Question

17/ A corporation declared and issued a 20% stock dividend on October 1. The following information was available immediately prior to the dividend:

Retained earnings	$	760,000
Shares issued and outstanding		61,000
Market value per share	$	16
Par value per share	$	5

The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

Multiple Choice

$61,000.

$0.

$(195,200).

$(61,000).

$195,200.

18/ Fetzer Company declared a $0.45 per share cash dividend. The company has 440,000 shares authorized, 418,000 shares issued, and 17,600 shares in treasury stock. The journal entry to record the payment of the dividend is:

Multiple Choice

Debit Common Dividends Payable $188,100; credit Cash $188,100.

Debit Retained Earnings $180,180; credit Common Dividends Payable $180,180.

Debit Common Dividends Payable $180,180; credit Cash $180,180.

Debit Retained Earnings $198,000; credit Common Dividends Payable $198,000.

Debit Retained Earnings $188,100; credit Common Dividends Payable $188,100.

19/ A corporation sold 14,500 shares of its $10 par value common stock at a cash price of $14 per share. The entry to record this transaction would include:

Multiple Choice

A debit to Paid-in Capital in Excess of Par Value, Common Stock for $58,000.

A debit to Cash for $145,000.

A credit to Common Stock for $145,000.

A credit to Common Stock for $203,000.

A credit to Paid-in Capital in Excess of Par Value, Common Stock for $203,000.

20/ Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 44,000 shares authorized, 23,400 shares issued, and 17,600 shares of common stock outstanding. The journal entry to record the dividend declaration is:

Multiple Choice

Debit Retained Earnings $8,800; credit Common Dividends Payable $8,800.

Debit Common Dividends Payable $8,800; credit Cash $8,800.

Debit Retained Earnings $11,700; credit Common Dividends Payable $11,700.

Debit Common Dividends Payable $11,700; credit Cash $11,700.

Debit Retained Earnings $22,000; credit Common Dividends Payable $22,000.

Answer 1

Answer

17.

Stock Dividend = Outstanding shares *20%

Stock Dividend = 12,200 Shares (61,000 Shares * 20%)

Value of Stock Dividend = No. of Shares * Market Value per share

= 12,200 Shares * $16

Increase in Contributed Capital = $195,200

18.

Answer = Debit Common Dividends Payable $180,180; credit Cash $180,180

Shares for Cash dividend = Issued Shares – Treasury Stock

= 418,000 – 17,600 Shares

Shares for Cash dividend = 400,400 Shares

Cash dividend = 400,400 Shares * $0.45 per share

Cash dividend = $180,180

19.

Answer = A credit to Common Stock for $145,000

Cash (Dr.)                                                    $203,000 (14,500 shares * $14)

Paid in capital in excess of par (Cr.)           $58,000 (14,500 Shares * $4)

Common Stock (Cr.)                                   $145,000 (14,500 Shares * $10)

20.

Answer = Debit Retained Earnings $8,800; credit Common Dividends Payable $8,800

Dividend = Outstanding shares * $0.5 per share

= $8,800 (17,600 Shares * $0.5)