104 Quiz

Question 1
(1 point)

Saved
Victorias Company reported the following in its statement of
stockholders' equity on January 1, 2019:
Common stock, P50 par value, authorized 1,000,000 shares,
issued 500,000 shares 25,000,000
Additional paid-in capital 25,000,000
Retained earnings 15,000,000
65,000,000
Less: Treasury stock, at cost, 100,000 shares 7,000,000
Total stockholders' equity 58,000,000
The following transactions occurred in 2019:
June 1 40,000 shares of treasury stock were sold for

P3,200,000.
August 31 200,000 shares of previously unissued common stock

were sold for P120 per share.
October 1 Distribution of a 2-for-1 stock split, resulting in the

common stock's per share par value being halved.
Victorias accounts for treasury stock under the cost method. In

Victorias Company's statement of stockholders' equity, the number of
outstanding shares should be
Question 1 options:
2,280,000
1,400,000
1,320,000
1,280,000
Question 2 (1 point)

Saved
Mouser Company issues 4,000 shares of its P5 par value common stock
having a market value of P25 per share and 6,000 shares of its P15 par
value preferred stock having a market value of P20 per share for a lump
sum of P192,000. What amount of the proceeds should be allocated to
the preferred stock?
Question 2 options:
192,000
104,727
120,000
172,000

Saved
A company issued share warrant is an instrument that gives the holder
the right but not the obligation to

Question 3 options:
receive a certain dividend declared by the company by a specified date
sell a certain number of shares in the company by a specified date at a stated price
receive a bonus issue of shares in a proportion as notified by the company
buy a certain number of shares in the company by a specified date at a stated price

Saved
Labs Company issued 1,000 share P5 par to Ui as compensation for
1,000 hours of legal services performed. Ui usually bills P160 per hour
for legal services. on the date of issuance, the share was trading on a
public exchange at P140. By what amount should the share premium
account increase as a result of the transaction
Question 4 options:
160,000
135,000
140,000
155,000

Saved
What is the accounting for treasury share transactions?
Question 5 options:
On repurchase or reissuance of previously repurchased own shares, no gain or loss is recognized.
On reissuance of treasury shares, a gain or loss is recognized equal to the difference between the previous
repurchase rice and the reissuance price.
Treasury shares are accounted for as financial assets.
On repurchase of treasury shares, a gain or loss is recognized equal to the difference between the amount
at which the shares were issued and the repurchase price for the shares.

Saved
Resolve Corporation began operations on January 1, 2019. The
company was authorized to issue 60,000 shares of P10 par value
common stock and 120,000 shares of 10%, P100 par value convertible
preferred stock.
In connection with your audit of the company's financial statements,

you noted the following transactions involving stockholders' equity
during 2005:

Jan. 1 Issued 1,500 shares of common stock to the corporation promoters in exchange
for property valued at P510,000 and services valued at P210,000. The property
costs P270,000 3 years ago and was carried on the promoters' books at P150,000.
Jan. 31 Issued 30,000 shares of convertible preferred stock at P150 per share. Each share
can be converted to five shares of common stock. The corporation paid P225,000
to an agent for selling the shares.
Feb. 15 Sold 9,000 shares of common stock at P390 per share. The corporation paid issue
costs of P75,000.
May 30 Received subscriptions for 12,000 shares of common stock at P450 per share.
Aug. 30 Issued 2,100 shares of common stock and 4,200 shares of preferred stock in
exchanged for a building with a fair market value of P1,530,000. The building
was originally purchased for P1,140,000 by the investors and has a book value of
P660,000. In addition, 1,800 shares of common stock were sold for P720,000
cash.
Nov. 15 Payments in full for half of the subscriptions and partial payments for the rest of
the subscriptions were received. Total cash received was P4,200,000. Shares of
stock were issued for the fully paid subscriptions.

Question 6 options:
204,000
186,000
264,000
144,000

Saved
During 2012, Brad Co. issued 5,000 shares of P100 par convertible
preferred stock for P110 per share. One share of preferred stock can be
converted into three shares of Brad's P25 par common stock at the
option of the preferred shareholder. On December 31, 2014, when the
market value of the common stock was P40 per share, all of the
preferred stock was converted. What amount should Brad credit to
share premium-common stock as a result of the conversion?
Question 7 options:
50,000
175,000
0
225,000

Saved
The par value of ordinary share represents
Question 8 options:
The amount received by the corporation when the share was originally issued
The legal nominal value assigned to the share
The liquidation value of the share
The book value of the share

Saved
Issued 30,000 preference shares of P100 par value for P3,300,000,
with 30,000 warrants to acquire 10,000 common shares with P50 par
per share, at P55 exercise price.

