18 Jan A pro rata distribution

ACC556 Financial Accounting for Managers

CHAPTER 11 EXERCISE

Question 1 A corporation is not an entity that is separate and distinct from its owners.

Question 2 A stockholder has the right to vote in the election of the board of directors.

Question 3 The acquisition of treasury stock by a corporation increases total assets and total stockholders’ equity.

Question 4 Cash dividends are not a liability of the corporation until they are declared by the board of directors.

Question 5 A detailed stockholders’ equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

Question 6 Which of the following statements reflects the transferability of ownership rights in a corporation?

Question 7 If a stockholder cannot attend a stockholders’ meeting, he may delegate his voting rights by means of a(n)

Question 8 If Norben Company issues 4,000 shares of $5 par value common stock for $140,000, the account

Question 9 Holden Packaging Corporation began business in 2014 by issuing 80,000 shares of $5 par common stock for $8 per share and 20,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2014 balance sheet, Holden Packaging would report

Question 10 Which of the following is not a right or preference associated with preferred stock?

Question 11 All of the following statements about preferred stock are true except

Question 12 The board of directors of Benson Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2014. The dividend is to be paid on August 15, 2014, to stockholders of record on July 31, 2014. The effects of the journal entry to record the payment of the dividend on August 15, 2014, are to

Question 13 Which of the following statements is not true about a 2-for-1 split?

Question 14 The following selected amounts are available for Thomas Company.

Retained earnings (beginning) $2,500

Net loss 200

Cash dividends declared 200

Stock dividends declared 200

What is its ending Retained Earnings balance?

Question 15 In the stockholders’ equity section of the balance sheet

Question 16 Herman Corporation had net income of $120,000 and paid dividends of $24,000 to common stockholders and $20,000 to preferred stockholders in 2014. Herman Corporation’s common stockholders’ equity at the beginning and end of 2014 was $450,000 and $550,000, respectively. Herman Corporation’s payout ratio for 2014 is

Question 17 Which of the following statements is true regarding corporate performance ratios?

Question 18 Match the items below by entering the appropriate code letter in the space provided.

Question

The chief accounting officer.

A debit balance in retained earnings.

Measures the percentage of earnings distributed in the form of dividends to common stockholders.

A pro rata distribution of the corporation’s own stock to stockholders.

The date the board of directors formally declares a dividend.

Enables stockholders to maintain their same percentage ownership when new shares are issued.

The amount assigned to each share of stock in the corporate charter.

The amount that must be retained in the business for the protection of creditors.

Corporation’s own stock that has been reacquired by the corporation but not retired.

Preferred stockholders have a right to receive current and unpaid prior-year dividends before common stockholders receive any dividends.