College Level Advanced Accounting Multiple CHoice: My freind, Please Help! Which
ID: 2479076 • Letter: C
Question
College Level Advanced Accounting Multiple CHoice: My freind, Please Help!
Which of the following is true of dividends? Dividends increase assets and decrease total stockholders' equity of a corporation. Dividends are a distribution of cash, stock, or other assets to the stockholders. Dividend payments decrease paid-in capital. Dividend payments increase stockholders' equity. ABC has 45,000 shares of S10 par common stock outstanding. They offer a stock split of 4-for-l. The effect of the split will be par stays at S10; total shares go to 11,250 par drops to $5; total shares stay at 45,000 par goes to $40; total shares go to 180,000 par drops to $2.50; total shares go to 180,000 On the, cash dividends become a liability of a corporation. end of the fiscal year date of record payment date declaration date On November 1, 2015, Oster Inc. declared a dividend of S3.00 per share. Oster Inc. has 20,000 shares of common stock outstanding and no preferred stock. The date of record is November 15, and the payment date is November 30, 2015. Which of the following is the journal entry needed on November 30? debit Retained Earnings $60,000 and credit Dividends Payable Common S60,000 debit Retained Earnings $60,000 and credit Cash $60,000 debit Dividends Payable Common S60,000 and credit Cash $60,000 debit Cash $60,000 and credit Dividends Payable Common $60,000 Which of the following statements is true of a corporation? Corporate shares of stock cannot be readily bought and sold by investors on the open market. Corporations pay income tax on corporate earnings, and shareholders pay personal income tax on corporate dividends and gains from sale of stock. Shareholders are authorized to sign contracts or make business commitments on behalf of the corporation. The liabilities of a corporation can be paid by the personal assets of the shareholders. Outstanding stock refers to the total amount of stock that has been authorized by state law total amount of stock that has not been sold yet shares of stock that are held by the stockholders shares of stock that are sold for the highest price Which of the following represents one of the basic rights of stockholders? Stockholders may authorize a business contract on behalf of the corporation. Stockholders may sell their stock back to the company if they wish. Stockholders may determine at what price the company issues stock. Stockholders may receive dividends from corporate earnings. Which of the following will happen to a stockholder's percentage ownership in the stock of a corporation when the corporation declares a stock dividend? The stockholder's percentage ownership remains unchanged. The stockholder's percentage ownership decreases. The stockholder's percentage ownership increases. The stockholder's percentage ownership can increase or decrease. In the event of liquidation, preferred stockholders. have first claim on remaining corporate assets after debts are paid are guaranteed to get their investment back in full may sell their shares for higher amounts than common stock may retain their proportionate share of voting rights Lerner Inc. had the following transactions in 2015, its first year of operations. Issued 20,000 shares of common stock. Stock has par value of $1.00 per share and was issued at S14.00 per share. Issued 1,000 shares of S100 par value preferred stock. Shares were issued at par. Earned net income of S35,000. middot EsM no dividends. At the end of 2015, what is the total amount of paid-in capital? $280,000 $380,000 $120,000 $415,000 Which of the following is true of the distribution of stock dividends? It increases both dividends payable and cash. It affects only stockholder's equity accounts. It decreases assets and increase liabilities. It decreases both assets and liabilities. Assume the following information for Petra Sales Inc.: Common stock, $1.00 par, 200,000 issued, 180,000 outstanding Paid-In Capital in Excess of Par E Common: SI,600,000 Retained earnings: $2,440,000 Treasury stock: 20,000 shares purchased at S12 per share If Petra Sales purchases an additional 5,000 shares of treasury stock at $14 per share, what number of shares will be shown as issued and outstanding? 200,000 issued; 180,000 outstanding 200,000 issued; 175,000 outstanding 175,000 issued; 180,000 outstanding 195,000 issued; 180,000 outstanding Which of the following types of stock is considered least risky for investors? par value stock preferred stock no-par stock common stock Restrictions on retained earnings. are reported on the income statement are designed to maximize dividends paid to shareholders are usually reported in the notes to the financial statements are reported on the cash flow statement. A corporation has 15,000 shares of 10%, S50 par cumulative preferred stock outstanding and 25,000 shares of no-par common stock outstanding. Dividends of $37,500 are in arrears. At the end of the current year, the corporation declares a dividend of S120,000. What is the dividend per share for preferred stock and for common stock? The dividend per share is $5.00 to preferred stock and $4.60 per share to common stock. The dividend per share is $7.50 to preferred stock and $0.30 per share to common stock. The dividend per share is $8.00 to preferred stock and $0 per share to common stock. The dividend per share is $8.00 to preferred stock and $0.30 per share to common stock.Explanation / Answer
1)
B) Dividends are a distribution of cash stock or other assets to the stockholders.
Dividend is distribution of profit and this profit is distributed in any of the froms ateated below:
Cash – Cash dividend
Stock – stock dividend
Other assets like property – Property Dividend
2)
D) par drops to $2.50; total shares goes to 180000
4-1 split means 1 share of par value $10 will be spitted into 4 shares of par value $2.50 each thereby increasing the number of shares to 4 * 45000 = 180000 and reducing the par value to $2.50 each.
3)
Declaration Date.
On the declaration date the retained earnings is debited and cash dividend payable is credited thereby creating a provision for cash dividend to be paid to the stockholders.
4)
C) Debit Dividends Payable Common $60000 & Credit Cash $60000
5)
B) Corporation pay income tax on corporate earnings and shareholders pay personal income tax on corporate dividends and gains from sale of stock.
A) is not true as Corporate shares (listed in exchange of course) can be readily bought and sold in the secondary market
C) is not true as shareholders are the owners of the business and not the directors who are authorized by the shareholders to run the day to day affairs of the business. Shareholders are not authorized to sign the contract
D) is not true as the liability of the shareholders of a corporation are limited.
6)
C) Shares of stock that are held by the stockholders.
7)
D) Stockholders may receive dividends from corporate earnings. The common stockholders are the owners of the business and have the right to receive the profit (net profit after tax – preference dividend) earned by the business if there is any.
8)
C) the stockholders’ percentage of ownership increases.
Stock dividend means the stockholders are paid dividends in terms of common stock. The number of stocks in the disposal of the stockholders increases thereby increasing their percentage of stockholding.
9)
A) have first claim on remaining corporate assets after debts are paid.
Preferred shareholders have prior claim on a company's assets if it is liquidated though they remain subordinate to bondholders. Because preferred shareholders do not enjoy the same guarantees as creditors, the ratings on preferred shares are generally lower than the same issuer's bonds, with the yields being accordingly higher.
10)
Paid in capital = par value of common stock issued + par value of preferred stock issued = 20000 x $1 + 1000 x $100 = $120000
11)
B) It affects only stockholders’ equity accounts
It reduces the retained earnings and increases the common stock (as well as paid in capital in excess of common stock if the market price of the common stock is more than the par value at the time of declaring dividend)
12)
B) 2,00000 issued and 175000 outstanding
Number of shares outstanding = 180000 – treasury stock = 175000 shares
13)
B) Preferred stock
14)
C) are usually reported in the notes to the financial statements
Restricted retained earnings refers to that amount of a company's retained earnings that are not available for distribution to shareholders as dividends.
15) Answer: B
Dividend for current year due to preferred stock = 15000 x $50 x 10% = $75000
Arrear = $37500
Total dividend to be paid to the preferred stockholders = $75000 + $37500 = $112500
Dividend to common stockholders = $120000 - $112500 = $7500
Dividend to preferred stockholders = $112500 / 15000 = $7.5 per share
Dividend to common stockholders = $7500 / 25000 = $0.30/share