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Exam 20: Corporations: Formation and Capital Stock Transactions

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Question 41

True/False

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When shares of a corporation's stock are transferred from one investor to another,an entry is recorded in the capital stock transfer journal.

A) True
B) False

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Question 42

Multiple Choice

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Which of the following statements is not correct?

A) The Paid-in Capital in Excess of Par Value-Common Stock account appears in the Stockholders' Equity section of the balance sheet.
B) The Subscriptions Receivable account is shown in the Stockholders' Equity section of the balance sheet.
C) The balance of the Common Stock account appears in the Stockholders' Equity section of the balance sheet.
D) The balance of the Preferred Stock account appears in the Stockholders' Equity section of the balance sheet.

E) A) and D)
F) C) and D)

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Question 43

Multiple Choice

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A corporation has 10,000 shares of 6 percent,$50 par-value noncumulative preferred stock and 50,000 shares of $4 par-value common stock outstanding.Last year,no dividends were paid.This year,the board of directors decided to pay a dividend of $80,000.The common stockholders will receive a dividend of

The number of shares of common stock that will be issued for each share of convertible preferred stock is referred to as the ___________________.

Stock that carries special privileges or rights is called ____________________ stock.

The "preemptive right" enables shareholders to purchase an equivalent proportion of shares should the corporation issue additional common shares in the future.

A corporation received a subscription for 100 shares of 10 percent,$100 par-value preferred stock at $103 a share.The entry to record this transaction consists of a debit to Subscriptions Receivable-Preferred for $10,300 and a credit to

The ability to convert preferred stock to common stock can make the preferred stock less attractive to investors.

An investor agrees to pay a preferred stock subscription in two monthly installments.Each collection will include a debit to Cash and a credit to

Callable preferred stock is the stock of another firm that a corporation has purchased as an investment.

A corporation is owned by

Common Stock Subscribed is an equity account.

Venti Corporation has outstanding 100,000 shares of $50 par-value preferred stock,issued at an average price of $74 a share.The preferred stock is convertible into common stock at the rate of two shares of common stock for each share of preferred stock.Martin Spellman owns 100 shares of the preferred stock.During the current year he decides to convert 50 shares into common stock.How many shares of common stock will he receive?

SanMartin Corporation has 300,000 shares of $10 par value,common shares authorized through its charter.250,000 shares were issued of which 225,000 shares are currently outstanding.The year-end market price of the stock was $70.Dividends paid at the end of the year were $3 per share.Calculate the total dividends paid.

The stockholders of a corporation

Which of the following statements is correct?