Multiple Choice Questions

Use the following information for Questions 1 to 2:

These account balances at December 31 relate to Sportworld, Inc.:

1. What is total paid-in capital for Sportworld, Inc.?

a. $634,445

b. $622,000

c. $641,345

d. $693,300

e. None of the above

2. What is total stockholders equity for Sportworld, Inc.?

a. $688,100

b. $641,345

c. $693,300

d. $698,500

e. None of the above

3. Sportworld’s net income for the period is $119,100 and beginning common stockholders equity is $681,500. Calculate Sportworld’s return on common stockholders equity.

a. 17.2%

b. 16.4%

c. 18.2%

d. 19.3%

4. A company paid $24 per share to purchase 600 shares of its common stock as treasury stock. The stock was originally issued at $16 per share. The journal entry to record the purchase of the treasury stock is:

5. When treasury stock is sold for less than its cost, the entry could include a debit to:
a. Paid-in Capital in Excess of Par.
b. Retained Earnings.
c. Gain on Sale of Treasury Stock.
d. Loss on Sale of Treasury Stock.
6. A company purchased 100 shares of its common stock at $50 per share. It then sells 35 of the treasury shares at $56 per share. The entry to sell the treasury stock includes a
a. Credit to Paid-in Capital, Treasury Stock for $210.
b. Debit to Retained Earnings for $210.
c. Credit to Retained Earnings for $600.
d. Credit to Treasury Stock for $1,960.
e. Credit to Cash for $1,960.
7. Stockholders are eligible for a dividend if they own the stock on the date of:
a. Record.
b. Issuance.
c. Declaration.
d.Payment.

a. Treasury Stock 14,400 Cash 14,400 9,600 4,800 b. Treasury Stock Retained Earnings Cash 14,400 c. Treasury Stock 7,200 7,200 Paid-in Capital in Excess of Par Cash 14,400 d. Common Stock 14,000 Cash 14,000