1.If a stock is sold on the secondary market between one investor and another, what effect does that have on the financial statements of the company that originally issued the stock?
Its revenues increase
Its "in excess" equity increases
It has a new asset
There is no effect since the sale or trade is among investors only
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2.
QUESTION 10
Which of the following is an advantage of the corporate form of business organization?
double taxation
amount of regulation
limited liability
entrenched management
3.
Ownership and profit distribution in a sole proprietorship are generally seen on its balance sheet respectively as
A personal capital account and dividends
Common stock and dividends
Common stock and withdrawals
A personal capital account and withdrawals
4.
QUESTION 12
A major difference between common and preferred stock is that usually
Common stockholders receive dividends before preferred
Common stockholders can vote and preferred cannot
Preferred stockholders can only be other institutions and not individuals
Common stockholders have unlimited liability and preferred do not
5.If common stock is issued and sold as "no par"
It is treated as preferred stock
It becomes a liability account
An "additional paid in capital (in excess)" will be recorded
An "additional paid in capital (in excess)" will not be recorded
1.If a stock is sold on the secondary market between one investor and another, what effect does that have on the financial statements of the company that originally issued the stock?
| Its revenues increase | ||
| Its "in excess" equity increases | ||
| It has a new asset | ||
| There is no effect since the sale or trade is among investors only |
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2.
QUESTION 10
Which of the following is an advantage of the corporate form of business organization?
| double taxation | ||||||||||||||||||||||||||||||||||||||
| amount of regulation | ||||||||||||||||||||||||||||||||||||||
| limited liability | ||||||||||||||||||||||||||||||||||||||
| entrenched management 3. Ownership and profit distribution in a sole proprietorship are generally seen on its balance sheet respectively as
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Related questions
1. The effect of a stock dividend is to
Question 17 options:
change the composition of stockholders' equity. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
increase the book value per share of common stock. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
decrease total assets and stockholders' equity. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| decrease total assets and total liabilities 2. Regular dividends are declared out of:
3. Solaris, Inc. has 2,000 shares of 5%, $10 par value,cumulative preferred stock and 50,000 shares of $1 par value commonstock outstanding at December 31, 2014. What is the annual dividendon the preferred stock? Question 20 options:
Identify the effect the declaration and distribution of a stockdividend has on the par value per share. Question 24 options:
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Selected transactions completed by Primo Discount Corporationduring the current fiscal year are as follows:
| Jan. | 9 | Split the common stock The stock outstanding when a corporation has issued only oneclass of stock. 3 for 1 and reduced the parA dollar amount assigned to each share of stock. from $75 to $25 per share. After the split, there were 1,201,500common shares outstanding. |
| Feb. | 28 | Purchased 40,200 shares of the corporationâs own common stockat $27, recording the stock Shares of ownership of a corporation. at cost. |
| May | 1 | Declared semiannual dividends Distribution of a corporationâs earnings to stockholders. of $0.70 on 70,500 shares of preferred stockA class of stock with preferential rights over common stock. and $0.14 on the common stock to stockholdersThe owners of a corporation. of record on June 1, payable on July 10. |
| Jul. | 10 | Paid the cash dividends A cash distribution of earnings by a corporation to itsshareholders. . |
| Sep. | 7 | Sold 31,600 shares of treasury stock Stock that a corporation has once issued and thenreacquires. at $33, receiving cash. |
| Oct. | 1 | Declared semiannual dividends of $0.70 on the preferred stockand $0.14 on the common stock (before the stock dividend). Inaddition, a 2% common stock dividend A distribution of shares of stock to its stockholders. was declared on the common stock outstanding. The fair market valueof the common stock is estimated at $38. |
| Dec. | 1 | Paid the cash dividends and issued the certificates for thecommon stock dividend. |
Journalize the transactions. If no entry is required, simplyskip to the next transaction. Refer to the Chart of Accounts forexact wording of account titles.
| CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Primo Discount Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Promise Enterprises acquired 80 percent of Brown Corporationâs voting common stock on January 1, 20X3, for $376,000. At that date, the fair value of the noncontrolling interest of Brown Corporation was $94,000. Immediately after Promise acquired its ownership, Brown purchased 70 percent of Tann Companyâs stock for $185,500. The fair value of the noncontrolling interest of Tann Company was $79,500 at that date. During 20X3, Promise reported operating income of $270,000 and paid dividends of $90,000. Brown reported operating income of $160,000 and paid dividends of $50,000. Tann reported net income of $60,000 and paid dividends of $10,000. At January 1, 20X3, the stockholdersâ equity sections of the balance sheets of the companies were as follows: |
| Promise Enterprises | Brown Corporation | Tann Company | ||||||||||
| Common Stock | $ | 230,000 | $ | 210,000 | $ | 140,000 | ||||||
| Additional Paid-In Capital | 160,000 | 70,000 | 80,000 | |||||||||
| Retained Earnings | 380,000 | 190,000 | 45,000 | |||||||||
| Total Stockholdersâ Equity | $ | 770,000 | $ | 470,000 | $ | 265,000 | ||||||
| Required: | |
| a. | Prepare the journal entries recorded by Brown for its investment in Tann during 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
| b. | Prepare the journal entries recorded by Promise for its investment in Brown during 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
| c. | Prepare the consolidation entries related to Brownâs investment in Tann and Promiseâs investment in Brown that are needed in preparing consolidated financial statements for Promise and its subsidiaries at December 31, 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
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