On the date of the issuance, the warrants and the preference shares
do not have a market value but only the common share has a market
value of P64 per share.
Subsequently, 21,000 warrants were exercised and the remainder

lapsed.
Question 9 options:
98,000
90,000
237,000
210,000

Saved
Which of the following is not one of the basic shareholders' rights?
Question 10 options:
The right to participate in earnings more than its share in interest
The right to participate in the proceeds of the sale of corporate assets upon liquidation of the corporation
The right to inspect the accounting records of the corporation
The right to maintain one's proportional interest in the corporation

Saved
On September 1, 2008, Zelner Company reacquired 12,000 shares of
its P10 par value common stock for P15 per share. Zelner uses the cost
method to account for treasury stock. The journal entry to record the
reacquisition of the stock should debit
Common Stock for 120,000.
Treasury Stock for 120,000.
Treasury Stock for 180,000
Common Stock for 120,000 and Paid-in Capital in Excess of Par for 60,000

Saved
DO, Inc. issued preferred stock with detachable common stock
warrants. The issue price exceeded the sum of the warrants' fair value
and the preferred stocks' par value. The preferred stock fair value was
not determinable. What amount should be assigned to the warrants
outstanding?
The proportion of the proceeds that the warrants' fair value bears to the preferred stock's par value
The fair value of the warrants
Excess of proceeds over the par value of the preferred stock
Total proceeds.

Saved
In 2017, Fogg, Inc. issued P10 par value common stock for P25 per
share. No other common stock transactions occurred until March 31,
2019, when Fogg acquired some of the issued shares for P20 per share
and retired them. Which of the following statements correctly states an
effect of this acquisition and retirement?

Share premium is decreased
Retained earnings is increased
2019 net income is increased
2019 net income is decreased


Saved
An ordinary share
Is an equity instrument that is subordinate to all other classes of equity instrument
Is any contact that gives rise to both a financial asset of one entity and a financial liability or equity
instrument of another entity
Is a financial instrument or other contract that may entitle its holder to common shares
Is a financial instrument that gives the holder the right to purchase common shares

Saved
On June 1, Mason Company issued 80,000 shares of its P10 par
common stock to Dixon for a tract of land. The stock had a fair market
value of P18 per share on this date. On Dixon's last property tax bill,
the land has a fair value at P960,000. Mason should record an increase
in Share Premium
400,000
640,000
160,000
960,000

Saved
A primary source of stockholders' equity is
contributions by stockholders.
appropriated retained earnings
income retained by the corporation.
both income retained by the corporation and contributions by stockholders

Saved
On January 1, 2017, Tom Riddle Magic Company started operations
and issued 100,000 of its P5 par value common stock for P12 each. It
likewise issued, 5,000 shares as payment for P60,000 legal & other
professional services rendered by Voldemort & Associates. By yearend,
Tom Riddle Magic Company reported a net income of P780,000. No
dividends were declared.
In 2018, Tom Riddle Magic Company acquired 25,000 of its own shares
for a total consideration of P225,000. In the middle of 2008, 15,000 of
these acquired shares were issued for P13 each. In August 7,000
treasury shares were sold for P8.50 each. In October 2008, the
remaining shares were retired. On December 31, 2008, Tom Riddle
Magic Company declared dividends of P4 per share and reported
earning of P1,400,000.
Tom Riddle Company's share premium at December 31, 2017 is

700,000
525,000
760,000
735,000

Saved
On August 1, 2019, B. Doran Company reacquired 4,000 shares of its
P15 par value common stock for P18 per share. What journal entry
should Doran make to record the acquisition of treasury stock?
Treasury Stock 60,000
Additional Paid-In Capital 12,000

Cash 72,000
Treasury Stock 72,000
Cash 72,000

Retained Earnings 72,000
Cash 72,000

reasury Stock 60,000
Retained Earnings 12,000
Cash 72,000


Saved
Watt Co.'s stockholders' equity at January 1, 2017 is as follows:
Common stock, P10 par value; authorized 300,000 shares;
Outstanding 225,000 shares

P2,250,000
Paid-in capital in excess of par

900,000
Retained earnings

2,190,000
Total
P5,340,000
During 2017, Watt had the following stock transactions:
Acquired 6,000 shares of its stock for P270,000.
Sold 3,600 treasury shares at P50 a share.
Sold the remaining treasury shares at P41 per share.

