Question

1. Nebraska Inc. issues 2,600 shares of common stock for $83,200. The stock has a stated value of $12 per share. The journal entry to record the stock issuance would include a credit to Common Stock for

a.$2,600

b.$83,200

c.$31,200

d.$52,000

2. Nebraska Inc. issues 3,000 shares of common stock for $45,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for

a.$45,000

b.$30,000

c.$15,000

d.$3,000

3. The charter of a corporation provides for the issuance of 114,000 shares of common stock. Assume that 53,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

a.48,000

b.5,000

c.53,000

d.58,000

4. Windborn Company has 10,000 shares of cumulative preferred 2% stock, $100 par and 50,000 shares of $30 par common stock. The following amounts were distributed as dividends:

Year 1	$50,000
Year 2	10,000
Year 3	60,000

Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'.

	Year 1	Year 2	Year 3
Preferred stock (Dividends per share)	$	$	$
Common stock (Dividends per share)	$	$	$

Answer 1

Answer 1.

Credit to Common Stock = Number of stock issued * Stated Value per share
Credit to Common Stock = 2,600 * $12
Credit to Common Stock = $31,200

Answer 2.

Credit to Common Stock = Number of stock issued * Stated Value per share
Credit to Common Stock = 3,000 * $10
Credit to Common Stock = $30,000

Answer 3.

Number of shares outstanding = Number of shares issued - Number of shares reacquired
Number of shares outstanding = 53,000 - 5,000
Number of shares outstanding = 48,000

Answer 4.

Preferred Stock:

Number of shares = 10,000
Par Value = $100

Value of Preferred Stock = Number of shares * Par Value
Value of Preferred Stock = 10,000 * $100
Value of Preferred Stock = $1,000,000

Annual Dividend = 2% * Value of Preferred Stock
Annual Dividend = 2% * $1,000,000
Annual Dividend = $20,000

Common Stock:

Number of shares = 50,000