ACCT 2010 Exam 4 Questions and Solutions

The date when a cash dividend becomes a legal obligation is on the a. payable date b. declaration date c. date of record d. last day of the corporate year The journal entry on the date of record is a. To debit retained earnings and credit dividends payable b. non existent. no journal entry is required on the date of record. c. to credit dividends and credit cash. d. to debit dividends payable and credit cash Company is authorized to issue 70000 shares of $2 par common stock. On November 30, 2012, they issued 10,000 shares at $22 per share. Company's journal entry should include a. credit to common stock for $20000 b. Debit to common stock for $220,000 c. credit to paid-in capital in excess of par for $220000 d. both a and c A company paid $26 per share to purchase 300 shares of its common stock as treasury stock. The stock was originally issued at $17 per share. The journal entry to record the purchase of the treasury stock is which of the following? a. debit common stock $7800. credit cash $7800 b. debit treasury stock $5100 and retained earnings $2700. credit cash $7800 c. debit treasury stock $5100 and Paid-in capital in excess of par $2700. credit cash $7800 d. debit treasury stock $7800. credit cash $7800 which of the following is NOT a stockholder's right of ownership in a corporation? a. to maintain one's proportional share of ownership in the corporation b. to receive a proportionate share of the assets upon liquidation c. to declare dividends d. to vote and elect the board of directors Declaring and distributing stocks dividends a. increases the total liabilities of the corporation and decreases the total stockholders equity b. is the distribution of cash to the stockholders c. reduces the total assets of the corporation d. has no effect on total stockholders equity Corporations may choose to distribute stock dividends in order to a. reduce the market price per share of its own stock b. decrease the amount of capital in the corporation c. increase the market price per share of its stock d. increase retained earning