No other stock transactions occurred during 2017. Assuming Watt uses
the cost method to record treasury stock transactions, the total amount
of all additional paid-in capital accounts at December 31, 2017 is
891,600
908,400
870,000
927,600

Saved
The residual interest in a corporation belongs to the
common stockholders
management
creditors
preferred stockholders

Saved
Sam Company was incorporated on January 1, 2019 and provided the
following information:
Jan 1, 100,000 common shares authorized
Feb 1, 80,000 shares issued
July 1, 10,000 shares reacquired but not cancelled
December 1, 2:1 share split

On December 31, 2019, what is the numbre of common shares
outstanding?

160,000
140,000
180,000
150,000

Saved
Manjuyod Company was organized on January 1, 2003. On that date it
issued 500,000 shares of its P10 par value common stock at P15 per
share. During the period January 1, 2003 through December 31, 2005,
Manjuyod reported net income of P3,000,000 and paid cash dividends
of P500,000. On January 5, 2005, Manjuyod purchased 50,000 shares
of its common stock at P20 per share. On December 31, 2005, 45,000
treasury shares were sold at P30 per share and retired the remaining
treasury shares. What is the total stockholders' equity on December
31, 2005?
10,350,000
10,850,000
10,500,000
10,250,000

Saved
Which of the following features of preferred stock would make the
security more like a debt than an equity instrument?
voting
convertible
callable
redeemable

Saved
The accounts below appear in the December 31, 2019 trial balance of
Dumaguete Company:
Authorized common stock

30,000,000
Unissued common stock

5,000,000
Subscribed common stock

3,000,000
Subscription receivable
1,000,000
Share premium
10,000,000
Retained earnings unappropriated

6,000,000
Retained earnings appropriated

2,000,000
Revaluation surplus

4,500,000
Treasury stock, at cost

1,500,000
In its December 31, 2019 balance sheet , Dumaguete should report
total equity at
48,000,000
49,000,000
43,500,000
58,000,000

Saved
During 2015, Brad Company issued 5,000 convertible preferred shares
of P100 par value for P110 per share. one share can be converted into
three common shares with P25 par value at the option of the preferred
stockholder. When the market value of the common share was P40, all
the preference were converted. What amount should be credited
respectively to common share capital and share premium as a result of
the conversion.

500,000 and 50,000
600,000 and 0
375,000 and 225,000
375,000 and 175,000

Saved
Vittly Corporation owned 900,000 shares of Nixon Corporation stock.
On December 31, 2017, when Vittly's account "Investment in Common
Stock of Nixon Corporation" had a carrying value of P5 per share, Vittly
distributed these shares to its stockholders as a dividend. Vittly
originally paid P8 for each share. Nixon has 3,000,000 shares issued
and outstanding, which are traded on a national stock exchange. The
quoted market price for a Nixon share was P7 on the declaration date
and P9 on the distribution date.
What would be the reduction in Vittly's retained earnings as a result of

the above
8,100,000
3,600,000
4,500,000
7,200,000

Saved
Stock splits and large stock dividends have the same effect on a
company's retained earnings and total stockholders' equity.
True
False

Saved
Gonzalez Company has 350,000 shares of P10 par value common stock
outstanding. During the year, Gonzalez declared a 10% stock dividend
when the market price of the stock was P30 per share. Four months
later Gonzalez declared a P0.50 per share cash dividend. As a result of
the dividends declared during the year, retained earnings decreased by
175,000
192,500
1,242,500
525,000

Saved
All dividends reduce the total stockholders' equity of a corporation.
True
False

Saved
On June 30, 2019, when Vietti Co.'s stock was selling at $65 per share,
its capital accounts were as follows:
Capital stock (par value P50; 60,000 shares issued) P3,000,000
Premium on capital stock 600,000
Retained earnings 4,200,000
If a 100% stock dividend were declared and distributed, capital stock

would be

6,000,000
3,000,000
7,800,000
3,600,000

Saved
Dividends payable in assets of the corporation other than cash are
called property dividends or dividends in kind.
True
False

