Reference no: EM131811904
1. Maddox was organized on January 2, 2016 with 100,000 authorized shares of $10 stated value common stock. During 2016, Maddox had the following common stock transactions:
January 5, issued 75,000 shares at $14 per share;
July 27, reacquired 5,500 shares at $11 per share;
November 25, reissued 3,000 shares of treasury stock at $13 per share.
December 10, reissued 2,500 shares of treasury stock at $9.50 per share.
Maddox uses the cost method of accounting for treasury stock. What is the balance in the account
" paid in capital-sale of treasury stock" at December 31, 2016?
$6,000.
$3,000.
$3,750.
$2,250.
2. Wilson Co. had 150,000 common shares issued on September 10, 2016. On this date, the company owned 15,000 of its own common shares. On September 11, 2016, the Board of Directors of Wilson declared a quarterly cash dividend of $1.00 per share, payable on September 30, 2016 to stockholders of record on September 20, 2016. On September 15, 2016, Wilson sold 5,000 of its treasury shares for $75 per share. Which of the following statements is correct?
In the journal entry to record the declaration of the cash dividend on September 11, retained earnings should be debited for $135,000.
In the journal entry to record the payment of the cash dividend on September 30, cash dividends payable should be debited for $140,000.
A and B.
Neither A nor B.
3. Taft Inc. declared a $625,000 cash dividend on January 2, 2016, payable on January 20, 2016, to stockholders of record on January 12, 2016. The dividend is permissible under the laws of the state in which Taft is incorporated. The following information was taken from Taft's financial statements:
Net income for 2015 $ 90,000
Paid in capital at December 31, 2015 475,000
Retained earnings at December 31, 2014 450,000
In the journal entry to record the declaration of the cash dividend on January 2, 2016,
Retained earnings should be debited for $540,000.
Paid in capital should be debited for $85,000.
A and B.
Neither A nor B.
4. Grimm Company owned 32,000 shares of common stock in Baha Inc. On December 31, 2015, Grimm's Board of Directors voted to distribute one share of Baha for every 4 shares of Grimm common stock outstanding. On the declaration date, there were 112,000 common shares of Grimm outstanding. The dividend was payable on January 25, 2016 to stockholders of record January 15, 2016. The cost of the Baha Inc. shares was $15 per share, and the fair value was $20 per share on December 31, 2015. On the declaration date of the property dividend, which of the following statements is correct?
Retained earnings should be debited for $640,000.
Unrealized gain on marketable equity securities should be credited for $140,000.
A and B.
Neither A nor B.
5. Refer to the previous question. As a result of the property dividend, what was the net decrease in Grimm's retained earnings at December 31, 2015?
$500,000.
$560,000.
$420,000.
$640,000.