ch 18 quizch18quiz

ThefollowingpartialinformationistakenfromthecomparativebalancesheetofLeviCorporation:

1.

2.

HowmanyofLevi'scommonshareswereoutstandingon12/31/2012?

A.
14million.
B.
9million.
C.
5million.
D. Noneoftheaboveiscorrect.
Whatwastheaverageprice(roundedtothenearestdollar)oftheadditionalsharesissuedbyLeviin
2013?

A.
$5pershare.
B.
$26pershare.
C.
$39pershare.
D. Cannotbedeterminedfromthegiveninformation.

3.

WhatwastheaveragepriceoftheadditionaltreasurysharespurchasedbyLeviduring2013?

A. $11pershare.
B. $12pershare.
C. $12.50pershare.
D. Noneoftheaboveiscorrect.

4.

WhatwastheamountofnetincomeearnedbyLeviduring2013?

A.
$0.
B.
$40million.

C.
$62million.
D. Cannotbedeterminedfromthegiveninformation.

5.

RobertoCorporationwasorganizedonJanuary1,2013.Thefirmwasauthorizedtoissue100,000share
of$5parcommonstock.During2013,Robertohadthefollowingtransactionsrelatingtoshareholders'
equity:
Issued10,000sharesofcommonstockat$7pershare.
Issued20,000sharesofcommonstockat$8pershare.
Reportedanetincomeof$100,000.
Paiddividendsof$50,000.
Purchased3,000sharesoftreasurystockat$10(partofthe20,000sharesissuedat$8).
Whatistotalshareholders'equityattheendof2013?

A. $270,000.
B. $300,000.
C. $250,000.
D. $200,000.

6.

ThechangesinaccountbalancesforElderCompanyfor2013areasfollows:

Assumingtheonlychangesinretainedearningsin2013werefornetincomeanda$50,000dividend,
whatwasnetincomefor2013?

A. $40,000.
B. $60,000.
C. $70,000.
D. $90,000.

AsofDecember31,2013,WarnerCorporationreportedthefollowing:

During2014,halfofthetreasurystockwasresoldfor$240,000;netincomewas$600,000;cash
dividendsdeclaredwere$1,500,000;andstockdividendsdeclaredwere$500,000.

7.

Whatwasshareholders'equityasofDecember31,2013?

A. $7,020,000.
B. $6,440,000.
C. $6,420,000.
D. $6,400,000.

8.

9.

Whatwouldshareholders'equitybeasofDecember31,2014?

A Amountis
. notshown.
B. $5,760,000.
C. $5,820,000.
D. $6,760,000.
The2014saleofhalfofthetreasurystockwould:

A. Reduceincomebeforetaxby$60,000.
B. Reduceretainedearningsby$60,000.
C.Increasetotalshareholders'equityby
$300,000.
D. Decreaseretainedearningsby$40,000.

10. Commonshareholdersusuallyhaveallofthefollowingrightsexcept:

A. Toshareintheprofits.
B. Toshareinassetsuponliquidation.
C. Toelectaboardofdirectors.
D. Toparticipateinthedaytodayoperations.

11. Shareissuecostsrefertothecostsofobtainingthelegal,promotional,andaccountingservicesnecessary
toeffectthesaleofshares.Thecostsreducethenetcashproceedsfromsellingthesharesandthuspaid
incapitalexcessofpar,andare:

A.Notrecorded
separately.
B. Recordedasanasset.
C. Recordedasa
liability.
D. Amortizedovertime.

12. Whenstockisissuedinexchangeforproperty,thebestevidenceoffairvaluemightbeanyofthe
followingexcept:

A. Theappraisedvalueofthepropertyreceived.

B.Thesellingpriceofthestockinarecent
transaction.
C.Thepriceofthestockquotedonthestock
exchange.
D. Theaveragebookvalueofoutstandingstock.

