Accounting: R Co. has outstanding 100 million shares

Subject: Business / Accounting
Question
1. R Co. has outstanding 100 million shares, $1 par common shares, selling for $8 per share. After a 1 for 4 reverse stock split:

a) R would have 25 million shares, $4 par per share

b) The market price per share would be about $2

c) Fractional shares would be issued

d) None of the above

2. F Co. declares a 5% stock dividend. If the market price at declaration is $12 per share, a shareholder with 110 shares likely would receive:

a) 5 additional shares

b) fractional share rights for 5 ½ shares

c) 5 additional shares and $6 in cash

d) none of the above

3. When a company issues a stock dividend which of the following would be affected?

a) Earnings per share

b) Total assets

c) Total liabilities

d) None of the above

4. Stock splits are issued primarily to:

a) Increase the number of outstanding shares

b) Increase the number of authorized shares

c) Increase legal capital

d) none of the above

5. The declaration and issuance of a dividend on shares of common stock:

a) Has no effect on assets, liabilities, or total shareholders’ equity

b) Decreases total shareholders’ equity and increases common stock

c) Decreases assets and decreases total shareholders’ equity

d) None of the above

6. B Corporation has 20,000 shares of $10 par common stock outstanding and 10,000 shares of $100 par, 6% cumulative, nonparticipating preferred stock outstanding. Dividends have not been paid for the past two years. This year, a $300,000 dividend will be paid. What are the dividends per share payable to preferred and common, respectively?

a) $6; $12

b) $18; $6

c) $6; $6

d) None of the above

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