Reference no: EM132480615

Question 1 - A company issues 10,000 shares of $10 par value common stock for $23 in cash per share. Later, the company buys back 1,000 shares of this stock for $25 per share and records it using the cost method. Subsequently, the company sells 100 shares of this treasury stock for $26 per share. What should the company report as additional paid-in capital in the stockholders' equity section of its balance sheet?

A. $130,100

B. $130,000

C. $118,500

Question 2 - The initial number of authorized shares specified in the company's articles of incorporation is 25,000 shares of $10 par value per share common stock. A few weeks later, the company issues 10,000 shares of this common stock for $26 in cash per share. Later, the company buys back 1,000 shares of this stock for the same $26 per share and retires these shares. What is reported in this company's balance sheet in its Common Stock account?

A. $90,000

B. $250,000

C. $100,000

Question 3 - The XYZ partnership has inventory (book value of $200,000 and fair value of $220,000) and fixed assets (book value of $800,000 and fair value of $880,000). It has no other assets. The partnership also has liabilities with both a book value and fair value of $300,000. Partnership capital is recorded as $700,000. The three partners are currently incorporating this business and plan to issue 10,000 shares of $10 par value common stock to each individual. In setting up the opening account balances for the new corporation, what should be reported as additional paid-in capital?

A. $400,000

B. $500,000

C. $100,000

Question 4 - The board of directors for the Blank Corporation declares a $1 per share cash dividend on April 1, Year One, to be paid to owners of record on April 17, Year One, with the checks being distributed on April 29, Year One. Prior to April 1, the company had issued 100,000 shares of common stock but held 10,000 treasury shares. Another 10,000 shares were repurchased on April 25, Year One. On what date should the company decrease its working capital as a result of this dividend?

A. April 25, Year One

B. April 1, Year One

C. April 29, Year One

Question 5 - A company has both common stock authorized and preferred stock authorized. What is the basic difference between these two types of ownership interest?

A. The owners of common stock have rights that are set by the state of incorporation whereas the owners of preferred stock have rights that are set by the stock contract

B. The owners of common stock have voting rights whereas the owners of preferred stock do not have voting rights

C. Common stock has a set dividend rate but preferred stock does not