Question : 75. California Adventures issues 5,000 shares of 8%, $100 par : 1255747

 

 

75. California Adventures issues 5,000 shares of 8%, $100 par value preferred stock at the beginning of 2014. All remaining shares are common stock. The company was not able to pay dividends in 2014, but plans to pay dividends of $100,000 in 2015. Assuming the preferred stock is cumulative, how much of the $100,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2015?

a.

$40,000 to preferred stockholders and $60,000 to common stockholders.

b.

$80,000 to preferred stockholders and $20,000 to common stockholders.

c.

$20,000 to preferred stockholders and $80,000 to common stockholders.

d.

$100,000 to preferred stockholders and $0 to common stockholders.

 

 

76. California Adventures issues 5,000 shares of 8%, $100 par value preferred stock at the beginning of 2014. All remaining shares are common stock. The company was not able to pay dividends in 2014, but plans to pay dividends of $100,000 in 2015. Assuming the preferred stock is noncumulative, how much of the $100,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2015?

a.

$40,000 to preferred stockholders and $60,000 to common stockholders.

b.

$80,000 to preferred stockholders and $20,000 to common stockholders.

c.

$20,000 to preferred stockholders and $80,000 to common stockholders.

d.

$100,000 to preferred stockholders and $0 to common stockholders.

 

 

77. Treasury Stock is normally reported as:

a.A reduction of total stockholders’ equity.

b.An asset account.

c.A liability account.

d.An expense account.

 

 

78. When treasury stock is resold at a price above cost:

a.A gain account is credited.

b.A loss is reported.

c.A revenue account is credited.

d.Additional Paid-in Capital is increased.

 

 

79. When treasury stock is purchased, what is the effect on total stockholders’ equity?

a.Decrease.

b.Increase.

c.No effect.

d.Cannot tell from the given information.

 

 

80. When shares of another corporation are purchased, what is the effect on total stockholders’ equity?

a.Decrease.

b.Increase.

c.No effect.

d.Cannot tell from the given information.

 

 

81. When treasury stock is purchased, what is the effect on assets and stockholders’ equity?

a.Assets and stockholders’ equity increase.

b.Assets and stockholders’ equity decrease.

c.Assets increase and stockholders’ equity decrease.

d.Assets decrease and stockholders’ equity increase.

 

 

82. Treasury Stock:

a. Has a normal credit balance.

b. Decreases stockholders’ equity.

c. Is recorded as an investment.

d. Increases stockholders’ equity.

 

 

83. Which of the following statements about treasury stock transactions is true?

a.

Treasury stock is recorded as an asset by the acquiring company.

b.

Only losses on the sale of treasury stock are recorded on the income statement.

c.

Stockholders’ equity is reduced when treasury stock is purchased.

d.

Gains and losses on the sale of treasury stock are recorded on the income statement.

 

 

84. Which of the following is TRUE regarding the accounting for treasury stock?

a.

Treasury stock is reported on the balance sheet in the equity section.

b.

The purchase and sale of treasury stock has no impact on the income statement.

c.

Treasury stock represents a negative equity account.

d.

All of the above are true.