25. The number of shares of stock owned by stockholders is referred to as the: A
ID: 2600649 • Letter: 2
Question
25. The number of shares of stock owned by stockholders is referred to as the: A. authorized shares. B. issued shares. C outstanding shares. D. treasury shares. 26, Hough Company issued 2,000 shares of its $5 par value common stock for $15 per share. The journal entry to record this stock issuance include a: A. credit to Common Stock for $10,000. B. debit to Additional Paid-in Capital for$20,000. C. credit to Common Stock for $30,000. D. debit to Cash for $10,000. E. credit to Additional Paid-in Capital for $10,000. 27. Par value of a stock refers to the: A. amount assigned to a share of stock in the corporate C. market value of the stock. D. maximum selling price of the stock. charter B. issue price of the stock. 28. OnMarch 4 Axel Company declared an SO 80 per share cash dividend The dividend will be paid on March 30. Axel has 100,000 shares authorized, 45,000 shares issued, and 3,000 shares of treasury stock. The journal entry to record the dividend declarnation on arch 4 will include a: A. debit to Dividends for $36,000 B. credit to Cash for $33,600. C. debit to Retained Earnings for $36,000. D. debit to Dividends for $33,600. E. credit to Dividends for $33,600. 29. Treasury stock is a(n): A. asset account. B. contra-asset account. C. liability account D. stockholders' equity account E. contra-equity account.Explanation / Answer
Answer to Question No. 25
Option C i.e. Outstanding Shares.
Outstanding Shares are the number of shares held by different kinds of shareholders.
Authorised shares are the number of shares which a company has been authorised to issued to different shareholders.
Issued Shares are the number of shares issued by the Corporation, whereas the Treasury shares are the number of shares bought back by the Company from the Issued shares. The Difference between the Issued Shares and Outstanding shares is usually due to Treasury Shares.
Answer to Question No. 26
Option A i.e. Credit to Common Stock for $10,000.
The Journal Entry to record the transaction is:
Cash (2,000 * $15) 30,000
Common Stock (2,000 * $5) 10,000
Additional Paid-in Capital (2,000 * $10) 20,000
The Difference between the Par Value and issue Price is credited to Additional Paid-in Capital.
Answer to Question No. 27
Option A i.e. Amount assigned to a share of Stock in the Corporate Charter.
Par Value is the amount assigned in the Charter for a share. Whereas, Issue Price is the price at which shares is issued, it could be less or equal or more than the Par Value.
Market Value of the Stock is the value of the Stock in the Market. Maximum Selling price of the stock is determined by the reputation of the Company in the market.
Answer to Question No. 28
Option D i.e. Debit to Dividends for $33,600.
The Dividend will be declared on the outstanding shares i.e. 42,000 shares (45,000 shares – 3,000 shares). Therefore, the Total Dividend declared will be $33,600 (42,000 * $0.80).
The Journal Entry to Record Dividend Declaration will be:
Dividend 33,600
Dividend Payable 33,600
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