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Exam 13: Corporations: Organization and Capital Stock Transactions

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Question 61

Multiple Choice

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Simon Company issued 4,000 shares of its $5 par value common stock in payment of its attorney's bill of $35,000. The bill was for services performed in helping the company incorporate. Simon should record this transaction by debiting

A) Legal Expense for $20,000.
B) Legal Expense for $35,000.
C) Organization Expense for $20,000.
D) Organization Expense for $35,000.

E) All of the above
F) B) and C)

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Question 62

Multiple Choice

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Which of the following statements is not considered a disadvantage of the corporate form of organization?

A) Additional taxes
B) Government regulations
C) Limited liability of stockholders
D) Separation of ownership and management

E) A) and D)
F) A) and C)

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Question 63

Multiple Choice

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Venco Corporation's December 31, 2010 balance sheet showed the following: 8% preferred stock, $20 par value, cumulative, 10,000 shares Venco's total paid-in capital was

Stockholders generally have the right to share in corporate _______________ and in ______________ upon liquidation.

The stockholders' equity section of a corporation's balance sheet is generally divided in two major sections: (1) _____________ and (2) _______________.

The trial balance of Hackman Inc. includes the following balances: Common Stock, $26,000; Paid-in Capital in Excess of Par, $64,000; Treasury Stock, $6,000; Preferred Stock, $20,000. Capital stock totals

The ability of a corporation to obtain capital is

Andrews, Inc. paid $45,000 to buy back 9,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $6 per share. The entry to record the sale includes a

Ed Tresh has invested $400,000 in a privately held family corporation. The corporation does not do well and must declare bankruptcy. What amount does Tresh stand to lose?

Boswell Corporation has the following stockholders' equity accounts: Preferred Stock Paid-in Capital in Excess of Par Value-Preferred Stock Common Stock Paid-in Capital in Excess of Stated Value-Common Stock Paid-in Capital from Treasury Stock-Common Retained Earnings Treasury Stock-Common Instructions Classify each account using the following tabular alignment.

Which of the following represents the largest number of common shares?

Renner Corporation's December 31, 2010 balance sheet showed the following: 8% preferred stock, $20 par value, cumulative, 20,000 shares Renner's total stockholders' equity was

What is ordinarily the first step in the formation of a corporation?

Owners' equity for a corporation is identified as each of the following except

Treasury stock should be reported in the financial statements of a corporation as a(n)

Stock can be issued only in exchange for cash.

If an investment firm underwrites a stock issue, the

The cost of a noncash asset acquired in exchange for common stock should be either the fair market value of the consideration given up or the consideration received, whichever is more clearly determinable.

Land appraised at $60,000 is purchased by issuing 1,000 shares of $25 par value common stock. The market price of the shares at the time of the exchange, based on active trading in the securities market, is $75 per share. Should the land be recorded at $25,000, $60,000, or $75,000? Explain.

The paid-in capital section of the balance sheet consists of two classifications: ______________________ and ______________________.