Question : 41.Dividends payable recorded at the date of a. issue. b. record. c. declaration. d. : 1241742

 

 

41.Dividends payable is recorded at the date of

a. issue.

b. record.

c. declaration.

d. payment.

 

 

 

42.If dividends paid are recorded as an expense, then

a. income and retained earnings are understated.

b. only income is understated.

c. only retained earnings is understated.

d. the income statement and balance sheet are correct.

 

 

 

43.An ordinary 20% stock dividend

a.causes no change in retained earnings.

b.decreases assets.

c.increases contributed capital.

d.is reported on the income statement.

 

 

 

44.All of the following statements are true regarding the appropriations of retained earnings except:

a. Appropriations of retained earnings restrict retained earnings from future dividend payments.

b. Appropriations of retained earnings involve the restriction of cash.

c. Appropriations of retained earnings must be decided upon by the board of directors.

d. Appropriations of retained earnings do not change the amount of total stockholders’ equity.

 

 

45.Chambers Corporation has total assets of $800,000 as of December 31, 2015 and total liabilities of $400,000.  Contributed capital as of December 31, 2014 and December 31, 2015 is $150,000.  Chambers Corporation incurred a $50,000 net loss for the year ended December 31, 2015.  If Chambers declared and paid $80,000 in dividends in 2015, their retained earnings at the beginning of 2015 would have been.

 

a. $220,000.

b. $280,000

c. $380,000.

d. $440,000.

 

 

 

46.Garnett Corporation’s balance sheet reflects total assets of $500,000 as of December 31, 2014 and total liabilities of $150,000. Garnett’s balance sheet also reflects $50,000 of preferred stock outstanding on December 31, 2014.  In the early 1990’s, when Garnett was started up, Garnett issued 50,000 shares of no-par common stock, a one-time event that accounted for its entire contributed capital, other than the preferred stock.  Garnett had repurchased 15,000 shares of its common stock in 2013 from a retiring shareholder, which is now treasury stock. As of December 31, 2014 the book value of each outstanding share of Garnett’s common stock is:

 

a. $6.00

b. $8.57

c. $10.00

d. $14.29.

 

 

 

47.Smith Corporation’s balance sheet reflects total assets of $3 million as of December 31, 2015 and total liabilities of $1.8 million. Smith has 100,000 shares of common stock outstanding.  The market value of the stock is $9 per share.  Smith’s market to book ratio is:

 

a. 0.75.

b. 7.50.

c. 12.00.

d. 13.33.

 

 

48.Cavendish Corporation’s balance sheet reflects total assets of $250 million as of November 30, 2015 and total liabilities of $200 million. Cavendish issues $100 million of preferred stock, receiving $100 million in cash. After issuing the preferred stock Cavendish’s debt to equity ratio is:

 

a. 0.67.

b. 1.33.

c. .4.00

d. 6.00

 

 

 

49.Choice Corporation had 100,000 shares of commons stock outstanding on January 1, 2000.  On January 1, 2015 Choice purchased 5,000 shares of its own common stock to fund a stock option plan for its executives. On December 31, 2015 Choice announced a 3 to 1 stock split. Choice’s net income for 2015 was $400,000. How much should Choice report as earnings per share for 2015?

 

a. $1.33.

b. $1.40.

c. $4.00

d. $4.21

 

 

 

50.The following information was taken from the statement of shareholders’ equity of Carnival Industries:

 

 

2015

2014

Preferred stock (no par)

$900

$400

Common stock ($1 par value)

1,000

900

Additional paid-in capital:

 

 

Common stock

40

20

Treasury stock

(10)

—

Less: Treasury stock

130

150

 

The journal entry to record the issuance of preferred stock during 2015 would include:

a. a debit to Preferred Stock for $900.

b. a credit to Preferred Stock for $500.

c. a credit to Additional Paid in Capital for $500.

d. a credit to Cash for $500.

 

Solution:

 

Cash (+A)…………………………………..              500

Preferred Stock (+SE)…………………………..                            500