Question 1

Outstanding stock of the West Corporation included 40,000 shares of $5 par common stock and 10,000 shares of 5%, $10 par non-cumulative preferred stock.In 2019, West declared and paid dividends of $4,000.In 2020, West declared and paid dividends of $20,000.How much of the 2020 dividend was distributed to preferred shareholders?

Accepted Answer

The preferred shareholders receive 5% of the $10 par value per share, which is $0.50 per share. With 10,000 shares, they receive $5,000 in dividends. Since the preferred stock is non-cumulative, they do not receive any unpaid dividends from previous years.

Question 2

Treasury Stock is a(n)

Accepted Answer

Treasury Stock is a contra stockholders' equity account because it reduces the total amount of stockholders' equity. When a company buys back its own stock and holds it as treasury stock, it reduces the number of outstanding shares, which in turn reduces the total amount of stockholders' equity.

Question 3

Dividends in arrears on cumulative preferred stock

Accepted Answer

Dividends in arrears on cumulative preferred stock must be paid before any dividends can be distributed to common stockholders. This ensures that preferred stockholders receive their due dividends before any profits are shared with common stockholders.

Question 4

Nice Corporation issues 40,000 shares of $100 par value preferred stock for cash at $110 per share.The entry to record the transaction will consist of a debit to Cash for $4,400,000 and a credit or credits to

Accepted Answer

The preferred stock is issued at a premium, so the entry will credit Preferred Stock for the par value ($4,000,000) and the excess amount ($400,000) to Paid-in Capital in Excess of Par Value-Preferred Stock.

Question 5

Which of the following is not a right or preference associated with preferred stock?

Accepted Answer

Preferred stockholders typically do not have the right to vote in corporate matters, unlike common stockholders who usually have voting rights. Therefore, choice A is not a right or preference associated with preferred stock.

Question 6

A corporation purchases 30,000 shares of its own $10 par common stock for $25 per share, recording it at cost.What will be the effect on total stockholders' equity?

Accepted Answer

When a corporation purchases its own stock, it is recorded as treasury stock, which reduces total stockholders' equity by the cost of the purchase. In this case, 30,000 shares at $25 per share results in a decrease of $750,000 in stockholders' equity.

Question 7

The following data is available for BOX Corporation at December 31, 2020:  Based on the data, how many shares of common stock are issued?

Accepted Answer

The answer of The following data is available for BOX...

Question 8

Treasury shares plus outstanding shares equal

Accepted Answer

Issued stock is the total number of shares that have been allocated to shareholders, which includes both outstanding shares and treasury shares.

Question 9

Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued $10 par common stock for $62,500.As a result of this event,

Accepted Answer

When a company repurchases its own stock, it reduces its total stockholders' equity by the cost of the repurchased shares, which in this case is $62,500.

Question 10

Dividends in arrears on cumulative preferred stock

Accepted Answer

Dividends in arrears on cumulative preferred stock are not recognized as liabilities until they are declared. However, they should be disclosed in the notes to the financial statements to inform users about the potential obligation and its impact on future cash flows.

Question 11

Treasury stock is

Accepted Answer

Treasury stock refers to shares that were once a part of the outstanding shares of a corporation but were later reacquired by the corporation itself. These shares are held in the company's treasury and can be reissued or retired.

Question 12

Leary Manufacturing Corporation purchased 5,000 shares of its own previously issued $10 par common stock for $125,000.As a result of this event,

Accepted Answer

When a company repurchases its own stock, it decreases total stockholders' equity by the cost of the repurchased shares, which in this case is $125,000.

Question 13

Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share.In the stockholders' equity section, the effects of the transaction above will be reported

Accepted Answer

The par value of the stock is recorded in the capital stock section, while the excess over par value ($10 per share) is recorded in the additional paid-in capital section.

Question 14

Dividends in arrears are dividends on

Accepted Answer

Dividends in arrears refer to unpaid dividends on cumulative preferred stock that have not been declared for a given period. Cumulative preferred stock requires that any missed dividends be paid out before any dividends can be paid to common shareholders.

Question 15

A company would not acquire treasury stock

Accepted Answer

A company would not acquire treasury stock as an asset investment. While companies may choose to reissue shares to officers, increase trading of their stock, or have additional shares for acquisitions, acquiring treasury stock as an asset investment does not align with the purpose of treasury stock. Treasury stock is typically acquired to decrease the number of outstanding shares and potentially increase the value of remaining shares.

Question 16

Logan Corporation issues 70,000 shares of $50 par value preferred stock for cash at $60 per share.The entry to record the transaction will consist of a debit to Cash for $4,200,000 and a credit or credits to

Accepted Answer

The preferred stock is credited for its par value (70,000 shares x $50 = $3,500,000), and the excess over par value ($60 - $50 = $10 per share) is credited to Paid-in Capital in Excess of Par Value-Preferred Stock ($700,000).

Question 17

The acquisition of treasury stock by a corporation

Accepted Answer

When a corporation acquires its own stock as treasury stock, the stock is no longer outstanding and therefore decreases the total stockholders' equity. Additionally, since the corporation is using its assets (usually cash) to purchase the stock, the total assets also decrease. Therefore, acquiring treasury stock decreases both total assets and total stockholders' equity.

Question 18

The number of shares of issued stock equals

Accepted Answer

Issued stock includes both outstanding shares and treasury shares, as treasury shares are those that have been issued but are held by the company itself.

Question 19

Treasury stock should be reported in the financial statements of a corporation as a(n)

Accepted Answer

Treasury stock is the company's own stock that has been repurchased. It is not an investment, liability or addition to total paid-in capital. Rather, treasury stock is deducted from both total paid-in capital and retained earnings in the stockholders' equity section of the balance sheet. Therefore, the best choice is D.

Question 20

A corporation purchases 20,000 shares of its own $20 par common stock for $35 per share, recording it at cost.What will be the effect on total stockholders' equity?

Accepted Answer

When a corporation purchases its own stock, it is recorded as treasury stock, which reduces total stockholders' equity by the cost of the purchase. The cost is 20,000 shares x $35 = $700,000, so stockholders' equity decreases by $700,000.

Quiz 11: Reporting and Analyzing Stockholders Equity

Treasury Stock is a(n)

Dividends in arrears on cumulative preferred stock

Nice Corporation issues 40,000 shares of $100 par value preferred stock for cash at $110 per share.The entry to record the transaction will consist of a debit to Cash for $4,400,000 and a credit or credits to

Which of the following is not a right or preference associated with preferred stock?

A corporation purchases 30,000 shares of its own $10 par common stock for $25 per share, recording it at cost.What will be the effect on total stockholders' equity?

The following data is available for BOX Corporation at December 31, 2020: Based on the data, how many shares of common stock are issued?

Treasury shares plus outstanding shares equal

Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued $10 par common stock for $62,500.As a result of this event,

Dividends in arrears on cumulative preferred stock

Treasury stock is

Leary Manufacturing Corporation purchased 5,000 shares of its own previously issued $10 par common stock for $125,000.As a result of this event,

Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share.In the stockholders' equity section, the effects of the transaction above will be reported

Dividends in arrears are dividends on

A company would not acquire treasury stock

Logan Corporation issues 70,000 shares of $50 par value preferred stock for cash at $60 per share.The entry to record the transaction will consist of a debit to Cash for $4,200,000 and a credit or credits to

The acquisition of treasury stock by a corporation

The number of shares of issued stock equals

Treasury stock should be reported in the financial statements of a corporation as a(n)

A corporation purchases 20,000 shares of its own $20 par common stock for $35 per share, recording it at cost.What will be the effect on total stockholders' equity?