acct221 quiz 1 latest december 2015 [ 90 % grades ]

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Question 1

Powder Corporation declared, but had not yet paid, dividends on the 10,000 shares of 6%, $10 par value cumulative preferred stock it had outstanding for the year. The weighted average number of common shares outstanding and net income for the year were 50,000 shares and $90,000, respectively. Earnings per share equals:

Question 2

Oceanview Wholesale Merchandise had 20,000 shares of 6%, $20 par value preferred stock and 15,000 shares of $25 par value common stock outstanding throughout 2014. Assuming that total dividends declared in 2014 were $25,000 and that the preferred stock is not cumulative, common stockholders should receive total 2014 dividends of:

Question 3

Oceanview Wholesale Merchandise had 20,000 shares of 6%, $20 par value preferred stock and 15,000 shares of $25 par value common stock outstanding throughout 2014. Assuming that total dividends declared in 2014 were $80,000 and that the preferred stock is cumulative with two years' preferred dividends in arrears on December 31, 2013, the preferred stockholders should receive 2014 dividends totaling:

Question 4

Oceanview Wholesale Merchandise had 20,000 shares of 6%, $20 par value preferred stock and 15,000 shares of $25 par value common stock outstanding throughout 2014. Assuming that total dividends in 2014 were $35,000 and that the preferred stock is cumulative with one year's preferred dividends in arrears on December 31, 2013, the preferred stockholders should receive 2014 dividends totaling:

Question 5

Oceanview Wholesale Merchandise had 20,000 shares of 6%, $20 par value preferred stock and 15,000 shares of $25 par value common stock outstanding throughout 2014. Assuming that total dividends declared in 2014 were $45,000, that the cumulative preferred stock was issued on January 1, 2013, and that $10,000 of preferred dividends were declared and paid in 2013, the common stockholders should receive 2014 dividends totaling:

Answer: 7000

Question 6

Oceanview Wholesale Merchandise had 20,000 shares of 6%, $20 par value preferred stock and 15,000 shares of $25 par value common stock outstanding throughout 2014. Assuming that total dividends declared in 2014 were $60,000 and that the cumulative preferred stock dividends have not been paid after 2012, the common stockholders should receive total 2014 dividends of:

Answer:

Question 7

Oceanview Wholesale Merchandise had 20,000 shares of 6%, $20 par value preferred stock and 15,000 shares of $25 par value common stock outstanding throughout 2014. Assuming that the total dividends declared in 2014 were $190,000 and that the cumulative preferred stock received dividends in the following manner: In full up to 2010, $18,000 in 2011, $4,000 in 2012, and $15,000 in 2013; common stockholders should receive total 2014 dividends of:

Answer: 131000

Question 8

Restrictions of retained earnings may result from each of the following except:

Question options:

voluntary restrictions.

prior period adjustment restrictions.

legal restrictions.

contractual restrictions.

Question 9

Tina Corporation issued 4,000 shares of $10 par value common stock in exchange for a truck. The truck had a fair market value of $65,000. The entry to record this transaction includes a credit to Paid-in Capital in Excess of Par - CS for:

Question options:

$40,000.

$25,000.

$65,000.

$20,000.

Question 10

Trinity Manufacturing declared a 10% stock dividend when it had 150,000 shares of $3 par value common stock outstanding. The market price per common share was $11 per share when the dividend was declared. The entry to record this dividend declaration includes a credit to:

Question options:

Retained Earnings for $45,000.

Common Stock for $45,000.

Common Stock Dividends Distributable for $180,000.

Paid-in Capital in Excess of Par - CS for $120,000.

Question 11

Arthur Company paid $39,000 to buy 3,000 shares of its $5 par value common stock for the treasury. The stock was originally sold for $27,000. The entry to record the purchase includes a:

Question options:

debit to Treasury Stock for $39,000.

debit to Treasury Stock for $15,000.

credit to Treasury Stock for $27,000.

credit to Common Stock for $27,000.

Question 12

The officer who is responsible for maintaining the company's cash position is the:

Question options:

controller.

president.

treasurer.

vice-president of finance.

Question 13

Hallery Corporation issued 600 shares of 10% $15 par convertible preferred stock for $12,000. The entry to record the declaration of the annual cash dividend is:

Question options:

debit Cash Dividends $1,200 and credit Cash $1,200.

debit Cash Dividends $1,200 and credit Dividends Payable $1,200.

debit Cash Dividends $900 and credit Cash $900.

debit Cash Dividends $900 and credit Dividends Payable $900.

Question 14

The purchase of treasury stock:

Question options:

decreases total assets and decreases total stockholders' equity.

increases total assets and decreases total stockholders' equity.

increases total assets and increases total stockholders' equity.

decreases total assets and increases total stockholders' equity.

Question 15

The resale of treasury stock for an amount greater than its cost:

Question options:

increases total assets and decreases total stockholders' equity.

decreases total assets and increases total stockholders' equity.

increases net income.

increases total assets and increases total stockholders' equity.

Question 16

Each of the following decreases retained earnings except:

Question options:

stock splits.

cash dividends.

large stock dividends.

small stock dividends.

