Answered: 1. ABC Company buys 1000 shares of ABC…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. ABC Company buys 1000 shares of ABC stock for $50/share. How does this affect the accounting equation?

Group of answer choices

Owner's equity decreases by 50,000.

Assets do not change.

Assets increase by 50,000.

Owner's equity decreases by 1000.

2. ABC Company has the following:

Preferred stock, 5%, noncumulative, $100 par, 100,000 shares issued and outstanding 10,000,000

If ABC pays dividends this year, how much will it pay as total dividends for its preferred stock?

Group of answer choices

100

500,000

100,000

3. ABC Company has 100,000 shares of $5 par value stock issued and outstanding. It declares a 15% stock dividend when the stock is worth $100/share. How will retained earnings change as a result of the stock dividend?

Group of answer choices

1,500,000 increase

75,000 decrease

15,000 decrease

1,500,000 decrease

4. ABC Company has 100,000 shares of $5 par value stock issued and outstanding. It declares a 30% stock dividend when the stock is worth $100/share. How will retained earnings change as a result of the stock dividend?

Group of answer choices

30,000 decrease

3,000,000 decrease

150,000 increase

150,000 decrease

5. ABC Company has 100,000 shares of $5 par value stock issued and outstanding. It declares a 2:1 stock split when the stock is worth $100/share. By what amount will retained earnings change?

Group of answer choices

10,000,000 decrease

100,000 increase

100,000 decrease

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