Saved
On May 1, 2018, Kent Corp. declared and issued a 10% common stock
dividend. Prior to this dividend, Kent had 100,000 shares of P1 par
value common stock issued and outstanding. The fair value of Kent 's
common stock was P20 per share on May 1, 2007. As a result of this
stock dividend, Kent's total stockholders' equity
increased by $200,000.
did not change.
decreased by $10,000.
decreased by $200,000

Saved
When a corporation declares its land as dividends, the amount debited
to Retained Earnings is equal to the carrying amount of the land
True
False

Saved
Long Co. had 100,000 shares of common stock issued and outstanding
at January 1, year 1. During year 1, Long took the following actions:
March 15 — Declared a 2-for-1 stock split, when the fair value of the

stock was $80 per share.
December 15 — Declared a $.50 per share cashdividend.

In Long's statement of stockholders' equity for year 1, what amount
should Long report as dividends?
850,000
50,000
100,000
950,000

Saved
Cash dividends, when declared, reduces the amount of the
Unappropriated retained earnings.
True
False

Saved
On December 1, 2018, Nilo Corp. declared a property dividend of
marketable securities to be distributed on December 31, 2018, to
stockholders of record on December 15, 2018. On December 1, 2018,
the trading securities had a carrying amount of P60,000 and a fair value
of P78,000. What is the effect of this property dividend on Nilo's 2018
retained earnings, after all nominal accounts are closed?

78,000 decrease
18,000 increase
60,000 decrease
no effect

Saved
When a stock dividend is less than 20-percent of the common stock
outstanding, a company is required to transfer the fair market value of
the stock issued from retained earnings.
True
False

Saved
East Corp., a calendar-year company, had sufficient retained earnings in
2019 as a basis for dividends, but was temporarily short of cash. East
declared a dividend of P100,000 on April 1, 2019, and issued
promissory notes to its stockholders in lieu of cash. The notes, which
were dated April 1, 2018, had a maturity date of March 31, 2020, and a
10% interest rate. How should East account for the scrip dividend and
related interest?
Debit retained earnings for P110,000 on March 31, 2020.
Debit retained earnings for P110,000 on April 1, 2019

Debit retained earnings for P100,000 on April 1, 2019, and debit interest expense for P7,500 on
December 31, 2019.
Debit retained earnings for P100,000 on April 1, 2019 and debit interest expense for P10,000 on March
31, 2020.

Saved
Farmer Corporation owns 4,000,000 shares of stock in Baha
Corporation. On December 31, 2017, Farmer distributed these shares
of stock as a dividend to its stockholders. This is an example of a
stock dividend
liquidating dividend
cash dividend
property dividend

Saved
The following information pertains to Meg Corp.:
• Dividends on its 1,000 shares, P10 par value common stock have not
been declared or paid for three years.
• Treasury stock that cost $15,000 were purchased by Meg.
What amount of retained earnings should be appropriated as a result of

these items?
0
15,000
30,000
45,000

Saved
A dividend which is a return to stockholders of a portion of their
original investments is a

cash
property
liquidating
liability

Saved
At December 31, 2018, Eagle Corp. reported P1,750,000
of appropriated retained earnings for the construction of a new office
building, which was completed in 2019 at a total cost of P1,500,000. In
2019, Eagle appropriated P1,200,000 of retained earnings for the
construction of a new plant. Also, P2,000,000 of cash was restricted for
the retirement of bonds due in 2020.
In its 2019 balance sheet, Eagle should report what amount of

appropriated retained earnings?
3,200,000
4,700,000
4,950,000
1,200,000

Saved
Which dividends do not reduce stockholders' equity?
stock dividends
liquidating dividends
property dividends
cash dividend

Saved
On December 1, 2018, Nida Corp. declared a property dividend of
marketable securities to be distributed on December 31, 2018, to
stockholders of record on December 15, 2018. On December 1, 2018,
the trading securities had a carrying amount of P60,000 and a fair value
of P78,000. On December 31, 2018, the trading securities had a fair
value of P85,000
78,000
60,000
85,000
0

Saved
he balance in the retained earnings account is directly affected by the
transfer to that account of:
I. Issued share capital;
II. Dividends paid or provided for.
III. Transfers to or from appropriated accounts.
IV. Changes in accounting policies and errors.
V. Interest paid to debenture holders.

