Question 1

Lee's Lions issued 15,000 shares of stock for $17 per share.The par value of the stock was $0.50 per share.Calculate the value of capital stock and additional paid-in capital.

Accepted Answer

Capital stock is calculated as the number of shares multiplied by the par value per share, which is 15,000 shares * $0.50 = $7,500. Additional paid-in capital is calculated as the total amount received (15,000 shares * $17 = $255,000) minus the capital stock ($7,500), resulting in $247,500.

Question 2

When common stock is issued,the amount recorded in Additional paid-in capital is ________.

Accepted Answer

The amount recorded in Additional Paid-In Capital when common stock is issued is the cash received minus the amount recorded in the Common Stock account. This typically represents the excess of the amount received over the par value of the stock.

Question 3

Jem's Jewelers reported total shareholders' equity of $100,000 on its February 28 balance sheet.During March,the business earned $250,000,and declared and paid a cash dividend of $10,000.What was total shareholders' equity on March 31?

Accepted Answer

The answer of Jem's Jewelers reported total shareholders' equity of...

Question 4

Retained earnings is the amount owners have invested in a corporation.

Accepted Answer

Retained earnings refers to the portion of a company's net income that is kept by the company rather than distributed as dividends to shareholders. It is not the amount that owners have invested in the corporation.

Question 5

The number of shares outstanding equals the number of shares ________.

Accepted Answer

The number of shares outstanding equals the number of shares issued minus the number of shares of treasury stock. This is because shares of treasury stock are shares that were issued but have since been repurchased by the company and are no longer outstanding. Therefore, they cannot be included in the calculation of outstanding shares.

Question 6

Explain the difference between contributed capital,capital stock,and additional paid-in capital.

Accepted Answer

The answer of Explain the difference between contributed capital,capital stock,and...

Question 7

Discuss the ownership rights available to common shareholders.

Accepted Answer

The answer of Discuss the ownership rights available to common...

Question 8

Verst Corporation's state charter allows the corporation to issue 500,000 shares of $1 par value common stock.It has sold 305,000 shares of common stock to the public and it currently holds 5,000 shares of treasury stock.
1.How many shares are authorized?
2.How many shares are issued?
3.How many shares are outstanding?

Accepted Answer

The answer of Verst Corporation's state charter allows the corporation...

Question 9

Cartier,Inc.'s corporate charter authorizes it to sell 1 million shares of $0.50 par value common stock.As of December 31,2011,the company had sold 500,000 shares for $4 each.Cartier has 20,000 shares of treasury stock that cost $100,000.On the December 31,2011 balance sheet,the number of shares outstanding is ________ shares.

Accepted Answer

The number of shares authorized is 1,000,000. 
The number of shares sold is 500,000. 
The number of treasury shares is 20,000.

Therefore, the number of outstanding shares is: 
1,000,000 (authorized) - 500,000 (sold) - 20,000 (treasury) = 480,000 shares.

Therefore, the correct answer is C) 480,000.

Question 10

What is the difference between the par value of a stock and its market value?

Accepted Answer

The answer of What is the difference between the par...

Question 11

Explain the difference between authorized,issued,treasury and outstanding stock.

Accepted Answer

The answer of Explain the difference between authorized,issued,treasury and outstanding...

Question 12

If 10,000 shares of $2 par value common stock are issued for $10 per share,then additional paid-in capital will increase by ________.

Accepted Answer

The additional paid-in capital is calculated as the difference between the issue price and the par value, multiplied by the number of shares. Here, ($10 - $2) * 10,000 = $80,000.

Question 13

Team Shirts issued 20,000 shares of stock for $20 per share.The par value of the stock was $1 per share.Calculate the value of capital stock and additional paid-in capital.

Accepted Answer

Capital stock is calculated as the number of shares issued multiplied by the par value per share, which is 20,000 shares * $1 = $20,000. Additional paid-in capital is calculated as the total amount received (20,000 shares * $20 = $400,000) minus the capital stock ($20,000), resulting in $380,000.

Question 14

The owners' claims to the assets of a corporation are called shareholders' equity or stockholders' equity.

Accepted Answer

Shareholders' equity or stockholders' equity represents the residual claim that owners have to the assets of a corporation after all liabilities have been paid.

Question 15

Paid-in capital is divided into capital stock and retained earnings.

Accepted Answer

Paid-in capital refers to the funds raised by a company through the sale of its own shares, and it is divided into capital stock and additional paid-in capital, not retained earnings. Retained earnings represent the accumulated net income of a company that is retained by the company rather than distributed to its shareholders as dividends.

Question 16

Common stock's par value is usually ________.

Accepted Answer

Par value is often set at a nominal amount that is usually less than the market price. It is a legal capital per share that is printed on the face of the stock certificate.

Question 17

Use the information below to answer the following question:  How many shares of common stock have been issued?

Accepted Answer

The answer of Use the information below to answer the...

Question 18

Which of the following is true about bonds and common stock?

Accepted Answer

Bondholders do not have voting rights, while common shareholders do.

Question 19

The state charter of Team Shirts authorizes the corporation to sell 300,000 shares.Team Shirts has issued 200,000 shares of stock.There are 7,500 shares of treasury stock.The number of outstanding shares is ________.

Accepted Answer

The outstanding shares are the total shares issued minus the treasury shares. Therefore, outstanding shares = issued shares - treasury stock
⇒ outstanding shares = 200,000 - 7,500
⇒ outstanding shares = 192,500.

Question 20

State charters allow corporations to issue an unlimited number of shares of common stock.

Accepted Answer

State charters typically specify the maximum number of shares a corporation is authorized to issue, and any changes to this number usually require an amendment to the charter and approval from the state.

Quiz 8: Accounting for Shareholders Equity