Question

1. On July 14, Peterman Corporation exchanged 1,000 shares of its $8 par value common stock for a plot of land. Peterman’s common stock is listed on the NYSE and traded at an average price of $21 per share on July 14. The land was appraised by independent real estate appraisers on July 14 at $23,000. As a result of this exchange, Peterman’s additional paid in capital will increase by:
a. $0
b. $8,000
c. $13,000
d. $15,000
2. Cary Corporation has 50,000 shares of $10 par common stock authorized. The following transactions took place during 2016, the first year of the corporation’s existence:
• Sold 5,000 shares of common stock for $18 per share.
• Issued 5,000 shares of common stock in exchange for a patent valued at $100,000.
At the end of Cary’s first year, total contributed capital amounted to:
a. $40,000
b. $90,000
c. $100,000
d. $190,000
3. What is the most likely effect of a stock split on the par value per share and the number of shares outstanding?
4. Polk Corporation was organized on January 2, 2016, with authorized capital of 100,000 shares of $10 par value common stock. During 2016, Polk had the following transactions:
Jan. 12 Issued 20,000 shares at $ 12 per share Apr. 23 Issued 1,000 shares for legal services when the market price was $14 per share. What should be the amount of additional paid in capital at December 31, 2016?
a. $4,000
b. $14,000
c. $40,000
d. $44,000
5. During 2016, Bradley Corporation issued for $110 per share, 5,000 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into 3 shares of Bradley’s $25 par value common stock at the option of the preferred shareholder. On December 31, 2017, all of the preferred stock was converted into common stock. The market value of the common stock at the conversion date was $40 per .share. What amount should be credited to the Common Stock account on December 31, 2017?
a. $375,000
b. $500,000
c. $550,000
d. $600,000
6. Amlin Corporation was incorporated on January' 1, 2016, with the following authorized capitalization:
• 20,000 shares of common stock, no par value, stated value $40 per share
• 5,000 shares of 5% cumulative preferred stock, par value $10 per share
During 2016, Amlin issued 12,000 shares of common stock for a total of $600,000 and 3,000 shares of preferred stock at $ 16 per share. In addition, on December 21, 2016, subscriptions for 1,000 shares of preferred stock were taken at a purchase price of $17. These subscribed shares were paid for on March 4, 2017. What should Amlin report as total contributed capital on its December 31, 2016, balance sheet issued on February' 1,2017?
a. $520,000
b. $648,000
c. $665,000
d. $850,000
7. On January' 1, 2016, Stoner Corporation granted compensatory' share options to key employees for the purchase of shares of the company’s common stock at $25 per share. The options are intended to compensate employees for the next 2 years. The options are exercisable within a 4-year period beginning January 1, 2018, by grantees still in the employ of the company. The lair value of each option was $7 on the date of grant. Stoner expects to distribute 10,000 shares of treasury' stock when options are exercised. The treasury' stock was acquired by Stoner during 2015 at a cost of $28 per share and was recorded under the cost method. How much should Stoner charge to compensation expense for the year ended December 31, 2016?
a. $70,000
b. $35,000
c. $30,000
d. $15,000
8. When treasury stock is purchased for cash at than its PAC. Value, what is the effect on total shareholders’ equity under each of the following methods?
9. Preferred stock that may be retired by the corporation at its option is known as:
a. Convertible
b. Redeemable
c. Cumulative
d. Callable
10. When treasury' stock accounted for by the cost method is subsequently sold for more than its purchase price, the excess of the cash proceeds over the carrying value of the treasury' stock should be recognized as:
a. An extraordinary' gain
b. An increase in additional paid in capital
c. Income from continuing operations
d. An increase in retained earnings


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  • CreatedOctober 05, 2015
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