Acct 387 Q1A-IC (Chap. 15 -16) Name_Solution___
Spring Given in Class 1/31
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
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___ _______ _______