25.All the following except one are true statements about the declaration and distribution of stock dividends.
A) Stock dividends reduce the assets of the firm.
B) Stock dividends do not increase or decrease liabilities
C) Stock dividends increase contributed capital
D) Stock dividends decrease retained earnings.
26. A stockholder who received a 10% common stock dividend would have an increase in her/his ownership percentage equal to:
A)10%
B)20%
C)cannot be determined from the information given
D)there would be no change in the ownership percentage
27. Treasury stock is shown in a company’s financial statements as a(n):
A)intangible asset
B)contra equity
C)current asset
D)contra asset
28. Reissuing treasury stock at a price higher than the price paid to acquire the stock results in a(n):
A)increase in contributed capital
B)decrease in contributed capital
C)loss reported on the income statement
D)gain reported on the income statement
29. J&C Corporation purchased for the treasury 1,000 shares of its own $1 par value common stock at $20 per share. This was the first time the company had ever purchased treasury stock. Shortly thereafter, J&C sold 400 shares of this treasury stock at $17 per share. The journal entry to record the sale of the treasury stock would include a:
A)credit to Cash for $8,000
B)debit to Treasury Stock for $6,800
C)debit to Retained Earnings for $1,200
D)debit to Loss from Treasury Stock Transactions for $1,200
30. Bobber Corporation purchased 1,000 shares of its own $1 par value common stock at $10 per share. This was the first time the company had ever purchased treasury stock. Shortly thereafter, Bobber sold 100 shares of this treasury stock at $13 per share. The journal entry to record the sale of the treasury stock would include a:
A)credit to Gain on Sale of Treasury Stock $300
B)debit to Treasury Stock for $100
C)debit to Retained Earnings for $1,300
D)credit to Paid-in-Capital from Treasury Stock Transactions for $300
31. A 100% stock dividend and a 2 for 1 stock split are similar in that:
A)the par value of the company’s stock will be cut in half
B)the number of shares of stock outstanding will double
C)total stockholders’ equity will remain unchanged
D)both b and c are correct
32. Callisto began 2008 with 100,000 shares of $3 par common stock. The firm declared a 3-for-1 stock split on March 1, 2008. How will the stock split affect Callisto’s stockholders’ equity?
A)$300,000 will be transferred from paid-in capital to retained earnings
B)$300,000 will be transferred from retained earnings to paid-in capital
C)neither total paid-in capital nor retained earnings will change
D)stockholders’ equity will be decreased by $300,000
33. Where in the balance sheet is preferred stock usually reported?
A)long-term liabilities
B)stockholders’ equity
C)contra stockholders’ equity
D)After long-term liabilities but before stockholders’ equity
34. Which of the following would not appear in the stockholders’ equity section of the balance sheet?
A)gain on sale of treasury stock
B)additional paid-in capital
C)retained earnings
D)treasury stock
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