6. Hasbrooke Corporation has 50,000 shares of $1 par value commonstock and 20,000 shares of cumulative 8%, $100 par preferred stockoutstanding. Hasbrooke has not paid a dividend for the prior year.If Hasbrooke declares a $1.50 per share dividend this year, whatwill be the total amount they must pay their shareholders?
A) $30,000
B) $320,000
C) $395,000
D) $75,000
7. Retained earnings represents:
A) Cash available for dividends.
B) The amount initially invested in the business bystockholders.
C) Cash available for expansion and growth.
D) Income that has been reinvested in the business rather thandistributed as dividends to stockholders.
8. On January 1,2006, Lane Corporation had 50,000 shares of $5 par value commonstock outstanding. On March 31, 2006, Lane issued an additional8,000 shares in exchange for a building. What number of shares willbe used in the computation of basic EPS for the year 2006?
A) 50,000.
B) 58,000.
C) 56,000.
D) 52,000.
9. Mirage Corporation's financial statements for the current yearinclude the following:
Income from continuingoperations...............................................................
$620,000
Prior period adjustment (increase in prior year net
income, net oftaxes)......................................................................
190,000
Cash dividends paid to preferredstockholders............................................................
202,000
Gain on sale of discontinued operations (net oftaxes)......................................................................
410,000
Operating loss on discontinued operations (net of taxes)
net income, net of taxbenefit)...................................................................
320,000
Extraordinary loss (net of taxbenefit)...................................................................
95,000
On the basis of this information, net income for the current yearis:
A) $1,007,000.
B) $ 620,000.
C) $1,445,000.
D) $ 615,000.
10. During the year 2007,Moonglow Corporation suffered a $600,000 loss when its factory wasdestroyed in a flood. Assuming the corporate income tax rate is34%, what amount will Moonglow report as an extraordinary loss onits income statement for 2007? Assume floods are not common in thisarea.
A) $600,000
B) $396,000
C) $204,000.
D) Nothing, since this does not qualify as an extraordinaryitem.
11. Galaxy Corporation was organized on January 1 and issued 500,000shares of common stock on that date. On July 1, an additional200,000 shares were issued for cash. Net income for the year was$2,160,000. Net earnings per share amounted to:
A) $4.32.
B) $3.75.
C) $3.09.
D) $3.60.
18. Kims Corporation plansto invest $100 million to earn about 20% before income taxes. Thecompany is considering whether it should raise the $100 million byissuing 10% bonds payable or capital stock. If the company issuesthe bonds, it will probably report:
A) Lower net income and lower income taxes expense than if itissues capital stock.
B) Higher net income and higher income taxes expensethan if it issues capital stock.
C) Lower net income and higher income taxes expensethan if it issues capital stock.
D) Higher net income and lower income taxes expense than if itissues capital stock.
19. The amortization of a bonddiscount:
A) Decreases the carrying value of a bond and increases interestexpense.
B) Decreases the carrying value of a bond and decreasesinterest expense.
C) Increases the carrying value of a bond and increasesinterest expense.
D) Increases the carrying value of abond and decreases interest expense.
6. Hasbrooke Corporation has 50,000 shares of $1 par value commonstock and 20,000 shares of cumulative 8%, $100 par preferred stockoutstanding. Hasbrooke has not paid a dividend for the prior year.If Hasbrooke declares a $1.50 per share dividend this year, whatwill be the total amount they must pay their shareholders?
A) $30,000
B) $320,000
C) $395,000
D) $75,000
7. Retained earnings represents:
A) Cash available for dividends.
B) The amount initially invested in the business bystockholders.
C) Cash available for expansion and growth.
D) Income that has been reinvested in the business rather thandistributed as dividends to stockholders.
8. On January 1,2006, Lane Corporation had 50,000 shares of $5 par value commonstock outstanding. On March 31, 2006, Lane issued an additional8,000 shares in exchange for a building. What number of shares willbe used in the computation of basic EPS for the year 2006?
A) 50,000.
B) 58,000.
C) 56,000.
D) 52,000.
9. Mirage Corporation's financial statements for the current yearinclude the following:
Income from continuingoperations............................................................... | $620,000 |
Prior period adjustment (increase in prior year net | 190,000 |
Cash dividends paid to preferredstockholders............................................................ | 202,000 |
Gain on sale of discontinued operations (net oftaxes)...................................................................... | 410,000 |
Operating loss on discontinued operations (net of taxes) | 320,000 |
Extraordinary loss (net of taxbenefit)................................................................... | 95,000 |
On the basis of this information, net income for the current yearis:
A) $1,007,000.
B) $ 620,000.
C) $1,445,000.
D) $ 615,000.
10. During the year 2007,Moonglow Corporation suffered a $600,000 loss when its factory wasdestroyed in a flood. Assuming the corporate income tax rate is34%, what amount will Moonglow report as an extraordinary loss onits income statement for 2007? Assume floods are not common in thisarea.
A) $600,000
B) $396,000
C) $204,000.
D) Nothing, since this does not qualify as an extraordinaryitem.
11. Galaxy Corporation was organized on January 1 and issued 500,000shares of common stock on that date. On July 1, an additional200,000 shares were issued for cash. Net income for the year was$2,160,000. Net earnings per share amounted to:
A) $4.32.
B) $3.75.
C) $3.09.
D) $3.60.
18. Kims Corporation plansto invest $100 million to earn about 20% before income taxes. Thecompany is considering whether it should raise the $100 million byissuing 10% bonds payable or capital stock. If the company issuesthe bonds, it will probably report:
A) Lower net income and lower income taxes expense than if itissues capital stock.
B) Higher net income and higher income taxes expensethan if it issues capital stock.
C) Lower net income and higher income taxes expensethan if it issues capital stock.
D) Higher net income and lower income taxes expense than if itissues capital stock.
19. The amortization of a bonddiscount:
A) Decreases the carrying value of a bond and increases interestexpense.
B) Decreases the carrying value of a bond and decreasesinterest expense.
C) Increases the carrying value of a bond and increasesinterest expense.
D) Increases the carrying value of abond and decreases interest expense.
Related questions
Omit all general journal entryexplanations.
Ensure to include correct dollar signs, underlines &double underlines.
Question 1:
On December 31, 2014, Frick Incorporated, had the followingbalances (all balances are normal):
Accounts | Amount |
Preferred Stock, ($100 par value, 5% noncumulative,50,000 shares authorized, 10,000 shares issued andoutstanding) | $1,000,000 |
Common Stock ($10 par value, 200,000 shares authorized,100,000 shares issued and outstanding) | $1,000,000 |
Paid-in Capital in Excess of par, Common | 150,000 |
Retained Earnings | 700,000 |
The following events occurred during 2014 and were notrecorded:
a. On January 1, Frick declared a 5% stock dividend on its commonstock when the market value of the common stock was $15 per share.Stock dividends were distributed on January 31 to shareholders asof January 25.
b. On February 15, Frick reacquired 1,000 shares of common stockfor $20 each.
c. On March 31, Frick reissued 250 shares of treasury stock for $25each.
d. On July 1, Frick reissued 500 shares of treasury stock for $16each.
e. On October 1, Frick declared full year dividends for preferredstock and $1.50 cash dividends for outstanding shares and paidshareholders on October 15.
f. One December 15, Frick split common stock 2 shares for 1.
g. Net Income for 2014 was $275,000.
Requirements:
a. Prepare journal entries for the transactionslisted above.
b. Prepare a Stockholders' section of aclassified balance sheet as of December 31, 2014.
