Which of the following accounts below is reported in the paid-in capital/stockholders’ equity section of the corporate balance sheet?

1.Cash dividends are normally paid on shares of treasury stock.

a.

False  

b.

True

 

2.The following information pertains to Tanzi Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.

3.What is the price earnings ratio for this company?

 

a.

6 times  

b.

9.6 times  

c.

8 times  

d.

4.2 times  

 

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

 

a.

declaration date.  

b.

payment date.  

c.

date of record.  

d.

last day of the fiscal year end.

5.Investment in Bonds is listed on the balance sheet after Bonds Payable.

 

a.

True  

b.

False  

 

 

6.Which of the following accounts below is reported in the paid-in capital/stockholders’ equity section of the corporate balance sheet?

 

a.

Organizational Expenses  

b.

Preferred Stock  

c.

Cash  

d.

Stock Dividends  

7.The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors?

 

a.

the financial condition, earnings record, and dividend record of the corporation  

b.

how high the par value  

c.

investor expectations of the corporation’s earning power  

d.

general business and economic conditions and prospects  

 

8.The journal entry to issue 1,000,000 shares of $5 par common stock for $7.00 per share on January 2nd would be:

 

a.

Jan 2    Cash                                                       5,000,000
                   Common Stock                                                            5,000,000
 

b.

Jan 2    Cash                                                       7,000,000
                   Common Stock                                                          5,000,000
                   Paid-In Capital in Excess of Par – C/S                          2,000,000
 

c.

Jan 2    Cash                                                        5,000,000
            Paid-In Capital in Excess of Par – C/S        2,000,000
                   Common Stock                                                           7,000,000
 

d.

Jan 2    Cash                                                         1,000,000
                   Common Stock                                                           1,000.000
 

 

9.When the market rate of interest on bonds is higher than the contract rate, the bonds will sell at

 

a.

their maturity value  

b.

their face value  

c.

a premium  

d.

a discount  

 

10.The entry to record the amortization of a premium on bonds payable is

 

a.

debit Bonds Payable, credit Interest Expense  

b.

debit Premium on Bonds Payable, credit Interest Expense  

c.

debit Interest Expense, debit Premium on Bonds Payable, credit Cash  

d.

debit Interest Expense, credit Premium on Bond Payable  

 

 

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