Sample Exam II PDF

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1. Long Co. issued 100,000 shares of $10 par common stock for $1,200,000. A year later Long acquired 12,000 shares of its own common stock at $15 per share. Three months later Long sold 6,000 of these shares at $19 per share. If the cost method is used to record treasury stock transactions, to record the sale of the 6,000 treasury shares, Long should credit A. Treasury Stock for $114,000. B. Treasury Stock for $60,000 and Paid-in Capital from Treasury Stock for $54,000. C. Treasury Stock for $90,000 and Paid-in Capital from Treasury Stock for $24,000. D. Treasury Stock for $90,000 and Paid-in Capital in Excess of Par for $24,000. 2. Pierson Corporation owned 10,000 shares of Hunter Corporation. These shares were purchased in 2011 for $90,000. On November 15, 2015, Pierson declared a property dividend of one share of Hunter for every ten shares of Pierson held by a stockholder. On that date, when the market price of Hunter was $28 per share, there were 90,000 shares of Pierson outstanding. What gain and net reduction in retained earnings would result from this property dividend? Gain Net Reduction in Retained Earnings A. $0 $252,000 B. $0 $ 81,000 C. $171,000 $ 81,000 D. $171,000 $ 36,000 3. The stockholders' equity section of Gunkel Corporation as of December 31, 2014, was as follows: Common stock, par value $2; authorized 20,000 shares; issued and outstanding 10,000 shares $ 20,000 Paid-in capital in excess of par 30,000 Retained earnings 95,000 $145,000 On March 1, 2015, the board of directors declared a 15% stock dividend, and accordingly 1,500 additional shares were issued. On March 1, 2015, the fair value of the stock was $6 per share. For the two months ended February 28, 2015, Gunkel sustained a net loss of $15,000. What amount should Gunkel report as retained earnings as of March 1, 2015? A. $71,000. B. $77,000. C. $81,000. D. $87,000. 4. On June 30, 2014, when Ermler Co.'s stock was selling at $65 per share, its capital accounts were as follows: Capital stock (par value $50; 50,000 shares issued) $2,500,000 Premium on capital stock 600,000 Retained earnings 4,200,000

If a 100% stock dividend were declared and distributed, capital stock would be A. $2,500,000. B. $3,100,000. C. $5,000,000. D. $7,300,000. 5. The following information is available for Barone Corporation: January 1, 2016 April 1, 2016 July 1, 2016 October 1, 2016

Shares outstanding Shares issued for cash Treasury shares purchased Shares issued in a 100% stock dividend

2,000,000 320,000 120,000 2,200,000

The weighted average number of shares to be used in computing earnings per common share for 2016 is A. 4,520,800. B. 4,380,000. C. 4,360,000. D. 2,730,000....