A+ Answers

1. Rhubarb Corporation’s outstanding stock is 100 shares of $100, 11% cumulative nonparticipating preferred stock, and 2,000 shares of $12 par value common stock. Rhubarb paid $1,600 cash dividends during the year. Common stockholders received:

2. Antiques.com’s outstanding stock is 75 shares of $60, 8% cumulative nonparticipating preferred stock, and 2,000 shares of $10 par value common stock. Antiques paid $2,400 cash dividends during the year. Common stockholders received:

3. Custer.com’s outstanding stock is 100 shares of $100, 6% cumulative nonparticipating preferred stock, and 1,000 shares of $10 par value common stock. Custer paid $2,000 cash dividends including one-year dividends in arrears to preferred stockholders. Common stockholders received:

4. Alpha Corporation has 1,500 shares of $40 par, 7% cumulative preferred stock, and 2,200 shares of $10 par common stock. Alpha paid $10,000 in cash dividends including one-year dividends in arrears to preferred stockholders. Common stockholders received:

5. Soy.com has 100 shares of $100, 6% cumulative nonparticipating preferred stock, and 1,000 shares of $10 par value common stock outstanding. the company paid $2,000 cash dividends including one-year dividends in arrears to preferred stockholders. Preferred stockholders received:

6. The entry to record MidIowa.net selling 800 shares of $6.00 par value common stock at $8.00 would be to:

a. debit Cash $6,400; credit Common Stock $4,800; credit Paid-in Capital in Excess of Par Value-Common $1,600.

b. debit Cash $4,800; credit Common Stock $4,800.

c. debit Cash $6,400; debit Paid-in Capital in Excess of Par Value-Common $1,600; credit Common Stock $8,000.

d. None of the above.

7. The entry to record selling 300 shares of no-par common stock with a stated value of $60 for $70 would be to:

a. debit Cash $21,000; credit Common Stock $21,000

b. debit Cash $18,000; credit Common Stock $18,000

c. debit Cash $21,000; credit Common Stock $18,000; debit Paid-in Capital in Excess of Par Value-Common $3,000.

d. debit Cash $21,000; credit Common Stock $18,000; credit Paid-in Capital in Excess of Stated Value-Common $3,000.

8. The entry to record selling 150 shares of no-par common stock with a stated value of $30 for $40 would be to:

a. debit Common Stock $6,000; credit Cash $6,000.

b. debit Cash $6,000; credit Common Stock $6,000

c. debit Cash $6,000; credit Common Stock $4,500; credit Paid-in Capital in Excess of Stated Value-Common $1,500.

d. debit Cash $6,000; credit Common Stock $4,500; credit Paid-In Capital in Excess of Par Value-Common $1,500.

9. Five hundred shares of $25 par common stock was exchanged for a piece of equipment with a fair market value of $13,500. The journal entry to record the transaction would include a credit to:

a. Equipment for $12,500.

b. Debit to Common Stock for $12,500.

c. Paid-In Capital in Excess of Par-Common for $1,000.

d. Common Stock for $13,500.

10. When stock is exchanged for non cash assets,:

a. debit the asset for prior book value; credit Common Stock for cash received.

b. debit assets for market value; credit Common Stock for par value; if needed, credit Paid-in Capital in Excess of Par.

c. debit assets for market value; credit Common Stock for market value.

d. debit assets for par value; credit Common Stock for par value.

11. The Harvester Corporation issued 40 shares of $20 par value stock to its accountant. The shares are in full payment for her $900 fee for helping to set up the new company. The entry to record the issuance of the stock would include a:

a. credit to Common Stock for $900.

b. debit to Common Stock for $900.

c. credit to Common Stock for $800.

d. debit to Common Stock for $800.

12. In exchange for $1,500 legal services to help set up the new company, Hickory Grove Corporation issued 100 shares of $10 par value stock to its attorney. The entry to record the issuance of the stock would include a:

a. credit to Common Stock for $1,000.

b. debit to Common Stock for $1,000.

c. credit to Common Stock for $1,500.

d. debit to Paid-in Capital in Excess of Par Value for $500.

13. Washington Corporation issued 4,000 shares of its $20 par value common stock for $23 per share. The entry to record the issuance would include a:

a. debit to Cash for $80,000.

b. credit to Common Stock for $12,000.

c. credit to Common Stock for $80,000.

d. debit to Paid-in Capital in Excess of Par Value for $12,000.

14. The Logan Company issued 140 shares of its $12 par value stock for $14 per share. Then entry to record the receipt of cash and issuance of the stock would include a:

a. debit to Cash for $1,680; credit to Common Stock for $1,680.

b. debit to Cash for $1,960.

c. credit to Common Stock for $1,960.

d. debit to Discount on Common Stock for $280.

15. Sunrise Online issued 500 shares of its $10 common stock in exchange for equipment with a fair market value of $7,500. The entry to record the transaction would include a:

a. debit to Equipment for $5,000.

b. debit to Common Stock for $5,000.

c. credit to Paid-in Capital in Excess of Par Value for $2,500.

d. credit to Common Stock Subscribed for $5,000.

16. Dolly’s Best issued 200 shares of its $10 common stock in exchange for used packaging equipment with a fair market value of $2,400. The entry to record the acquisition of the equipment would include a:

a. debit to Equipment for $2,000.

b. debit to Paid-in Capital in Excess of Par for $400.

c. credit to Common Stock for $2,400.

d. debit to Equipment for $2,400.

17. ABC sells 400 shares of its $23 par common stock for $27. The entry would entail credit(s) to:

a. Cash for $9,200

b. Paid-in Capital in Excess of Par-Common for $800; Common Stock for $10,800

c. Paid-in Capital in Excess of Par-Common for $1,600; Common Stock for $9,200.

d. Common Stock for $10,800.

18. The major parts of the Stockholders’ Equity section of the balance sheet are:

a. Paid-in Capital and Retained Earnings.

b. Stock and Retained Earnings.

c. Stock, Paid-in Capital, and Retained Earnings.

d. Authorized Stock and Preferred Stock.

19. Stockholders’ investment appears in:

a. Paid-in Capital.

b. Owner’s Equity.

c. Retained Earnings.

d. Cash.

20. Which of the following would normally not appear in the Stockholder’s Equity section of the balance sheet?

a. Cash

b. Paid-in Capital

c. Common Stock

d. Preferred Stock