Question 1

Ironworks, Inc. issued 400 shares of $9 par common stock in exchange for a piece of equipment with a current market value of $5,000. Which of the following is NOT part of the journal entry for this transaction?

Accepted Answer

A)  Debiting equipment for $5,000
B)  Crediting Common Stock for $5,000
C)  Crediting paid-in capital in excess of par-common for $1,400
D)  Crediting Common Stock for $3,600E) B) and C)
F) C) and D)

Question 2

The formula needed to compute "additional paid-in capital in excess of par" is:

Accepted Answer

A)  number of shares of stock times par value per share of stock.
B)  number of shares of stock times selling price per share of stock.
C)  number of shares of stock times (selling price per share - par value per share) .
D)  number of shares of stock times (selling price per share + par value per share) .E) All of the above
F) B) and D)

Question 3

A company issues 25,000 shares of its $25 par common stock for $27 per share. The entry to record this will include a debit to Cash for $675,000.

Accepted Answer

A) True 
 B)False

Question 4

Par value is assigned.

Accepted Answer

A)  when the corporate charter is filed.
B)  when the company decides to issue the stock.
C)  after the stock has been issued.
D)  at the first meeting of the organizers of the corporation.E) A) and D)
F) All of the above

Question 5

HiTech Industries reacquired 10,000 shares of its $26-par common stock for $70/share. The debit to Treasury Stock will be:

Accepted Answer

A)  based on the last treasury stock transaction.
B)  $440,000.
C)  $260,000.
D)  $700,000.E) B) and D)
F) None of the above

Question 6

Which of the following dates do NOT require a journal entry?

Accepted Answer

A)  Date of payment
B)  Date of record
C)  Date of declaration
D)  All dividend dates require a journal entry.E) B) and D)
F) A) and B)

Question 7

The entry to record selling 400 shares of $28 stated value common stock for $44 per share would include:

Accepted Answer

A)  debiting Common Stock for $17,600.
B)  crediting Cash for $17,600.
C)  crediting Paid-in Capital in Excess of Stated Value for $6,400.
D)  debiting Paid-in Capital in Excess of Stated Value for $6,400.E) A) and B)
F) A) and C)

Question 8

Dental Designs, Inc. Stockholders' Equity section includes the following information: 
Total paid-in capital is:

Accepted Answer

A)  $56,000.
B)  $26,000.
C)  $63,000.
D)  $30,000.E) None of the above
F) A) and B)

Question 9

A company has 50,000 shares of $1 par, 10% preferred stock. The 10% refers to the stock's:

Accepted Answer

A)  market rate.
B)  dividend rate.
C)  paid-in capital rate.
D)  interest rate.E) None of the above
F) A) and D)

Question 10

Charmed, Inc. reacquired 7,000 shares of its $16-par common stock for $11/share. The debit to Treasury Stock will be:

Accepted Answer

A)  $35,000.
B)  $77,000.
C)  $112,000.
D)  based on the last treasury stock transaction.E) C) and D)
F) B) and D)

Question 11

The journal entry to record the distribution of a stock dividend includes a:

Accepted Answer

A)  credit to Common Stock.
B)  credit to Dividends Payable.
C)  credit to Cash.
D)  credit to Retained Earnings.E) B) and C)
F) C) and D)

Question 12

A company issues 15,000 shares of its $22 par common stock for $32 per share. The amount to be debited to Cash is:

Accepted Answer

A)  $330,000.
B)  $480,000.
C)  $150,000.
D)  $810,000.E) None of the above
F) A) and D)

Question 13

On the date of declaration:

Accepted Answer

A)  debit Dividends and credit Retained Earnings.
B)  debit Dividends Payable and credit Cash.
C)  debit Retained Earnings and credit Cash.
D)  debit Retained Earnings and credit Dividends Payable.E) A) and D)
F) A) and C)

Question 14

The number of shares of stock that a corporation is given the right to sell is called:

Accepted Answer

A)  issued stock.
B)  authorized stock.
C)  outstanding stock.
D)  capital stock.E) A) and D)
F) All of the above

Question 15

A company's stock that it reacquires is termed treasury stock.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is an advantage of a corporation?

Accepted Answer

A)  Tax regulations
B)  Continuous life
C)  Unlimited liability
D)  All of the above are advantagesE) A) and C)
F) C) and D)

Question 17

Evergreen Corp. issues 12,000 shares of $5 par common stock for $8.50 per share. The amount credited to paid-in capital in excess of par is:

Accepted Answer

A)  $102,000.
B)  $60,000.
C)  $12,000.
D)  $42,000.E) A) and B)
F) B) and D)

Question 18

In addition to the regular financial statements, a company may issue a separate Statement of Stockholders' Equity.

Accepted Answer

A) True 
 B)False

Question 19

The entry to record TLR, Inc. selling 1,200 shares of $6 par common stock at $10 per share would be to:

Accepted Answer

A)  debit Cash $12,000; credit Common Stock $7,200; credit Paid-In Capital in Excess of Par-Common Stock $4,800.
B)  debit Cash $7,200; credit Common Stock $7,200.
C)  debit Cash $12,000; debit Paid-In Capital in Excess of Par-Common $4,800; credit Common Stock $16,800.
D)  debit Cash $12,000; credit Common Stock $12,000.E) A) and B)
F) All of the above

Question 20

Charmed, Inc. has 10,000 shares of treasury stock which it purchased for $10/share. It later resold 3,000 of those shares for $18/share. The amount to be credited to Paid-in Capital-Treasury Stock is:

Accepted Answer

A)  $80,000.
B)  $100,000.
C)  $54,000.
D)  $24,000.E) None of the above
F) B) and C)

Exam 10: Corporations: Paid-In Capital and Retained Earnings

Evergreen Corp. issues 12,000 shares of $5 par common stock for $8.50 per share. The amount credited to paid-in capital in excess of par is:

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On the date of declaration:

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A company has 50,000 shares of $1 par, 10% preferred stock. The 10% refers to the stock's:

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Par value is assigned.

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In addition to the regular financial statements, a company may issue a separate Statement of Stockholders' Equity.

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The formula needed to compute "additional paid-in capital in excess of par" is:

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Which of the following is an advantage of a corporation?

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A company issues 25,000 shares of its $25 par common stock for $27 per share. The entry to record this will include a debit to Cash for $675,000.

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Ironworks, Inc. issued 400 shares of $9 par common stock in exchange for a piece of equipment with a current market value of $5,000. Which of the following is NOT part of the journal entry for this transaction?

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The journal entry to record the distribution of a stock dividend includes a:

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Dental Designs, Inc. Stockholders' Equity section includes the following information: Total paid-in capital is:

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Which of the following dates do NOT require a journal entry?

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The entry to record selling 400 shares of $28 stated value common stock for $44 per share would include:

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The entry to record TLR, Inc. selling 1,200 shares of $6 par common stock at $10 per share would be to:

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A company issues 15,000 shares of its $22 par common stock for $32 per share. The amount to be debited to Cash is:

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Charmed, Inc. has 10,000 shares of treasury stock which it purchased for $10/share. It later resold 3,000 of those shares for $18/share. The amount to be credited to Paid-in Capital-Treasury Stock is:

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HiTech Industries reacquired 10,000 shares of its $26-par common stock for $70/share. The debit to Treasury Stock will be:

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The number of shares of stock that a corporation is given the right to sell is called:

Correct AnswerverifiedShow Answer

Charmed, Inc. reacquired 7,000 shares of its $16-par common stock for $11/share. The debit to Treasury Stock will be:

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A company's stock that it reacquires is termed treasury stock.

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