CORPORATIONS: DIVIDENDS, RETAINED EARNINGS, AND INCOME REPOR

Each of the following decreases retained earnings except a

• cash dividend.

• liquidating dividend.

• stock dividend.

• All of these decrease retained earnings.

If a corporation declares a dividend based upon paid-in capital, it is known as a

• scrip dividend

• property dividend.

• paid dividend.

• liquidating dividend

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

• decrease total liabilities and stockholders' equity.

• increase total expenses and total liabilities.

• increase total assets and stockholders' equity.

• decrease total assets and stockholders' equity.

If a corporation declares a 10% stock dividend on its common stock, the account to be debited on the date of declaration is

• Common Stock Dividends Distributable.

• Common Stock.

• Paid-in Capital in Excess of Par.

• Retained Earnings.

Which one of the following events would not require a formal journal entry on a corporation's books?

• 2 for 1 stock split

• 100% stock dividend

• 2% stock dividend

• $1 per share cash dividend

A corporation is committed to a legal obligation when it declares

• a cash dividend.

• a stock dividend.

• a stock split.

• either a cash dividend or a stock dividend.

ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2005. What is the annual dividend on the preferred stock?

• $50 per share

• $5,000 in total

• $500 in total

• $.50 per share

Agler, Inc. has 10,000 shares of 6%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2005. If the board of directors declares a $40,000 dividend, the

• preferred shareholders will receive 1/10th of what the common shareholders will receive.

• preferred shareholders will receive the entire $40,000.

• $40,000 will be held as restricted retained earnings and paid out at some future date

• preferred shareholders will receive $20,000 and the common shareholders will receive $20,000.

Lopez, Inc. has 2,000 shares of 5%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 20X1, and December 31, 20X2. The board of directors declared and paid a $4,000 dividend in 20X1. In 20X2, $20,000 of dividends are declared and paid. What are the dividends received by the preferred and common shareholders in 20X2?

• Preferred $14.000

  Common $6.000

• Preferred $10000

  Common $10.000

• Preferred $6.000

  Common $14.000

• Preferred $5.000

  Common $15.000

Irwin, Inc. had 300,000 shares of common stock outstanding before a stock split occurred, and 600,000 shares outstanding after the stock split. The stock split was

• 3 for 6.

• 6 for 1.

• 1 for 6.

• 2 for 1.