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Exam 11: Corporations: Organization, stock Transactions, and Dividends

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Question 91

Multiple Choice

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Sabas Company has 20,000 shares of $100 par,2% cumulative preferred stock and 100,000 shares of $50 par common stock.The following amounts were distributed as dividends: Determine the dividends per share for preferred and common stock for the third year.

A) $4.50 and $0.25
B) $3.25 and $0.25
C) $4.50 and $0.90
D) $2.00 and $0.25

E) B) and D)
F) B) and C)

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Question 92

True/False

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Under the Internal Revenue Code,corporations are required to pay federal income taxes.

A) True
B) False

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Question 93

Multiple Choice

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A corporation issues 2,500 shares of common stock for $ 45,000.The stock has a stated value of $10 per share.The journal entry to record the stock issuance would include a credit to Common Stock for

Double taxation is a disadvantage of a corporation because the same party has to pay taxes twice on the income.

A large retained earnings account means that there is cash available to pay dividends.

Before a stock dividend can be declared or paid,there must be sufficient cash.

One of the prerequisites to paying a cash dividend is sufficient retained earnings.

Sabas Company has 20,000 shares of $100 par,2% cumulative preferred stock and 100,000 shares of $50 par common stock.The following amounts were distributed as dividends: Determine the dividends per share for preferred and common stock for the second year.

A large public corporation normally uses registrars and transfer agents to maintain records of the stockholders.