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1. Rocky Mountain Ski Wear's balance sheet disclosed following stockholder's equity
Account balances at the end of 20X5:

Common stock $350,000
Retained earnings 180,000
Notes Payable 70,000
Contributed capital in excess of par: common 120,000
Contributed capital in excess of par: preferred 40,000
Preferred stock 90,000

Total amount invested by stockholders and corporation's total stockholders equity are:

  Invested by stockholders Total stockholders' equity
a $600,000 $780,000
b $670,000 $850,000
c $780,000 $780,000
d $440,000 $620,000
e None of the above.

2. Nancy's High Fashion, Inc., has 200,000 shares of $10 par value common stock and 2,000 shares of $100 par value preferred stock outstanding. Preferred stock is noncumulative and has call price of $110. Total stockholders' equity is $4 million. Book value per share of common stock is:

a. $17.80
b. $18.00
c. $20.00
d. $37.80
e. None of the above.

3. Mellon Corporation declared 10% stock dividend on its S1 par value common stock when there were 100,000 shares outstanding. Market value of stock on date of declaration was $4 per share. How does entry to record this declaration affect total stockholders' equity?

a. No effect.
b. $10,000 increase.
c. $10,000 decrease.
d. $40,000 decrease.
e. $40,000 increase.

4. Which of the given items would be accounted for as prior period adjustment?

a. Appropriation of retained earnings.
b. Correction of an error.
c. Reissuance of treasury stock at a price below cost.
d. Change in accounting principle.
e. Change in the estimated life of a plant asset.

5. Which of the given items may be considered the extraordinary item on income statement?

a. prepare-down of inventories because of obsolete items.
b. Gain on the disposal of a business segment.
c. Loss from an earthquake.
d. Gain on the sale of a building.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M921820

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