answer

The answer of Prepare the journal entries for Mayhem Manufacturing:
June...

Quiz 18: Corporations: Organizations and Stock

Prepare the journal entries for Mayhem Manufacturing: July 21 Issued 6,000 shares of $10 par common stock for $65,000. July 29 Issued 3,000 shares of 7%,$30 par preferred stock for equipment with a fair market value of $93,000.

What is the entry to record subscriptions received for 1,700 shares of $100 par value common stock at $130 per share?

When a stock subscription is received,Common Stock subscribed is credited for the total par value.

Nature's Honey Corporation received the final installment of $1,000 on a stock subscription for 20 shares of $100 par value common stock.After recording the cash receipt,the entry to issue the stock would include a:

In the stockholders' equity section of a balance sheet:

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

The journal entry for the receipt of a cash payment on common stock subscriptions would include:

Monarch Company reported Subscriptions Receivable-Common Stock of $1,500 and Common Stock Subscribed of $3,200 on its balance sheet.All the following are true except:

Tory Company received the first installment of $3,200 on a common stock subscription.The entry to record the collection would include a:

The Bean Counter Corporation received subscriptions for 100 shares of its $10 par value common stock at $13 per share.The entry to record receipt of the subscriptions would include a:

Most preferred stock currently being issued is participating,while it is very unusual to find cumulative preferred stock.

Diamonds Forever Corporation received subscriptions for 80 shares of its $100 par value common stock for $120 per share.The entry to record the receipt of the subscriptions would include a:

Common Stock Subscribed is:

Prepare the journal entries for Mayhem Manufacturing: June 10 Incurred organization costs totaling $4,200 June 14 Issued 9,000 shares of $10 par value common stock for $110,000 June 22 Issued 3,500 shares of 7%,$30 par value preferred stock for $115,000.