1.Sweet Company’s outstanding stock consists of 2,000shares of cumulative 4% preferred stock with a $100 par value and11,000 shares of common stock with a $10 par value. During thefirst three years of operation, the corporation declared and paidthe following total cash dividends.
Dividend Declared
Year 1 $ 3,000
Year 2 $ 7,000
Year 3 $ 37,000
The total amount of dividends paid to preferred and commonshareholders over the three-year period is:
Multiple Choice
A.$24,000 preferred; $23,000 common.
B.$15,000 preferred; $32,000 common.
C.$8,000 preferred; $39,000 common.
D.$19,000 preferred; $28,000 common.
E.$16,000 preferred; $31,000 common.
2.Torino Company has 2,400 shares of $10 par value, 4.5%cumulative and nonparticipating preferred stock and 24,000 sharesof $10 par value common stock outstanding. The company paid totalcash dividends of $500 in its first year of operation. The cashdividend that must be paid to preferred stockholders in the secondyear before any dividend is paid to common stockholdersis:
Multiple Choice
A.$1,660.
B.$580.
C.$2,160.
D$1,080.
E.$500.
3.Global Corporation had 41,000 shares of $20 par valuecommon stock outstanding on July 1. Later that day the board ofdirectors declared a 25% stock dividend when the market value ofeach share was $25. The entry to record the dividend declarationis:
Multiple Choice
A.Debit Retained Earnings $205,000; credit Common Stock DividendDistributable $205,000.
B.Debit Retained Earnings $256,250; credit Common Stock DividendDistributable $256,250.
C.Debit Retained Earnings $256,250; credit Common Stock DividendDistributable $205,000; credit Paid-In Capital in Excess of ParValue, Common Stock $51,250.
D.Debit Retained Earnings $256,250; credit Cash $256,250.
E.No entry is made until the stock is issued.
4.A corporation issued 5,700 shares of $10 par valuecommon stock in exchange for some land with a market value of$84,000. The entry to record this exchange is:
A.Debit Land $84,000; credit Common Stock $57,000; creditPaid-In Capital in Excess of Par Value, Common Stock $27,000.
B.Debit Land $84,000; credit Common Stock $84,000.
C.Debit Land $57,000; credit Common Stock $57,000.
D.Debit Common Stock $57,000; debit Paid-In Capital in Excess ofPar Value, Common Stock $27,000; credit Land $84,000.
E.Debit Common Stock $84,000; credit Land $84,000.
5.A corporation declared and issued a 20% stock dividendon October 1. The following information was available immediatelyprior to the dividend:
Retained earnings $ 690,000
Shares issued and outstanding 54,000
Market value per share $ 21
Par value per share $ 5
The amount that contributed capital will increase(decrease) as a result of recording this stock dividendis:
Multiple Choice
A.$54,000.
B.$(54,000).
C.$0.
D.$226,800.
E.$(226,800).
