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Exam 14: Corporations: Dividends, Retained Earnings, and Income Reporting

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Question 91

Multiple Choice

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Colson Inc. declared a $160,000 cash dividend. It currently has 6,000 shares of 7%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Colson distribute to the common stockholders?

A) $76,000.
B) $84,000.
C) $118,000.
D) None.

E) All of the above
F) A) and C)

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Question 92

Multiple Choice

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Allstate, Inc., has 10,000 shares of 6%, $100 par value, noncumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2010. If the board of directors declares a $200,000 dividend, the

A) preferred stockholders will receive 1/10^th of what the common stockholders will receive.
B) preferred stockholders will receive the entire $200,000.
C) $60,000 will be held as restricted retained earnings and paid out at some future date.
D) preferred stockholders will receive $60,000 and the common stockholders will receive $140,000.

E) A) and B)
F) B) and C)

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Question 93

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Retained earnings that are restricted are unavailable for dividends.

Net income of a corporation should be closed to retained earnings and net losses should be closed to paid-in capital accounts.

The date on which a cash dividend becomes a binding legal obligation is on the

Franklin, Inc. declares a 10% common stock dividend when it has 30,000 shares of $10 par value common stock outstanding. If the market value of $24 per share is used, the amounts debited to Retained Earnings and credited to Paid-in Capital in Excess of Par Value are:

Corporations report which of the following in a separate section of the income statement?

When stock dividends are distributed,

Devons Company has 24,000 shares of $1 par common stock issued and outstanding. The company also has 2,000 shares of $100 par 5% cumulative preferred stock outstanding. The company did not pay the preferred dividends in 2009 or 2010. What amount of dividends must the company pay the preferred shareholders in 2011 if they wish to pay the common stockholders a dividend?

Corporations sometimes segregate retained earnings into two categories: (1)________________ retained earnings and (2)________________ retained earnings.

A net loss

On December 31, 2010, Springer, Inc. has 3,000 shares of 6% $100 par value cumulative preferred stock and 45,000 shares of $10 par value common stock outstanding. On December 31, 2010, the directors declare a $12,000 cash dividend. The entry to record the declaration of the dividend would include:

A prior period adjustment is reported as an adjustment of the beginning balance of Retained Earnings.

Jennifer Company reports the following amounts for 2010: The 2010 rate of return on common stockholders' equity is

The following selected amounts are available for Sanders Company. What is its ending retained earnings balance?

Earnings per share is reported only for common stock.