13. Theshareholders'equityofGreenCorporationincludes$200,000of$1parcommonstockand$400,000
parvalueof6%cumulativepreferredstock.TheboardofdirectorsofGreendeclaredcashdividendsof
$50,000in2013afterpaying$20,000cashdividendsineachof2012and2011.Whatistheamountof
dividendscommonshareholderswillreceivein2013?

A. $18,000.
B. $26,000.
C. $28,000.
D. $32,000.

ch18quizKey

ThefollowingpartialinformationistakenfromthecomparativebalancesheetofLeviCorporation:

SpicelandChapter1

1.

HowmanyofLevi'scommonshareswereoutstandingon12/31/2012?

A.
14million.
B.
9million.
5million.
C.
D. Noneoftheaboveiscorrect.

5millionshareswereoutstandingatthisdate(9millionwereissued,and4millionshareswereinthe
treasury).

AACSB:Analyt
AICPAFN:Measureme
Blooms:Analy
Difficulty:2Mediu
LearningObjective:1805Distinguishbetweenaccountingforretiredsharesandfortreasuryshare
SpicelandChapter18#2
Topic:Treasuryshar

2.

Whatwastheaverageprice(roundedtothenearestdollar)oftheadditionalsharesissuedbyLeviin
2013?

A.
$5pershare.
$26pershare.
B.
C.
$39pershare.
D. Cannotbedeterminedfromthegiveninformation.

AACSB:Analyt
AICPAFN:Measureme
Blooms:Analy
Difficulty:2Mediu
LearningObjective:1804Recordtheissuanceofshareswhensoldforcashandfornoncashconsideratio
SpicelandChapter18#2
Topic:Issuanceofshar

3.

WhatwastheaveragepriceoftheadditionaltreasurysharespurchasedbyLeviduring2013?

A. $11pershare.
B.
$12pershare.
C. $12.50pershare.
D. Noneoftheaboveiscorrect.

AACSB:Analyt
AICPAFN:Measureme
Blooms:Analy
Difficulty:2Mediu
LearningObjective:1805Distinguishbetweenaccountingforretiredsharesandfortreasuryshare

SpicelandChapter18#2
Topic:Treasuryshar

4.

WhatwastheamountofnetincomeearnedbyLeviduring2013?

A.
$0.
B.
$40million.
C.
$62million.
D. Cannotbedeterminedfromthegiveninformation.
Theincreaseinretainedearningsisacompositeofnetincomeandchangesduetodividends.You
cannotdeterminetheportionduetonetincomeunlessyouhaveinformationaboutthedividends.

AACSB:Analyt
AICPAFN:Measureme
Blooms:Analy
Difficulty:2Mediu
LearningObjective:1806Describeretainedearningsanddistinguishitfrompaidincapita
SpicelandChapter18#2
Topic:Retainedearnin

5.

RobertoCorporationwasorganizedonJanuary1,2013.Thefirmwasauthorizedtoissue100,000
sharesof$5parcommonstock.During2013,Robertohadthefollowingtransactionsrelatingto
shareholders'equity:
Issued10,000sharesofcommonstockat$7pershare.
Issued20,000sharesofcommonstockat$8pershare.
Reportedanetincomeof$100,000.
Paiddividendsof$50,000.
Purchased3,000sharesoftreasurystockat$10(partofthe20,000sharesissuedat$8).
Whatistotalshareholders'equityattheendof2013?

A. $270,000.
B. $300,000.
C. $250,000.
D. $200,000.

AACSB:Analyt
AICPAFN:Measureme

Blooms:App
Difficulty:2Mediu
LearningObjective:1801Describethecomponentsofshareholdersequityandexplainhowtheyarereportedinastatementofshareholdersequi
LearningObjective:1804Recordtheissuanceofshareswhensoldforcashandfornoncashconsideratio
LearningObjective:1805Distinguishbetweenaccountingforretiredsharesandfortreasuryshare
LearningObjective:1806Describeretainedearningsanddistinguishitfrompaidincapita
SpicelandChapter18#2
Topic:Componentsofshareholdersequi
Topic:Issuanceofshar
Topic:Retainedearnin
Topic:Treasuryshar

6.

