Question

In: Accounting

The date on which cash dividends are paid is the a.date of declaration. b.last day of...

The date on which cash dividends are paid is the

a.date of declaration.

b.last day of the fiscal year-end.

c.date of payment.

d.date of record.

Steak Company acquired a building valued at $170,000 for property tax purposes in exchange for 10,000 shares of its $5 par common stock. The stock is widely traded and selling for $16 per share. At what amount should the building be recorded by Steak Company?

a.$50,000

b.$200,000

c.$160,000

d.$170,000

Which of the following statements concerning taxation is accurate?

a.Corporations pay federal income taxes but not state income taxes.

b.Corporations pay income taxes, but their stockholders do not.

c.Only the stockholders must pay taxes on corporate income.

d.Corporations pay federal and state income taxes.

Which of the following is not true of a corporation?

a.It may enter into binding legal contracts in its own name.

b.It may buy, own, and sell property.

c.The owners are personally liable for corporate actions.

d.It may sue and be sued.

Which of the following is not a term used to refer to owners' equity in a corporation?

a.Stockholders' equity

b.Capital

c.Shareholders' investment

d.Members' equity

If a corporation has only one class of stock, the account is entitled Common Stock or

a.Capital Stock.

b.Owners' Stock.

c.Member Stock.

d.Preferred Stock.

The entry to record the issuance of common stock at a price above par includes a credit to

a.Organizational Expenses.

b.Paid-In Capital in Excess of Par—Common Stock.

c.Cash.

d.Preferred Stock.

The number of shares of stock that a corporation can issue as stated in its charter is referred to as

a.outstanding.

b.authorized.

c.arrears.

d.issued.

When a cash dividend is declared, which of the following accounts is credited?

a.Common Stock

b.Cash Dividends

c.Cash Dividends Payable

d.Paid-In Capital

Aaron Company has 80,000 shares of $10 par common stock outstanding. On May 25, Aaron Company declared a $1.50 cash dividend. The market price of the stock on May 25 was $17 per share. The journal entry to record the cash dividend would include

a.a debit to Cash for $560,000.

b.a credit to Paid-In Capital in Excess of Par—Common Stock for $560,000.

c.a debit to Cash Dividends for $120,000.

d.All of these choices are correct.

Expert Solution

1. (C) Date of payment

The three important dates are the date of declaration, the date of record, and the date of payment. The date of payment is the date the corporation will pay the dividend to the stockholders who owned the stock on the date of record.

2) Option (C) $160,000

An asset exchange for stock is value at the verifiable market value. A property tax evaluation would not really be considered a market value. A widely traded stock value would be a market value would be a market value and should be used to record the asset.

3) Option (D) corporations pay federal and state incomes taxes.

4) Option (C) The owners are personally liable for corporate actions.

A major advantage ofthe corporate structure is thatowners are not liable forcorporate actions.

5) Option (D) Members equity

6) Option (a) Capital Stock

7) Option (B) Paid-In Capital in Excess of Par—Common Stock.

8) Option (B) Authorized

9) Option (C) Cash Dividends Payable

10) Option (C) a debit to Cash Dividends for $120,000

ekkarill92 answered 2 years ago

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