II, III and V only.
I, II and III only.
I, II, III and IV only
II, III and IV only.

Saved
On January 2, 2019, Lake Mining Co.'s board of directors declared a
cash dividend of P400,000 to stockholders of record on January 18,
2019, payable on February 10, 2019. The dividend is permissible under
the corporation law.
Selected data from Lake's December 31, year 1 balance sheet are as
follows:
Accumulated depletion P100,000
Capital stock 500,000
Additional paid-in capital 150,000
Retained earnings 300,000
The P400,000 dividend includes a liquidating dividend of

300,000
0
100,000
400,000

Saved
RR Corporation declared a 5% share dividend on its 100,000 shares of
P20 par value ordinary share, which had a fair value of P50 per share
before the share dividend was declared. This share dividend was
distributed 60 days after the declaration date.
By what amount did RR's current liabilities increase as a result of the

share dividend declaration?

150,000
100,000
250,000
0

Saved
Select the statement that is incorrect concerning the appropriations of
retained earnings
Appropriations of retained earnings can be made at the discretion of the board of directors
Appropriations of retained earnings changes the total amount of shareholders' equity.
Appropriations of retained earnings reflect earnings set aside for a designated purpose, such as plant
expansion.
Appropriations of retained earnings can be made as a result of contractual requirements

Saved
Lott Co. has outstanding 50,000 shares of 8% preferred stock with a
P10 par value and 125,000 shares of P3 par value common stock.
Dividends have been paid every year except last year and the current
year. If the preferred stock is cumulative and nonparticipating and
P250,000 is distributed, the common stockholders will receive
250,000
0
210,000
170,000

Saved
Cash dividends are paid on the basis of the number of shares
Subscribed
Authorized
Outstanding
Issued

104 Quiz

Uploaded by

Copyright:

Available Formats

104 Quiz

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

104 Quiz

Uploaded by

Copyright:

Available Formats

Question 1

Common stock, P50 par value, authorized 1,000,000 shares,

issued 500,000 shares 25,000,000

Additional paid-in capital 25,000,000

Retained earnings 15,000,000

Less: Treasury stock, at cost, 100,000 shares 7,000,000

Total stockholders' equity 58,000,000

The following transactions occurred in 2019:

June 1 40,000 shares of treasury stock were sold for

August 31 200,000 shares of previously unissued common stock

October 1 Distribution of a 2-for-1 stock split, resulting in the

Victorias accounts for treasury stock under the cost method. In

In connection with your audit of the company's financial statements,

Subsequently, 21,000 warrants were exercised and the remainder

2019 net income is increased

2019 net income is decreased

Tom Riddle Company's share premium at December 31, 2017 is

Treasury Stock 60,000

Additional Paid-In Capital 12,000

Cash 72,000

Cash 72,000

Retained Earnings 12,000

Cash 72,000

Common stock, P10 par value; authorized 300,000 shares;

Outstanding 225,000 shares

Paid-in capital in excess of par

Retained earnings

During 2017, Watt had the following stock transactions:

Acquired 6,000 shares of its stock for P270,000.

Sold 3,600 treasury shares at P50 a share.

Sold the remaining treasury shares at P41 per share.

Jan 1, 100,000 common shares authorized

Feb 1, 80,000 shares issued

July 1, 10,000 shares reacquired but not cancelled

December 1, 2:1 share split

Authorized common stock

Unissued common stock

Subscribed common stock

Retained earnings unappropriated

Retained earnings appropriated

Revaluation surplus

Treasury stock, at cost

What would be the reduction in Vittly's retained earnings as a result of

Capital stock (par value P50; 60,000 shares issued) P3,000,000

Premium on capital stock 600,000

Retained earnings 4,200,000

If a 100% stock dividend were declared and distributed, capital stock

March 15 — Declared a 2-for-1 stock split, when the fair value of the

December 15 — Declared a $.50 per share cashdividend.

Debit retained earnings for P110,000 on April 1, 2019

Question 39 (1 point)

• Treasury stock that cost $15,000 were purchased by Meg.

What amount of retained earnings should be appropriated as a result of

In its 2019 balance sheet, Eagle should report what amount of

I. Issued share capital;

II. Dividends paid or provided for.

III. Transfers to or from appropriated accounts.

IV. Changes in accounting policies and errors.