ThechangesinaccountbalancesforElderCompanyfor2013areasfollows:

Assumingtheonlychangesinretainedearningsin2013werefornetincomeanda$50,000dividend
whatwasnetincomefor2013?

A. $40,000.
B. $60,000.
C. $70,000.
D. $90,000.

AACSB:Analyt
AICPAFN:Measureme
Blooms:Analy
Difficulty:3Ha
LearningObjective:1801Describethecomponentsofshareholdersequityandexplainhowtheyarereportedinastatementofshareholdersequi
SpicelandChapter18#2
Topic:Componentsofshareholdersequi

AsofDecember31,2013,WarnerCorporationreportedthefollowing:

During2014,halfofthetreasurystockwasresoldfor$240,000;netincomewas$600,000;cash
dividendsdeclaredwere$1,500,000;andstockdividendsdeclaredwere$500,000.

SpicelandChapter1

7.

Whatwasshareholders'equityasofDecember31,2013?

A. $7,020,000.
B. $6,440,000.
C. $6,420,000.
D. $6,400,000.

AACSB:Analyt
AICPAFN:Measureme
Blooms:Analy
Difficulty:2Mediu
LearningObjective:1801Describethecomponentsofshareholdersequityandexplainhowtheyarereportedinastatementofshareholdersequi
SpicelandChapter18#3
Topic:Componentsofshareholdersequi

8.

Whatwouldshareholders'equitybeasofDecember31,2014?

A Amountis
. notshown.
B. $5,760,000.
C. $5,820,000.
D. $6,760,000.

AACSB:Analyt
AICPAFN:Measureme
Blooms:Analy
Difficulty:3Ha
LearningObjective:1801Describethecomponentsofshareholdersequityandexplainhowtheyarereportedinastatementofshareholdersequi
LearningObjective:1805Distinguishbetweenaccountingforretiredsharesandfortreasuryshare
LearningObjective:1806Describeretainedearningsanddistinguishitfrompaidincapita
LearningObjective:1807Explainthebasisofcorporatedividends;includingthesimilaritiesanddifferencesbetweencashandpropertydividend
LearningObjective:1808Explainstockdividendsandstocksplitsandhowweaccountforthem
SpicelandChapter18#3
Topic:Cashandpropertydividen
Topic:Componentsofshareholdersequi
Topic:Retainedearnin
Topic:Stockdividendsandstockspl
Topic:Treasuryshar

9.

The2014saleofhalfofthetreasurystockwould:

A. Reduceincomebeforetaxby$60,000.
B. Reduceretainedearningsby$60,000.
C.Increasetotalshareholders'equityby
$300,000.
D. Decreaseretainedearningsby$40,000.

AACSB:Analyt
AICPAFN:Measureme
Blooms:Analy
Difficulty:3Ha
LearningObjective:1805Distinguishbetweenaccountingforretiredsharesandfortreasuryshare
SpicelandChapter18#3
Topic:Treasuryshar

10.

Commonshareholdersusuallyhaveallofthefollowingrightsexcept:

A. Toshareintheprofits.
B. Toshareinassetsuponliquidation.
C. Toelectaboardofdirectors.

D. Toparticipateinthedaytodayoperations.

AACSB:ReflectiveThinkin
AICPABB:Leg
Blooms:Rememb
Difficulty:1Ea
LearningObjective:1803Understandthecorporateformoforganizationandthenatureofstoc
SpicelandChapter18#4
Topic:Distinguishingclassesofshar

11.

