29 Jun Question Use the following to answer questions 7 – 10:
Question
Use the following to answer questions 7 – 10:
Shown below is information relating to the stockholders’ equity of Surf Corporation as of December 31, 2001:
8% cumulative preferred stock, $100 par,
Callable at $106 $ 200,000
Common stock, $10 par, 500,000 shares
Authorized, 80,000 shares issued and outstanding 800,000
Additional paid-in capital: common stock 300,000
Retained earnings (Deficit) (20,000)
Dividends in arrears 16,000
7. Refer to the above data. How many shares of preferred stock are issued and outstanding?
Answer
A) 1,851 shares
B) 2,000 shares.
C) 20,000 shares.
D) Some other amount.
Question 8
8. Refer to the above data. What was the original issue price per share of common stock?
Answer
A) $10.00 per share.
B) $12.50 per share.
C) $13.75 per share.
D) Some other amount.
Question 9
9. Refer to the above data. Compute total paid-in capital.
Answer
A) $1,320,000.
B) $1,280,000.
C) $1,300,000.
D) Some other amount.
Question 10
10. Refer to the above data. Total stockholders’ equity is:
Answer
A) $1,300,000.
B) $1,320,000.
C) $1,280,000.
D) Some other amount.
Question 11
11. Which of the following individuals has the most power to influence corporate policy on a long-term basis?
Answer
A) A shareholder owning 60% of the outstanding common stock.
B) A shareholder owning 80% of the outstanding preferred stock.
C) The treasurer of the corporation.
D) The controller of the corporation.
Question 12
12. The overall effect of declaring and distributing a cash dividend includes each of the following except:
Answer
A) Reducing total assets.
B) Reducing stockholders’ equity
C) Reducing the balance of the Retained Earnings account
D) Reducing net income for the period.
Question 13
13. The financial statements of a corporation that failed during the current year to pay any dividends on its cumulative preferred stock should:
Answer
A) Include the amount of the omitted dividends among its current liabilities
B) Include a footnote disclosing the amount of the dividends in arrears.
C) Show the amount of the omitted dividends as a deduction from retained earnings.
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