Week 14 Quiz

The illustrative bicycle shop's charter gives its common stock a $1 par value. In Year 2 the shop sells new shares for $9 each. What is the $1 par value?

Select one.

• A legal amount per share set in the charter
• The price a buyer pays for one share in Year 2
• The cash the shop holds for each share it has issued
• The dividend the shop pays on each share every year

On the first day of Year 2, the bicycle shop (illustrative) issues 5,000 shares of its $1-par common stock for $9 a share. How much does the entry credit to Additional Paid-in Capital?

Select one.

• $45,000
• $5,000
• $40,000
• $0

In Month 5 of Year 2, the board of the bicycle shop (illustrative) declares a cash dividend of $0.20 a share on its 35,000 outstanding shares, to be paid in Month 6. Which entry does the shop record on the declaration date?

Select one.

• Debit Dividend Expense 7,000; credit Cash 7,000
• Debit Dividends 7,000; credit Dividends Payable 7,000
• Debit Dividends Payable 7,000; credit Cash 7,000
• Debit Cash 7,000; credit Retained Earnings 7,000

On the record date of a cash dividend, the corporation records no journal entry; that date only fixes which owners receive the dividend.

True or false.

• True
• False

The bicycle shop (illustrative) has 35,000 shares of common stock issued, all of them outstanding. At the end of Month 6 it buys back 1,000 of its own shares and holds them as treasury stock. How many shares are outstanding after the buyback?

Select one.

• 35,000
• 34,000
• 36,000
• 1,000

The bicycle shop (illustrative) buys back 1,000 of its own shares at $10 a share and records Treasury Stock of $10,000 under the cost method. Where is that $10,000 reported?

Select one.

• Among the current assets on the balance sheet
• As a deduction in the stockholders' equity section
• Among the long-term liabilities on the balance sheet
• As an expense on the year's income statement

Retained Earnings of the bicycle shop (illustrative) stood at $13,000 at the start of Year 2. During Year 2 the shop earned net income of $69,000 and declared $7,000 of cash dividends. What is Retained Earnings at the end of Year 2?

Select one.

• $82,000
• $69,000
• $89,000
• $75,000

At the end of Year 2, the bicycle shop (illustrative) reports Common Stock of $35,000, Additional Paid-in Capital of $40,000, Retained Earnings of $75,000, and Treasury Stock of $10,000 at cost. What is total stockholders' equity?

Select one.

• $150,000
• $160,000
• $140,000
• $100,000

The bicycle shop (illustrative) has no preferred stock and earns net income of $69,000 in Year 2. It had 35,000 common shares outstanding for the first 6 months and 34,000 for the last 6 months. What is its basic earnings per share?

Select one.

• $2.03
• $1.97
• $1.80
• $2.00

Which of these events leave a corporation's total stockholders' equity unchanged? Select all that apply.

Select every option that applies.

• A 2-for-1 stock split
• A stock dividend
• Declaring a cash dividend
• Buying back shares as treasury stock
• Issuing common stock for cash