1.

(TCO E) A primary source of stockholders' equity is (Points : 4)

income retained by the corporation. appropriated retained earnings. contributions by stockholders. both income retained by the corporation and contributions by stockholders.

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MultipleChoice

2. (TCO E) Which of the following represents the total number of shares that a corporation may issue

under the terms of its charter?

(Points : 4)

Authorized shares Issued shares Unissued shares Outstanding shares

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3. (TCO E) Norton Company issues 4,000 shares of its $5 par value common stock having a market

value of $25 per share, and 6,000 shares of its $15 par value preferred stock having a market value of $20 per share, all for a lump sum of $192,000. What amount of the proceeds should be allocated to the preferred stock? (Points : 4) (4,000 $25) + (6,000 $20) = $220,000 ($120,000 $220,000) $192,000 = $104,727.

$172,000 $120,000 $104,727 $90,000

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MultipleChoice

4. (TCO F) Colson Inc. declared a $160,000 cash dividend. It currently has 6,000 shares of 7%, $100 par

value cumulative preferred stock outstanding. It is 1 year in arrears on its preferred stock. How much cash will Colson distribute to the common stockholders?

6,000 x 7% x 100 = $42,000 owed to preferred shareholders each year. 160,000 - 42,000 preferred dividends in arrears - 42,000 preferred current dividends =

A. $76,000.
(Points : 4)

$76,000. $84,000. $118,000. None

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5. (TCO F) Written, Inc. has 300,000 outstanding shares of $2 par common stock and 60,000 shares of

no-par 8% preferred stock with a stated value of $5. The preferred stock is cumulative and nonparticipating. Dividends have been paid in every year except the past 2 years and the current year. Assuming that $63,000 will be distributed as a dividend in the current year, how much will the preferred stockholders receive? (Points : 4) $21,000 $24,000 $48,000 $63,000