Reference no: EM13356667

Multiple choice question based on stock valuation.

1. Carter Corporation had net income of $250,000 and paid dividends of $50,000 to common stockholders and $20,000 to preferred stockholders in 2008. Carter Corporation's common stockholders' equity at the beginning and end of 2008 was $870,000 and $1,130,000, respectively. There are 100,000 weighted-average shares of common stock outstanding.

Carter Corporation's return on common stockholders' equity was

 a. 25%.

 b. 23%.

 c. 20%.

 d. 18%.

 

2. Rancho Corporation sold 100 shares of treasury stock for $40 per share. The cost for the shares was $30. The entry to record the sale will include a

 a. credit to Gain on Sale of Treasury Stock for $3,000.

 b. credit to Paid-in Capital from Treasury Stock for $1,000.

 c. debit to Paid-in Capital in Excess of Par Value for $1,000.

 d. credit to Treasury Stock for $4,000.

 

3. If Kiner Company issues 1,000 shares of $5 par value common stock for $70,000, the account

 a. Common Stock will be credited for $5,000.

 b. Paid-in Capital in Excess of Par Value will be credited for $5,000.

 c. Paid-in Capital in Excess of Par Value will be credited for $70,000.

 d. Cash will be debited for $65,000.