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Multiple choice

1. The journal entry to record issuance of 1,000 shares of $2 par common stock for $40 per share would be

a. cash 2,000
common stock 2,000

b. cash 40,000
Common Stock 2,000
Paid-in capital in excess of par 38,000

c. Cash 40,000
common stock 40,000

d. cash 40,000
Common stock 10,000
Gain on sale of stock 30,000

2. Paula Corporation had net income of $365,000, paid its required preferred dividend of $17,500, and had no other stock transactions during the year. If the average number of common shares outstanding during the year is 69,500, the earnings per share is:

a. $5.50
b. $10.00
c. $5.25
d. $5.00

3. On March 1, 20x9, Joshua Company had 100,000 shares of its $100 par value common stock issued and 45,000 shares outstanding. On March 12, the company declared a 20% stock dividend to be distributed on March 31. On October 1, the Company declared a 3-for-1 stock split. How many shares of common stock were outstanding at December 31, 20x9:

a. $300,000
b. $195,000
c. $162,000
d. $360,000

Solution Preview

1. b. cash 40,000
Common Stock 2,000
Paid-in capital in excess of par 38,000

The par value is $2 so common ...

Solution Summary

The solution explains some multiple choice questions relating to stock transactions

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