Indicate whether each of the following statements is true or false. 1. The corporation is an entity separate and distinct from its owners. 2. The liability of stockholders is normally limited to their investment in the corporation. 3. The relative lack of government regulation is an advantage of the corporate form of business. 4. There is no journal entry to record the authorization of capital stock. 5. No-par value stock is quite rare today. E11-15 On October 31, the stockholders’ equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000.
Indicate whether each of the following statements is true or false. 1.?The corporation is an entity separate and distinct from its owners.???2.?The liability of stockholders is normally limited to their investment in the corporation.???3.?The relative lack of government regulation is an advantage of the corporate form of business.???4.?There is no journal entry to record the authorization of capital stock.???5.?No-par value stock is quite rare today.??? E11-15????On October 31, the stockholders’ equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000. Omar is considering the following two courses of action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share. Complete the tabular summary of the effects of the alternative actions on the components of stockholders’ equity and outstanding shares. (If answer is zero, please enter 0. Do not leave any fields blank.) ?Before Action?After Stock Dividend?After Stock Split??Stockholders’ equity? ? ? ?? Paid-in capital? ? ? ?? Common Stock?$?$?$?? In excess of par value????? Total paid-in capital????? Retained earnings????? Total stockholders’ equity?$??$?? ? ? ? ??Outstanding shares????? E11-16????Before preparing financial statements for the current year, the chief accountant for Springer Company discovered the following errors in the accounts. The declaration and payment of $50,000 cash dividend was recorded as a debit to Interest Expense $50,000 and a credit to Cash $50,000. A 10% stock dividend (1,000 shares) was declared on the $10 par value stock when the market value per share was $16. The only entry made was: Retained Earnings (Dr.) $10,000 and Dividend Payable (Cr.) $10,000. The shares have not been issued. A 4-for-1 stock split involving the issue of 400,000 shares of $5 par value common…
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