Question : 21) Cartier, Inc.’s corporate charter authorizes it to sell 1 : 1253396

 

 

21) Cartier, Inc.’s corporate charter authorizes it to sell 1 million shares of $0.50 par value common stock. As of December 31, 2011, the company had sold 500,000 shares for $4 each. Cartier has 20,000 shares of treasury stock that cost $100,000. On the December 31, 2011 balance sheet, the number of shares outstanding is ________ shares.

A) 1,000,000

B) 500,000

C) 480,000

D) 400,000

 

22) If 10,000 shares of $2 par value common stock are issued for $10 per share, then additional paid-in capital will increase by ________.

A) $120,000

B) $100,000

C) $80,000

D) $20,000

 

23) The state charter of Team Shirts authorizes the corporation to sell 300,000 shares. Team Shirts has issued 200,000 shares of stock. There are 7,500 shares of treasury stock. The number of outstanding shares is ________.

A) 300,000

B) 200,000

C) 192,500

D) 7,500

24) Team Shirts issued 20,000 shares of stock for $20 per share. The par value of the stock was $1 per share. Calculate the value of capital stock and additional paid-in capital.

A) capital stock $400,000; additional paid-in capital $0

B) capital stock $380,000; additional paid-in capital $20,000

C) capital stock $20,000; additional paid-in capital $380,000

D) capital stock $0; additional paid-in capital $400,000

 

25) Lee’s Lions issued 15,000 shares of stock for $17 per share. The par value of the stock was $0.50 per share. Calculate the value of capital stock and additional paid-in capital.

A) capital stock $0; additional paid-in capital $255,000

B) capital stock $7,500; additional paid-in capital $247,500

C) capital stock $247,500; additional paid-in capital $7,500

D) capital stock $255,000; additional paid-in capital $0

 

26) Jem’s Jewelers reported total shareholders’ equity of $100,000 on its February 28 balance sheet. During March, the business earned $250,000, and declared and paid a cash dividend of $10,000. What was total shareholders’ equity on March 31?

A) $360,000

B) $350,000

C) $340,000

D) $260,000

 

27) Common stock’s par value is usually ________.

A) equal to the market price of the common stock

B) greater than the market price of the common stock

C) less than the market price of the common stock

D) zero

 

28) The number of shares outstanding equals the number of shares ________.

A) authorized minus the number of shares issued

B) issued minus the number of shares authorized

C) issued minus the number of shares of treasury stock

D) of treasury stock minus the number of shares issued

29) Which of the following is true about bonds and common stock?

A) Bonds and common stock are both shareholders’ equity accounts.

B) The company that has issued bonds and common stock has a legal responsibility to pay back the principal when the bonds and stock mature.

C) The company has a legal responsibility to pay interest and dividends each year.

D) Bondholders do not have voting rights, while common shareholders do.

 

30) When common stock is issued, the amount recorded in Additional paid-in capital is ________.

A) the cash received minus the amount recorded in the Common stock account

B) the cash received plus the amount received in excess of par

C) the par value plus the market price of the stock

D) nothing; Additional paid-in capital is not affected by issuing common stock

 

 

 

31) Use the information below to answer the following question:

 

Common stock, $1 par, 100,000 shares

authorized, _________ shares issued$ 40,000

Additional paid-in capital160,000

Retained earnings100,000

Treasury stock (1,000 shares at cost)(6,000)

Total shareholders’ equity$294,000

How many shares of common stock have been issued?

A) 100,000 shares

B) 40,000 shares

C) 1,000 shares

D) 39,000 shares

 

32) The owners’ claims to the assets of a corporation are called shareholders’ equity or stockholders’ equity.

 

33) Retained earnings is the amount owners have invested in a corporation.

 

34) Paid-in capital is divided into capital stock and retained earnings.

35) State charters allow corporations to issue an unlimited number of shares of common stock.