Shareissuecostsrefertothecostsofobtainingthelegal,promotional,andaccountingservices
necessarytoeffectthesaleofshares.Thecostsreducethenetcashproceedsfromsellingtheshares
andthuspaidincapitalexcessofpar,andare:

A. Notrecorded
separately.
B. Recordedasanasset.
C. Recordedasa
liability.
D. Amortizedovertime.

AACSB:ReflectiveThinkin
AICPAFN:Measureme
Blooms:Rememb
Difficulty:2Mediu
LearningObjective:1804Recordtheissuanceofshareswhensoldforcashandfornoncashconsideratio
SpicelandChapter18#4
Topic:Issuanceofshar

12.

Whenstockisissuedinexchangeforproperty,thebestevidenceoffairvaluemightbeanyofthe
followingexcept:

A. Theappraisedvalueofthepropertyreceived.
B. Thesellingpriceofthestockinarecent
transaction.
C. Thepriceofthestockquotedonthestock
exchange.
D. Theaveragebookvalueofoutstandingstock.

AACSB:ReflectiveThinkin
AICPAFN:Measureme
Blooms:Understan
Difficulty:1Ea
LearningObjective:1804Recordtheissuanceofshareswhensoldforcashandfornoncashconsideratio
SpicelandChapter18#4
Topic:Issuanceofshar

13.

Theshareholders'equityofGreenCorporationincludes$200,000of$1parcommonstockand
$400,000parvalueof6%cumulativepreferredstock.TheboardofdirectorsofGreendeclaredcash
dividendsof$50,000in2013afterpaying$20,000cashdividendsineachof2012and2011.Whatis
theamountofdividendscommonshareholderswillreceivein2013?

A. $18,000.

B. $26,000.
C. $28,000.
D. $32,000.
Green'scommonshareholderswillreceivedividendsof$18,000asaresultofthe2013distribution.

*$24,000currentpreference(6%x$400,000),thus$4,000dividendsinarrears.
**$24,000currentpreference(6%x$400,000),thusanother$4,000dividendsinarrears.
***$8,000dividendsinarrearsplusthe$24,000currentpreference.

AACSB:Analyti
AICPAFN:Measuremen
Blooms:Analyz
Difficulty:2Medium
LearningObjective:1803Understandthecorporateformoforganizationandthenatureofstock
SpicelandChapter18#5
Topic:Distinguishingclassesofshare

ch18quizSummary

Category

#ofQuestio
s
AACSB:Analytic
10
AACSB:ReflectiveThinking
3
AICPABB:Legal
1
AICPAFN:Measurement
12
Blooms:Analyze
9
Blooms:Apply
1
Blooms:Remember
2
Blooms:Understand
1
Difficulty:1Easy
2
Difficulty:2Medium
8
Difficulty:3Hard
3
LearningObjective:1801Describethecomponentsofshareholdersequityandexplainhowtheyarereportedinastatementofshar
1
eholdersequity.
LearningObjective:1801Describethecomponentsofshareholdersequityandexplainhowtheyarereportedinastatementofshar
1
eholdersequity.
LearningObjective:1801Describethecomponentsofshareholdersequityandexplainhowtheyarereportedinastatementofshar
2
eholdersequity.
LearningObjective:1803Understandthecorporateformoforganizationandthenatureofstock.
2
LearningObjective:1804Recordtheissuanceofshareswhensoldforcashandfornoncashconsideration.
4
LearningObjective:1805Distinguishbetweenaccountingforretiredsharesandfortreasuryshares.
5
LearningObjective:1806Describeretainedearningsanddistinguishitfrompaidincapital.
3
LearningObjective:1807Explainthebasisofcorporatedividends;includingthesimilaritiesanddifferencesbetweencashandpro
1
pertydividends.

LearningObjective:1808Explainstockdividendsandstocksplitsandhowweaccountforthem.
SpicelandChapter18
Topic:Cashandpropertydividends
Topic:Componentsofshareholdersequity
Topic:Componentsofshareholdersequity
Topic:Componentsofshareholdersequity
Topic:Distinguishingclassesofshares
Topic:Issuanceofshares
Topic:Retainedearnings
Topic:Stockdividendsandstocksplits
Topic:Treasuryshares

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3
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