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ACC 304 Chapter 15 Quiz

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ACC 304 Chapter 15 Quiz

1. 

When treasury stock is purchased for more than the par value of the stock and the cost method is used to account for treasury stock, what account(s) should be debited?

2. 

Total stockholders' equity represents

3. 

Hernandez Company has 490,000 shares of $10 par value common stock outstanding. During the year, Hernandez declared a 10% stock dividend when the market price of the stock was $30 per share. Four months later Hernandez declared a $.50 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by

4. 

A dividend which is a return to stockholders of a portion of their original investments is a

5. 

On December 1, 2012, Abel Corporation exchanged 30,000 shares of its $10 par value common stock held in treasury for a used machine. The treasury shares were acquired by Abel at a cost of $40 per share, and are accounted for under the cost method. On the date of the exchange, the common stock had a fair value of $55 per share (the shares were originally issued at $30 per share). As a result of this exchange, Abel's total stockholders' equity will increase by

6.

In a corporate form of business organization, legal capital is best defined as

8.

Quirk Corporation issued a 100% stock dividend of its common stock which had a par value of $10 before and after the dividend. At what amount should retained earnings be capitalized for the additional shares issued?

9. 

Which dividends do not reduce stockholders' equity?

10. 

At the beginning of 2013, Hamilton Company had retained earnings of $180,000. During the year Hamilton reported net income of $75,000, sold treasury stock at a "gain" of $27,000, declared a cash dividend of $45,000, and declared and issued a small stock dividend of 1,500 shares ($10 par value) when the fair value of the stock was $30 per share. The amount of retained earnings available for dividends at the end of 2013 was:

11. 

The stockholders' equity of Howell Company at July 31, 2012 is presented below:

Common stock, par value $20, authorized 400,000 shares;

 

 

issued and outstanding 160,000 shares

$3,200,000

Paid-in capital in excess of par

160,000

Retained earnings

650,000

 

$4,010,000

On August 1, 2012, the board of directors of Howell declared a 10% stock dividend on common stock, to be distributed on September 15th. The market price of Howell's common stock was $35 on August 1, 2012, and $38 on September 15, 2012. What is the amount of the debit to retained earnings as a result of the declaration and distribution of this stock dividend?

12. 

Long Co. issued 100,000 shares of $10 par common stock for $1,200,000. Long acquired 10,000 shares of its own common stock at $15 per share. Three months later Long sold 5,000 of these shares at $19 per share. If the cost method is used to record treasury stock transactions, to record the sale of the 5,000 treasury shares, Long should credit

13. 

The cumulative feature of preferred stock

14. 

The balance in Common Stock Dividend Distributable should be reported as a(n)

15. 

The pre-emptive right of a common stockholder is the right to

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