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Exam 13: Accounting for Corporations

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Question 81

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Stocks with a price-earnings ratio greater than 20 to 25 are likely to be underpriced.

A) True
B) False

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Question 82

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A company is authorized to issue 750,000 shares of $5 par value common stock.Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

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Question 83

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A reverse stock split reduces the market value per share and the par value per share of stock.

A dividend preference for preferred stock means that:

How is the retirement of stock recorded?

A company had the following stockholders' equity on January 1: On January 10,the company declared a 40% stock dividend to holders of record on January 25,to be distributed January 31.The market value of the stock on January 10 prior to the dividend was $20 per share.What is the book value per common share on February 1?

Par value per share is the price at which a share of stock is bought or sold.

A company has 40,000 shares of common stock outstanding.The stockholders' equity applicable to common shares is $470,000,and the par value per common share is $10.The book value per share is:

If a corporation receives assets other than cash in exchange for stock,it records the assets received at their market value as of the date of the transaction.

Shamrock Company had net income of $30,000.The weighted-average common shares outstanding were 8,000.The company declared a $2,700 dividend on its noncumulative,nonparticipating preferred stock.There were no other stock transactions.The company's earnings per share is:

A large stock dividend only occurs when a distribution of more than 50% of previously outstanding shares is issued.

If a company resells treasury stock below the acquisition cost,a loss from the sale of treasury stock is recorded.

________________________ is the number of shares that a corporation's charter allows it to sell.

The least amount that the buyers of stock must contribute to the corporation or be subject to paying at a future date is called ____________________________.

On August 1,a corporation issued 15,000 shares of no-par common stock in exchange for a tract of land having a market value of $215,000.The common stock has a stated value of $10 per share.Prepare the general journal entry to record this transaction.

A premium on common stock:

A company reported stockholders' equity on January 1 of the current year as follows: Common Stock,$5 par value,1,000,000 shares authorized,600,000 shares issued; Paid-in Capital in Excess of Par Value,Common Stock,$1,025,000; Retained Earnings,$2,850,000.Prepare journal entries to record the following transactions:

Treasury stock is classified as:

Callable preferred stock gives its holders the option of exchanging their preferred shares into common shares at a specified rate.

A company reported the following stockholders' equity on January 1 of the current year: Prepare journal entries for the following selected transactions related to this company's stock during the current year: