41.Dividends payable is recorded at the date of
a. issue.
b. record.
c. declaration.
d. payment.
42.If dividends paid are recorded as an expense, then
a. income and retained earnings are understated.
b. only income is understated.
c. only retained earnings is understated.
d. the income statement and balance sheet are correct.
43.An ordinary 20% stock dividend
a.causes no change in retained earnings.
b.decreases assets.
c.increases contributed capital.
d.is reported on the income statement.
44.All of the following statements are true regarding the appropriations of retained earnings except:
a. Appropriations of retained earnings restrict retained earnings from future dividend payments.
b. Appropriations of retained earnings involve the restriction of cash.
c. Appropriations of retained earnings must be decided upon by the board of directors.
d. Appropriations of retained earnings do not change the amount of total stockholders’ equity.
45.Chambers Corporation has total assets of $800,000 as of December 31, 2010 and total liabilities of $400,000. Contributed capital as of December 31, 2009 and December 31, 2010 is $150,000. Chambers Corporation incurred a $50,000 net loss for the year ended December 31, 2010. If Chambers declared and paid $80,000 in dividends in 2010, their retained earnings at the beginning of 2010 would have been.
a. $220,000.
b. $280,000
c. $380,000.
d. $440,000.
46.Garnett Corporation’s balance sheet reflects total assets of $500,000 as of December 31, 2009 and total liabilities of $150,000. Garnett’s balance sheet also reflects $50,000 of preferred stock outstanding on December 31, 2009. In the early 1990’s, when Garnett was started up, Garnett issued 50,000 shares of no-par common stock, a one-time event that accounted for its entire contributed capital, other than the preferred stock. Garnett had repurchased 15,000 shares of its common stock in 2008 from a retiring shareholder, which is now treasury stock. As of December 31, 2009 the book value of each outstanding share of Garnett’s common stock is:
a. $6.00
b. $8.57
c. $10.00
d. $14.29.
47.Smith Corporation’s balance sheet reflects total assets of $3 million as of December 31, 2010 and total liabilities of $1.8 million. Smith has 100,000 shares of common stock outstanding. The market value of the stock is $9 per share. Smith’s market to book ratio is:
a. 0.75.
b. 7.50.
c. 12.00.
d. 13.33.
48.Cavendish Corporation’s balance sheet reflects total assets of $250 million as of November 30, 2010 and total liabilities of $200 million. Cavendish issues $100 million of preferred stock, receiving $100 million in cash. After issuing the preferred stock Cavendish’s debt to equity ratio is:
a. 0.67.
b. 1.33.
c. .4.00
d. 6.00
49.Choice Corporation had 100,000 shares of commons stock outstanding on January 1, 1995. On January 1, 2010Choice purchased 5,000 shares of its own common stock to fund a stock option plan for it’s executives. On December 31, 2010Choice announced a 3 to 1 stock split. Choice’s net income for 2010 was $400,000. How much should Choice report as earnings per share for 2010?
a. $1.33.
b. $1.40.
c. $4.00
d. $4.21
50.The following information was taken from the statement of shareholders’ equity of Carnival Industries:
|
2010
|
2009
|
Preferred stock (no par)
|
$900
|
$400
|
Common stock ($1 par value)
|
1,000
|
900
|
Additional paid-in capital:
|
|
|
Common stock
|
40
|
20
|
Treasury stock
|
(10)
|
--
|
Less: Treasury stock
|
130
|
150
|
The journal entry to record the issuance of preferred stock during 2010 would include:
a. a debit to Preferred Stock for $900.
b. a credit to Preferred Stock for $500.
c. a credit to Additional Paid in Capital for $500.
d. a credit to Cash for $500.