Glow Corporation has 50,000 shares of preferred shares outstanding, with annual

Question

Glow Corporation has 50,000 shares of preferred shares outstanding, with annual dividends paid at the rate of $1.50 per share. Glow also has 100,000 shares of common shares outstanding. If Glow declares a $250,000 dividend in 2013, each outstanding share of common shares would receive OA. $1.75 OC. $2.50 OD. $1.50 Assets received in exchange for the issuance of stock should be recorded at: 0 A. historical cost less accumulated amortization taken to date 0 B. book value prior to the issuance OC. historical cost D. fair market value as determined by a good-faith estimate from independent appraisers Assets received in exchange for the issuance of stock should be recorded at: A. historical cost less accumulated amortization taken to date O B. book value prior to the issuance OC. historical cost 0 D. fair market value as determined by a good-faith estimate from independent appraisers Share capital is also known as 0 A, common shareholders' equity OB, total shareholders' equity OC. retained earnings OD, contributed capital Which of the following statements regarding stock splits is incorrect? 0 A. A stock split increases total owners' equity O B. A stock split decreases the market price of the shares ° C. A stock split involves a reduction in the share's issue value 0 D. A stock split is an increase in the number of authorized, issued, and outstanding shares

Explanation / Answer

Q - 1) ........SELECT ....OPTION - A $ 1.75

Total dividend declared = 250000 and out of this 50000 * 1.50 = 75000 shall go to preferred stock. So remaining 175000 for 100000 shares = 1.75 per share

Q-2) ....... SELECT ...OPTION - D  

Fair market value of an independent appriasor should be the basis of such assets. Otherwise we can also take the fair value of stock issued.

Q - 3) ........Repetition of Q - 2

Q - 4) ..........SELECT ..... OPTION - A

Q - 5) ........ SELECT ..... OPTION - A

There will be no change in the owners equity due to stock split.

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