Question 17

Treasury stock is reported in the balance sheet as a deduction from:

Question options:

paid-in capital and retained earnings.

capital stock.

additional paid-in capital.

retained earnings.

Question 18

Watkins, Inc. paid $48,000 to buy back 9,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $6 per share. The entry to record the sale includes a:

Question options:

debit to Paid-in Capital from Treasury Stock for $45,000.

debit to Retained Earnings for $48,000.

credit to Common Stock for $6,000.

credit to Paid-in Capital from Treasury Stock for $6,000.

Question 19

Restrictions of retained earnings:

Question options:

are reported on the balance sheet as liabilities.

do not change total stockholders' equity.

are reported as expenses on the income statement.

provide insurance coverage for contingencies.

Question 20

Ownership of common stock ordinarily carries the right to:

Question options:

declare dividends.

establish a drawing account.

vote on corporate actions that require stockholder approval.

enter into contracts for the corporation.

Question 21

A corporation is formed when:

Question options:

it receives a charter from its president.

it is granted by-laws by the federal government.

None of the other choices are correct.

it borrows money.

Question 22

Which of the following may either increase or decrease retained earnings?

Question options:

Stock dividends.

Prior period adjustments.

Disposals of treasury stock.

Net income.

Question 23

Common Stock Dividends Distributable is reported in the balance sheet:

Question options:

as an asset.

as an addition to retained earnings.

in paid-in capital as an addition to common stock issued.

as a liability.

Question 24

Under the equity method of accounting, the investment in common stock is initially recorded at cost and the investment account is subsequently:

Question options:

debited for cash dividends received and credited for the investor's share of investee net income.

credited for cash dividends received and debited for the investor's share of investee net income.

credited for cash dividends received.

debited for the investor's share of investee net income.

Question 25

The preparation of consolidated financial statements are not useful to:

Question options:

creditors of the company.

the subsidiary company.

the parent company.

only the parent and the subsidiary company.

Question 26

The account Unrealized Loss—Income is reported:

Question options:

in the other expenses and losses section of the income statement.

in the operating section of the income statement.

as a contra account in the stockholders' equity section of the balance sheet.

as a contra account in the current asset section of the balance sheet.

Question 27

The cost method of accounting for long-term investments in common stock is typically used when the investor:

Question options:

has a controlling interest.

recognizes any goodwill when preparing consolidated financial statements.

owns between 20% and 50% of the investee's outstanding common stock.

owns less than 20% of the investee's common stock.

Question 28

Dior Manufacturing purchased 100% of Venus, Inc. common stock for $900,000 when Venus had stockholders' equity consisting of $400,000 of common stock and $300,000 of retained earnings. In the consolidated balance sheet, Dior's investment in Venus will be shown at:

Question options:

$0.

$900,000.

$700,000.

$100,000.

Question 29

At the end of its first year, the trading securities portfolio consisted of the following common stocks:

Cost Market

Cinnamon Corporation $69,600 75,000

Ling, Inc. $90,000 $80,700

Owens Corporation $120,000 $113,000

The unrealized loss to be recognized under the fair value method is:

Question options:

$9,300.

$10,900.

$7,000.

$16,300.

Question 30

Willow Corporation purchased 2,000 shares of Apex common stock at $70 per share plus $4,000 brokerage fees as a short-term investment. The shares were subsequently sold at $80 per share less $4,800 brokerage fees. The cost of the securities purchased and gain or loss on the sale were:

Question options:

Cost Gain or Loss

$140,000 $11,200 gain

Cost Gain or Loss

$140,000 $20,000 gain

Cost Gain or Loss

$144,000 $11,200 gain

Cost Gain or Loss

$144,000 $11,200 loss

Question 31

Adam Corporation purchased 3,000 shares of Ozark Company's common stock for $12 per share as a long-term available-for-sale investment on June 30, 2014. Ozark declared and paid a cash dividend of $1.00 per share on its common stock on September 30, and had a closing fair value of $18 per share on December 31. Assuming this investment is appropriately accounted for using the fair value method, it will increase Adam's 2014 income before taxes by:

Question 32

Clayton Inc. purchased 30% of the outstanding common stock of Austin Industries on January 1, 2014, for $180,000. Austin reported net income of $70,000 for 2014 and declared and paid cash dividends on common stock of $30,000. The amount of Clayton's investment in Austin on December 31, 2014, should be:

Question 33

Pacific Company bought 35% of the outstanding common stock of Atlantic Inc. on January 1, 2014, for $400,000. Atlantic reported net income of $200,000 for 2014 and declared and paid no dividends for the year. This investment was sold for $500,000 on December 31, 2014. Pacific should report a gain on sale of this investment on its 2014 income statement of:

Question 34

Copper Inc. accounts for its investment in Ridge Corporation using the fair value method. Copper bought 3,000 shares (5%) of Ridge's outstanding common stock for $28 per share on January 1, 2014. Ridge earned $3 per share for 2014, declared and paid cash dividends of $1 per common share, and had a closing fair value of $24 per share on December 31. The reported balance sheet value of Copper's investment in Ridge at December 31, 2014 is: