ch 18 quizch 18 quizThe following partial information is taken from the comparative balance sheet of Levi Corporation:1.How many of Levi's common shares were outstanding on 12/31/2012?A.14 million.B.9 million.C.5 million.D.None of the above is correct.2.What was the average price (rounded to the nearest dollar) of the additional shares issued by Levi in 2013?A.$5 per share.B.$26 per share.C.$39 per share.D.Cannot be determined from the given information.3.What was the average price of the additional treasury shares purchased by Levi during 2013?A.$11 per share.B.$12 per share.C.$12.50 per share.D.None of the above is correct.4.What was the amount of net income earned by Levi during 2013?A.$0.B.$40 million.C.$62 million.D.Cannot be determined from the given information.5.Roberto Corporation was organized on January 1, 2013. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2013, Roberto had the following transactions relating to shareholders' equity:Issued 10,000 shares of common stock at $7 per share.Issued 20,000 shares of common stock at $8 per share.Reported a net income of $100,000.Paid dividends of $50,000.Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8).What is total shareholders' equity at the end of 2013?A.$270,000.B.$300,000.C.$250,000.D.$200,000.6.The changes in account balances for Elder Company for 2013 are as follows:Assuming the only changes in retained earnings in 2013 were for net income and a $50,000 dividend, what was net income for 2013?A.$40,000.B.$60,000.C.$70,000.D.$90,000.As of December 31, 2013, Warner Corporation reported the following:During 2014, half of the treasury stock was resold for $240,000; net income was $600,000; cash dividends declared were $1,500,000; and stock dividends declared were $500,000.7.What was shareholders' equity as of December 31, 2013?A.$7,020,000.B.$6,440,000.C.$6,420,000.D.$6,400,000.8.What would shareholders' equity be as of December 31, 2014?A.Amount is not shown.B.$5,760,000.C.$5,820,000.D.$6,760,000.9.The 2014 sale of half of the treasury stock would:A.Reduce income before tax by $60,000.B.Reduce retained earnings by $60,000.C.Increase total shareholders' equity by $300,000.D.Decrease retained earnings by $40,000.10.Common shareholders usually have all of the following rights except:A.To share in the profits.B.To share in assets upon liquidation.C.To elect a board of directors.D.To participate in the day-to-day operations.11.Share issue costs refer to the costs of obtaining the legal, promotional, and accounting services necessary to effect the sale of shares. The costs reduce the net cash proceeds from selling the shares and thus paid-in capitalexcess of par, and are:A.Not recorded separately.B.Recorded as an asset.C.Recorded as a liability.D.Amortized over time.12.When stock is issued in exchange for property, the best evidence of fair value might be any of the following except:A.The appraised value of the property received.B.The selling price of the stock in a recent transaction.C.The price of the stock quoted on the stock exchange.D.The average book value of outstanding stock.13.The shareholders' equity of Green Corporation includes $200,000 of $1 par common stock and $400,000 par value of 6% cumulative preferred stock. The board of directors of Green declared cash dividends of $50,000 in 2013 after paying $20,000 cash dividends in each of 2012 and 2011. What is the amount of dividends common shareholders will receive in 2013?A.$18,000.B.$26,000.C.$28,000.D.$32,000.ch 18 quiz KeyThe following partial information is taken from the comparative balance sheet of Levi Corporation:Spiceland - Chapter 181.How many of Levi's common shares were outstanding on 12/31/2012?A.14 million.B.9 million.C.5 million.D.None of the above is correct.5 million shares were outstanding at this date (9 million were issued, and 4 million shares were in the treasury).AACSB: AnalyticAICPA FN: MeasurementBlooms: AnalyzeDifficulty: 2 MediumLearning Objective: 18-05 Distinguish between accounting for retired shares and for treasury shares.Spiceland - Chapter 18 #23Topic: Treasury shares2.What was the average price (rounded to the nearest dollar) of the additional shares issued by Levi in 2013?A.$5 per share.B.$26 per share.C.$39 per share.D.Cannot be determined from the given information.AACSB: AnalyticAICPA FN: MeasurementBlooms: AnalyzeDifficulty: 2 MediumLearning Objective: 18-04 Record the issuance of shares when sold for cash and for noncash consideration.Spiceland - Chapter 18 #24Topic: Issuance of shares3.What was the average price of the additional treasury shares purchased by Levi during 2013?A.$11 per share.B.$12 per share.C.$12.50 per share.D.None of the above is correct.AACSB: AnalyticAICPA FN: MeasurementBlooms: AnalyzeDifficulty: 2 MediumLearning Objective: 18-05 Distinguish between accounting for retired shares and for treasury shares.Spiceland - Chapter 18 #25Topic: Treasury shares4.What was the amount of net income earned by Levi during 2013?A.$0.B.$40 million.C.$62 million.D.Cannot be determined from the given information.The increase in retained earnings is a composite of net income and changes due to dividends. You cannot determine the portion due to net income unless you have information about the dividends.AACSB: AnalyticAICPA FN: MeasurementBlooms: AnalyzeDifficulty: 2 MediumLearning Objective: 18-06 Describe retained earnings and distinguish it from paid-in capital.Spiceland - Chapter 18 #26Topic: Retained earnings5.Roberto Corporation was organized on January 1, 2013. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2013, Roberto had the following transactions relating to shareholders' equity:Issued 10,000 shares of common stock at $7 per share.Issued 20,000 shares of common stock at $8 per share.Reported a net income of $100,000.Paid dividends of $50,000.Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8).What is total shareholders' equity at the end of 2013?A.$270,000.B.$300,000.C.$250,000.D.$200,000.AACSB: AnalyticAICPA FN: MeasurementBlooms: ApplyDifficulty: 2 MediumLearning Objective: 18-01 Describe the components of shareholders equity and explain how they are reported in a statement of shareholders equity.Learning Objective: 18-04 Record the issuance of shares when sold for cash and for noncash consideration.Learning Objective: 18-05 Distinguish between accounting for retired shares and for treasury shares.Learning Objective: 18-06 Describe retained earnings and distinguish it from paid-in capital.Spiceland - Chapter 18 #27Topic: Components of shareholders equityTopic: Issuance of sharesTopic: Retained earningsTopic: Treasury shares6.The changes in account balances for Elder Company for 2013 are as follows:Assuming the only changes in retained earnings in 2013 were for net income and a $50,000 dividend, what was net income for 2013?A.$40,000.B.$60,000.C.$70,000.D.$90,000.AACSB: AnalyticAICPA FN: MeasurementBlooms: AnalyzeDifficulty: 3 HardLearning Objective: 18-01 Describe the components of shareholders equity and explain how they are reported in a statement of shareholders equity.Spiceland - Chapter 18 #29Topic: Components of shareholders equityAs of December 31, 2013, Warner Corporation reported the following:During 2014, half of the treasury stock was resold for $240,000; net income was $600,000; cash dividends declared were $1,500,000; and stock dividends declared were $500,000.Spiceland - Chapter 187.What was shareholders' equity as of December 31, 2013?A.$7,020,000.B.$6,440,000.C.$6,420,000.D.$6,400,000.AACSB: AnalyticAICPA FN: MeasurementBlooms: AnalyzeDifficulty: 2 MediumLearning Objective: 18-01 Describe the components of shareholders equity and explain how they are reported in a statement of shareholders equity.Spiceland - Chapter 18 #31Topic: Components of shareholders equity8.What would shareholders' equity be as of December 31, 2014?A.Amount is not shown.B.$5,760,000.C.$5,820,000.D.$6,760,000.AACSB: AnalyticAICPA FN: MeasurementBlooms: AnalyzeDifficulty: 3 HardLearning Objective: 18-01 Describe the components of shareholders equity and explain how they are reported in a statement of shareholders equity.Learning Objective: 18-05 Distinguish between accounting for retired shares and for treasury shares.Learning Objective: 18-06 Describe retained earnings and distinguish it from paid-in capital.Learning Objective: 18-07 Explain the basis of corporate dividends; including the similarities and differences between cash and property dividends.Learning Objective: 18-08 Explain stock dividends and stock splits and how we account for them.Spiceland - Chapter 18 #32Topic: Cash and property dividendsTopic: Components of shareholders equityTopic: Retained earningsTopic: Stock dividends and stock splitsTopic: Treasury shares9.The 2014 sale of half of the treasury stock