Question 1
Post Company issues 10,000 shares of $5 par value common stock for $20 a share. The accounting entry for this transaction would be:
Debit cash -$200,000 and credit Common Stock – $200,000.
Debit cash -$50,000 and credit Common Stock – $50,000.
Debit cash -$200,000, debit Additional Paid in Capital – $50,000 and credit Common Stock – $200,000,
Debit cash -$200,000 and credit Common Stock – $50,000, credit Additional Paid in Capital – $150,000.
Question 2
Dividends become a liability of the corporation:
On the date the board of directors declares the dividend.
On the date of record.
On the date payment is made.
When preferred dividends have not been paid.
Question 3
XYZ Company has 100,000 shares of stock outstanding. On January 1, 200X XYZ Company declared a cash dividend of .50 per share to be paid on January 31. On January 1 XYZ Company will make the following journal entry:
Debit cash $50,000 and credit dividends payable $50,000.
Debit dividends declared $50,000 and credit dividends payable $50,000.
Credit cash $50,000and debit dividends declared $50,000.
No entry is made until January 31.
Question 4
Which of the following will result when a dividend is paid?
A credit to dividends payable.
A debit to dividends payable.
A debit to capital.
A credit to capital.
Question 5
In its most basic form, the Earnings per Share (EPS) ratio is calculated as:
Dividends paid on common stock divided by the average number of shares outstanding of common stock.
Net income divided by the average number of shares outstanding of common stock.
Net income divided by average stockholder s equity.
Sales divided by average stockholder s equity