A. Decrease and increase
B. Decrease and no effect
C. Increase and decrease
D. Increase and no effect
12) In computations of weighted average of shares outstanding, when
a stock dividend or stock split occurs, the additional shares are
A. considered outstanding at the beginning of the year.
B. weighted by the number of days outstanding.
C. considered outstanding at the beginning of the earliest year report
ed.
D. weighted by the number of months outstanding.
13) On May 1, 2007, Kent Corp. declared and issued a 10% common
stock dividend. Prior to this dividend, Kent had 100,000 shares of $1
par value common stock issued and outstanding. The fair value of Ke
nt „s common stock was $20 per share on May 1, 2007. As a result of
this stock dividend, Kent‟s total stockholders‟ equity
A. decreased by $10,000.
B. increased by $200,000.
C. did NOT change.
D. decreased by $200,000.
14) Palmer Corp. owned 20,000 shares of Dixon Corp. purchased in 2
003 for $240,000. On December 15, 2006, Palmer declared a property
dividend of all of its Dixon Corp. shares on the basis of one share of
Dixon for every 10 shares of Palmer common stock held by its stockh
olders. The property dividend was distributed on January 15, 2007. O
n the declaration date, the aggregate market price of the Dixon shares
held by Palmer was $400,000. The entry to record the declaration of t
he dividend would include a debit to Retained Earnings of
A. $240,000.
B. $0.
C. $400,000.
D. $160,000.
15) At its date of incorporation, Wilson, Inc. issued 100,000 shares of
its $10 par common stock at $11 per share. During the current year,
Wilson acquired 20,000 shares of its common stock at a price of $16
per share and accounted for them by the cost method. Subsequently, t
hese shares were reissued at a price of $12 per share. There have been