q1a ch 15&16 sol so2 by q6S4a6Vq


									Acct 387                           Q1A-IC (Chap. 15 -16)              Name_Solution___
Spring                              Given in Class 1/31
Doran                                                                               Group#
Total of 16 points.
Part I. Multiple Choice (Circle the Best Answer) 2 points each

1. Presented below is information related to Getty Corporation:

  Subscriptions Receivable, Common Stock                          $ 120,000
  Common Stock, $1 par                                             3,600,000
  Common Stock Subscribed                                            240,000
  Paid-in Capital in Excess of Par—Common Stock                      210,000
  Preferred 8 1/2% Stock, $50 par                                  1,200,000
  Paid-in Capital in Excess of Par—Preferred Stock                   240,000
  Retained Earnings                                                  900,000
  Treasury Common Stock (at cost)                                     90,000

  The total stockholders' equity of Getty Corporation is (Note: Assume Subscriptions
  receivable is treated as contr-equity)

  a. $6,180,000.     b. $6,270,000.       c. $6,300,000.      d. $6,390,000.

2. When a corporation issues shares of its own stock in payment for services, the least
   appropriate basis for recording this transaction would be

  a. the fair market value of the services received
  b. the par or stated value of the shares issued.
  c. the fair market value of the shares issued
  d. All of the above are equally appropriate basis for recording the transaction

3. Nelsen Co. was organized on January 2, 2001, with 100,000 authorized shares of
   $10 par value common stock. During 2001 Nelsen had the following capital
           January 5—issued 75,000 shares at $14 per share.
           July 27—purchased 5,000 shares at $11 per share.
           November 25—sold 4,000 shares of treasury stock at $13 per share.
  Nelsen used the cost method to record the purchase of the treasury shares. What
  would be the balance in the Paid-in Capital from Treasury Stock account at
  December 31, 2001?

  a. $0.             b. $4,000.           c. $8,000.          d. $12,000.

4. An entry is not made on the

  a.   date of declaration.
  b.   date of record.
  c.   date of payment.
  d.   An entry is made on all of these dates.

                                  -Continued on Back Side-
5. A retained earnings appropriation always means the company is

 a. setting aside cash for a specific purpose.
 b. disclosing managerial policy.
 c. preventing unusual losses.
 d. improving the debt-equity ratio.

6. Stine Co. had outstanding 2,000 shares of $100 par value 8% cumulative preferred
   stock and 30,000 shares of $5 par value common stock on December 31, 1998. At
   December 31, 1998, dividends in arrears on the preferred stock were $20,000. Cash
   dividends declared in 1999 totaled $60,000. The amounts paid to each class of
   stock were
                          Preferred Stock     Common Stock
a.                           $16,000            $44,000
b.                           $20,000            $40,000
c.                           $36,000            $24,000
d.                           $40,000            $20,000

Part II. Fill in the blank (1/2 point each)
Indicate the effect of each of the following transactions on
total stockholders' equity by placing an "X" in the appropriate
                                            Increase Decrease No Effect

1. The sale of treasury stock for
   less than its cost.                           ___X___   _______     _______

2. Not declaring this year's dividend
   On cumulative preferred stock    _______                _______     ___X___

3. Declaration of a stock dividend. _______                _______     ___X___

4. Payment of a stock dividend.                  _______   _______     ___X___

5. Acquiring land by issuing
   common stock                                  ___X___   _______     _______

6. Declaration of cash dividend.                 _______   ___X___     _______

7. Payment of cash dividend.                     _______   _______     ___X___

8. Conversion of bonds payable
   into preferred stock                          ___X___   _______     _______

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