would:A.Reduce income before tax by $60,000.B.Reduce retained earnings by $60,000.C.Increase total shareholders' equity by $300,000.D.Decrease retained earnings by $40,000.AACSB: AnalyticAICPA FN: MeasurementBlooms: AnalyzeDifficulty: 3 HardLearning Objective: 18-05 Distinguish between accounting for retired shares and for treasury shares.Spiceland - Chapter 18 #33Topic: Treasury shares10.Common shareholders usually have all of the following rights except:A.To share in the profits.B.To share in assets upon liquidation.C.To elect a board of directors.D.To participate in the day-to-day operations.AACSB: Reflective ThinkingAICPA BB: LegalBlooms: RememberDifficulty: 1 EasyLearning Objective: 18-03 Understand the corporate form of organization and the nature of stock.Spiceland - Chapter 18 #42Topic: Distinguishing classes of shares11.Share issue costs refer to the costs of obtaining the legal, promotional, and accounting services necessary to effect the sale of shares. The costs reduce the net cash proceeds from selling the shares and thus paid-in capitalexcess of par, and are:A.Not recorded separately.B.Recorded as an asset.C.Recorded as a liability.D.Amortized over time.AACSB: Reflective ThinkingAICPA FN: MeasurementBlooms: RememberDifficulty: 2 MediumLearning Objective: 18-04 Record the issuance of shares when sold for cash and for noncash consideration.Spiceland - Chapter 18 #48Topic: Issuance of shares12.When stock is issued in exchange for property, the best evidence of fair value might be any of the following except:A.The appraised value of the property received.B.The selling price of the stock in a recent transaction.C.The price of the stock quoted on the stock exchange.D.The average book value of outstanding stock.AACSB: Reflective ThinkingAICPA FN: MeasurementBlooms: UnderstandDifficulty: 1 EasyLearning Objective: 18-04 Record the issuance of shares when sold for cash and for noncash consideration.Spiceland - Chapter 18 #49Topic: Issuance of shares13.The shareholders' equity of Green Corporation includes $200,000 of $1 par common stock and $400,000 par value of 6% cumulative preferred stock. The board of directors of Green declared cash dividends of $50,000 in 2013 after paying $20,000 cash dividends in each of 2012 and 2011. What is the amount of dividends common shareholders will receive in 2013?A.$18,000.B.$26,000.C.$28,000.D.$32,000.Green's common shareholders will receive dividends of $18,000 as a result of the 2013 distribution.* $24,000 current preference (6% x $400,000), thus $4,000 dividends in arrears.** $24,000 current preference (6% x $400,000), thus another $4,000 dividends in arrears.*** $8,000 dividends in arrears plus the $24,000 current preference.AACSB: AnalyticAICPA FN: MeasurementBlooms: AnalyzeDifficulty: 2 MediumLearning Objective: 18-03 Understand the corporate form of organization and the nature of stock.Spiceland - Chapter 18 #55Topic: Distinguishing classes of sharesch 18 quiz SummaryCategory#ofQuestionsAACSB:Analytic10AACSB:ReflectiveThinking3AICPABB:Legal1AICPAFN:Measurement12Blooms:Analyze9Blooms:Apply1Blooms:Remember2Blooms:Understand1Difficulty:1Easy2Difficulty:2Medium8Difficulty:3Hard3LearningObjective:18-01Describethecomponentsofshareholdersequityandexplainhowtheyarereportedinastatementofshareholdersequity.1LearningObjective:18-01Describethecomponentsofshareholdersequityandexplainhowtheyarereportedinastatementofshareholdersequity.1LearningObjective:18-01Describethecomponentsofshareholdersequityandexplainhowtheyarereportedinastatementofshareholdersequity.2LearningObjective:18-03Understandthecorporateformoforganizationandthenatureofstock.2LearningObjective:18-04Recordtheissuanceofshareswhensoldforcashandfornoncashconsideration.4LearningObjective:18-05Distinguishbetweenaccountingforretiredsharesandfortreasuryshares.5LearningObjective:18-06Describeretainedearningsanddistinguishitfrompaid-incapital.3LearningObjective:18-07Explainthebasisofcorporatedividends;includingthesimilaritiesanddifferencesbetweencashandpropertydividends.1LearningObjective:18-08Explainstockdividendsandstocksplitsandhowweaccountforthem.1Spiceland-Chapter1815Topic:Cashandpropertydividends1Topic:Componentsofshareholdersequity1Topic:Componentsofshareholdersequity1Topic:Componentsofshareholdersequity2Topic:Distinguishingclassesofshares2Topic:Issuanceofshares4Topic:Retainedearnings3Topic:Stockdividendsandstocksplits1Topic:Treasuryshares5