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Exam 20: Corporations: Formation and Capital Stock Transactions

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Question 41

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A person who signs a(n) ____________________ contract agrees to purchase stock and pay for the shares at a later date.

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Question 42

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In respect to corporate debt, stockholders have ____________________ liability.

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Question 43

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Which of the following statements is correct?

McDougall Corporation issued 40,000 shares of its $2 par-value common stock for cash at $20 a share. Record the issuance of the stock on page 1 of a general journal. Omit the description.

Organization costs should be

Ari Hightower owns 200 shares of preferred stock that is convertible into common stock at the rate of 3 shares for every share surrendered. If she surrenders all her preferred stock, she will have _____________________ shares of common stock.

The entry to record the issuance of 2,000 shares of $10 par-value common stock for $14 a share consists of a debit to Cash for $28,000 and a credit to Common Stock for

Stockholders are the ____________________ of a corporation.

Which of the following statements is correct?

The ability to convert preferred stock to common stock can make the preferred stock less attractive to investors.

The stockholders of a corporation

The Odegard Corporation has outstanding 50,000 shares of 6 percent, $100 par-value, noncumulative, nonparticipating preferred stock and 100,000 shares of $2 par-value common stock, sold at an average price of $20 per share. The board of directors voted to distribute $200,000 as dividends in 2013, $400,000 in 2014, and $450,000 in 2012. Compute the following: 1. Total dividend paid to preferred stockholders in 2013. 2. Total dividend paid to common stockholders in 2013. 3. Total dividend paid to preferred stockholders in 2014. 4. Total dividend paid to common stockholders in 2014. 5. Total dividend paid to preferred stockholders in 2012. 6. Total dividend paid to common stockholders in 2012.

The entry to record the issuance of 500 shares of $10 par-value common stock for $14 a share consists of a debit to Cash for $7,000 and a credit to Common Stock for

If preferred stock is ____________________, its owners must receive the stated dividends for both the current year and any prior years in which the stated dividend was not paid before the common stockholders can receive any dividend.

Stock that carries special privileges or rights is called ____________________ stock.

Contreras Corporation issued 10,000 shares of its no-par-value common stock (stated value, $3) for cash at $30 a share. Record the issuance of the stock on page 1 of a general journal. Omit the description.

On July 1, 2013, Abbott Corporation received a subscription from Brad Jones for 1,200 shares of its $1 par-value common stock at a price of $20 a share. Jones made a payment of $10 per share on the stock at the time of the subscription. Record the receipt of the subscription and the cash payment on page 1 of a general journal. Then, using the same page of the general journal, record the payment of the balance of Jones' subscription and issuance of the stock on August 1, 2013. Omit the descriptions.

An investor agrees to pay a preferred stock subscription in two monthly installments. Each collection will include a debit to Cash and a credit to

Santorini Corporation has outstanding 300,000 shares of $70 par-value preferred stock, issued at an average price of $84 a share. The preferred stock is convertible into common stock at the rate of four shares of common stock for each share of preferred stock. Maryann Miller owns 880 shares of the preferred stock. During the current year she decides to convert 220 shares into common stock. How many shares of common stock will she receive?

The Southeast Corporation has outstanding 40,000 shares of 12 percent, $50 par-value, noncumulative, nonparticipating preferred stock and 160,000 shares of $10 par-value common stock. The board of directors voted to distribute $240,000 as dividends in 2013, $280,000 in 2014, and $520,000 in 2012. Compute the following: 1. Amount paid on each share of preferred stock in 2013. 2. Amount paid on each share of common stock in 2013. 3. Amount paid on each share of preferred stock in 2014. 4. Amount paid on each share of common stock in 2014. 5. Amount paid on each share of preferred stock in 2012. 6. Amount paid on each share of common stock in 2012.