21. Describe cumulative preferred stock.
22. What is the meaning of "par value" of stock?
23. Explain the differences in recording the initial issue of stock for (a) par-value, (b) stated- value, and (c) no-par stock.
a. With par value stock, the par value is recorded as well as the difference between issue price and par. This difference is recorded in a Paid-in Excess account. The total issue price is recorded as an increase to cash.
b. Stated value stock is handled essentially the same way as par value stock.
c. With no-par stock, the entire amount of the proceeds from the stock issue is recorded into the stock account with no Paid-in Excess account required.
24. Will the number of shares of stock issued and the number of shares of stock outstanding always be the same? Why or why not?
25. In which section of the balance sheet would Treasury Stock be reported?
26. What is treasury stock?
27. On what date do dividends become a legal liability of a corporation?
28. What is the importance of record date for a corporation that has declared dividends?
29. Garber Corporation had 20,000 shares of $12 par value common stock outstanding and declared a four-for-one stock split. How many new shares of stock would then be outstanding and what would be the par value of the new stock?
30. Show the effect of a stock dividend on the accounting equation.