_______________________________________ Name ACG 302 Chapter 15 Quiz Spring 2012 A) B) C) D) 1. A primary source of stockholders' equity is income retained by the corporation. appropriated retained earnings. contributions by stockholders. both income retained by the corporation and contributions by stockholders. 2. Direct costs incurred to sell stock such as underwriting costs should be accounted for as 1. a reduction of additional paid-in capital. 2. an expense of the period in which the stock is issued. 3. an intangible asset. A) B) C) D) A) B) C) D) 1 2 3 1 or 3 3. The cumulative feature of preferred stock limits the amount of cumulative dividends to the par value of the preferred stock. requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders. means that the shareholder can accumulate preferred stock until it is equal to the par value of common stock at which time it can be converted into common stock. enables a preferred stockholder to accumulate dividends until they equal the par value of the stock and receive the stock in place of the cash dividends. 4. Gannon Company acquired 8,000 shares of its own common stock at $20 per share on February 5, and 2012, sold 4,000 of these shares at $27 per share on August 9, 2013. The fair value of Gannon's common stock was $24 per share at December 31, 2012, and $25 per share at December 31, 2013. The cost method is used to record treasury stock transactions. What account(s) should Gannon credit in 2013 to record the sale of 4,000 shares? Treasury Stock for $108,000. Treasury Stock for $80,000 and Paid-in Capital from Treasury Stock for $28,000. Treasury Stock for $80,000 and Retained Earnings for $28,000. Treasury Stock for $96,000 and Retained Earnings for $12,000. 5. On May 1, 2012, Ziek Corp. declared and issued a 10% common stock dividend. Prior to this dividend, Ziek had 100,000 shares of $1 par value common stock issued and outstanding. The fair value of Ziek 's common stock was $20 per share on May 1, 2012. On May 20, 2012, the shares from the stock dividend will be issued (paid). Prepare the May 1, 2012 and May 20, 2012 journal entries. 100,000 shares * 10% = 10,000 shares Small: 10,000 shares * $20/sh (FMV) = $200,000 5/1/2012 RE 200,000 Common Stock Div Distibutable 10,000 (10,000 shares * $1 par) APIC Common 190,000 (balancing) Common Stock Div Distributable 10,000 Common Stock 10,000
A) B) C) D)
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