21) Wetzel, Inc. has 20,000 shares of cumulative preferred stock outstanding, with annual dividends paid at a rate of $2 per share. Wetzel, Inc. also has 40,000 shares of common stock outstanding. Preferred dividends were passed in the prior year. If Wetzel, Inc. declares a $200,000 dividend, each outstanding share of common stock would receive:
A) $2.00.
B) $3.00.
C) $4.00.
D) $5.00.
22) Nichols, Inc. has 5,000 shares of 5%, $100 par value, cumulative preferred stock and 75,000 shares of $1 par value common stock outstanding at December 31, 2012. What is the annual dividend on the preferred stock?
A) $5,000
B) $25,000
C) $100,000
D) $0. Preferred stockholders do not receive dividends.
23) Corrao Foods Corporation has 2,000 shares of 6%, $50 par value, cumulative preferred stock and 150,000 shares of $1 par value common stock outstanding at December 31, 2013 and December 31, 2014. In 2013, a $5,000 dividend was declared and paid. In 2014, $32,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2014?
A) $3,000
B) $6,000
C) $7,000
D) $12,000
24) Declaring and distributing stock dividends:
A) is the distribution of cash to the stockholders.
B) increases the total liabilities of the corporation and decreases the total stockholders' equity.
C) reduces the total assets of the corporation.
D) has no effect on total stockholders' equity.
25) Corporations may choose to distribute stock dividends in order to:
A) increase the market price per share of its stock.
B) reduce the market price per share of its stock.
C) increase retained earnings.
D) decrease the amount of stockholders' equity in the corporation.
26) Mr. Jorgensen, a shareholder in the Best Corporation, owns 1,000 shares of their common stock. Mr. Jorgensen receives a 5% stock dividend. After the stock dividend, Mr. Jorgensen will have a:
A) total of 50 shares of Best Corporation's common stock.
B) total of 950 shares of Best Corporation's common stock.
C) total of 1,000 shares of Best Corporation's common stock.
D) total of 1,050 shares of Best Corporation's common stock.
27) Mr. Seider, a shareholder in the Greenfield Corporation, owns 1,000 shares of their common stock, which represents 30% of the outstanding common stock of Greenfield Corporation. Mr. Seider receives a 10% stock dividend. After the stock dividend, what is Mr. Seider's ownership in Greenfield Corporation's common stock?
A) 10% ownership
B) 20% ownership
C) 30% ownership
D) 40% ownership
28) A stock dividend is considered small when it is a dividend of:
A) less than 30% but greater than 25% of the corporation's outstanding stock.
B) between 50% and 100% of the corporation's outstanding stock.
C) more than 30% of the corporation's outstanding stock.
D) 25% or less of the corporation's outstanding stock.
29) A small stock dividend will:
A) reduce total assets.
B) reduce total stockholders' equity.
C) increase total stockholders' equity.
D) have no effect on total assets or total stockholders' equity.
30) Arnold, Inc. declares and distributes a 10% common stock dividend when it has 20,000 shares of $10 par value common stock outstanding. If the market value of the common stock is $25, the journal entry to record the stock dividend would include a:
A) debit to Retained Earnings $50,000.
B) debit to Retained Earnings $20,000.
C) credit to Paid-in Capital in Excess of Par—Common $50,000.
D) credit to Paid-in Capital in Excess of Par—Common $20,000.