Chapter 13 Corporations: Organization, Stock Transactions, and Dividends Student: _ Twenty percent of all businesses in the United States are corporations and they account for 80% of the total business dollars generated True False A corporation is a separate entity for accounting purposes but not for legal purposes True False The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested by the stockholder True False Under the Internal Revenue Code, corporations are required to pay federal income taxes True False Double taxation is a disadvantage of a corporation because the same party has to pay taxes twice on the income True False The initial owners of stock of a newly formed corporation are called directors True False While some businesses have been granted charters under state laws, most businesses receive their charters under federal laws True False Organizational expenses are classified as intangible assets on the balance sheet True False The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business True False 10 Retained earnings represents past net incomes less past dividends, therefore any balance in this account would be listed on the income statement True False 11 The balance in Retained Earnings at the end of the period is created by closing entries True False 12 The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends True False 13 A deficit in Retained Earnings is reported in the stockholders' equity section of the balance sheet True False 14 When no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds True False 15 The par value of common stock must always be equal to its market value on the date the stock is issued True False 16 For accounting purposes, stated value is treated the same way as par value True False 17 The issuance of common stock affects both paid-in capital and retained earnings True False 18 The main source of paid-in-capital is from issuing stock True False 19 The number of shares of outstanding stock is equal to the number of shares authorized minus the number of shares issued True False 20 The amount of capital paid in by the stockholders of the corporation is called legal capital True False 21 If the dividend amount of preferred stock, $50 par value, is quoted as 8%, then the dividends per share would be $4 True False 22 If 50,000 shares are authorized, 41,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 43,000 True False 23 Preferred stockholders must receive their current year dividends before the common stockholders can receive any dividends True False 24 If a corporation is liquidated, preferred stockholders are paid before the creditors and before the common stockholders True False 25 Paid-in capital may originate from real estate donated to the corporation True False 26 The par value of stock is an arbitrary per share amount defined in many states as legal capital True False 27 A large public corporation normally uses registrars and transfer agents to maintain records of the stockholders True False 28 When common stock is issued in exchange for land, the land should be recorded in the accounts at the par amount of the stock issued True False 29 When a corporation issues stock at a premium, it reports the premium as an other income item on the income statement True False 30 When no-par stock is issued, the Common Stock account is credited for the selling price of the stock issued True False 31 A large retained earnings account means that there is cash available to pay dividends True False 32 When the board of director's declares a cash or stock dividend, this action decreases retained earnings True False 33 If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend of $1 per share would amount to $15,000 True False 34 Cash dividends are normally paid on shares of treasury stock True False 35 The declaration of a cash dividend decreases a corporation's stockholders equity and decreases its assets True False 36 One of the prerequisites to paying a cash dividend is sufficient retained earnings True False 37 Cash dividends become a liability to a corporation on the date of record True False 38 The declaration and issuance of a stock dividend does not affect the total amount of a corporation's assets, liabilities, or stockholders' equity True False 39 The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities True False 40 Before a stock dividend can be declared or paid, there must be sufficient cash True False 41 The day on which the board of directors of the corporation distributes a dividend is called the declaration date True False 42 The stock dividends distributable account is listed in the current liability section of the balance sheet True False 43 A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made True False 44 The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial statements True False 45 A restriction/appropriation of retained earnings establishes cash assets that are set aside for a specific purpose True False 46 A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease True False 47 The cost method of accounting for the purchase and sale of treasury stock is a commonly used method True False 48 Under the cost method, when treasury stock is purchased by the corporation, the par value and the price at which the stock was originally issued are important True False 49 If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported in the income statement True False 50 A sale of treasury stock may result in a decrease in paid-in-capital All decreases should be charged to the Paid-In-Capital from Sale of Treasury account True False 51 Treasury Stock is listed in the stockholders' equity section on the balance sheet True False 52 The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders’ equity True False 53 The retained earnings statement may be combined with the income statement True False 54 If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in-capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit), the total stockholders' equity is $880,000 True False 55 A corporation has 10,000 shares of $100 par value stock outstanding If the corporation issues a 5-for-1 stock split, the number of shares outstanding after the split will be 40,000 True False 56 The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares True False 57 The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split True False 58 A corporation has 12,000 shares of $20 par value stock outstanding that has a current market value of $150 If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately $50 True False 59 A stock split results in a transfer at market value from retained earnings to paid-in capital True False 60 If a company has preferred stock, the preferred stock dividend is added to net income when computing earnings per common share True False 61 Which of the following is not characteristic of a corporation? A The financial loss that a stockholder may suffer from owning stock in a public company is limited B Cash dividends paid by a corporation are deductible as expenses by the corporation C A corporation can own property in its name D Corporations are required to file federal income tax returns 62 Characteristics of a corporation include A shareholders who are mutual agents B direct management by the shareholders (owners) C its inability to own property D shareholders who have limited liability 63 One of the main disadvantages of the corporate form is the A professional management B double taxation of dividends C charter D corporation must issue stock 64 A disadvantage of the corporate form of business entity is A mutual agency for stockholders B unlimited liability for stockholders C corporations are subject to more governmental regulations D the ease of transfer of ownership 65 Under the corporate form of business organization A ownership rights are easily transferred B a stockholder is personally liable for the debts of the corporation C stockholders’ acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation D stockholders wishing to sell their corporation shares must get the approval of other stockholders 66 Those most responsible for the major policy decisions of a corporation are the A management B board of directors C employees D stockholders 67 Which one of the following would not be considered an advantage of the corporate form of organization? A Government regulation B Separate legal existence C Continuous life D Limited liability of stockholders 68 Which of the following is not true of a corporation? A It may enter into binding legal contracts in its own name B It may sue and be sued C The acts of its owners bind the corporation D It may buy, own, and sell property 69 The ability of a corporation to obtain capital is A less than a partnership B about the same as a partnership C restricted because of the limited life of the corporation D enhanced because of limited liability and ease of share transferability 70 Which of the following statements concerning taxation is accurate? A Corporations pay federal income taxes but not state income taxes B Corporations pay federal and state income taxes C Only the owners must pay taxes on corporate income D Corporations pay income taxes but their owners not 71 The term deficit is used to refer to a debit balance in which of the following accounts of a corporation? A Retained Earnings B Treasury Stock C Organizational Expenses D Common Stock 72 Stockholders' equity A is usually equal to cash on hand B includes paid-in capital and liabilities C includes retained earnings and paid-in capital D is shown on the income statement 73 The state charter allows a corporation to issue only a certain number of shares of each class of stock This amount of stock is called A treasury stock B issued stock C outstanding stock D authorized stock 74 Which of the following is not a right possessed by common stockholders of a corporation? A the right to vote in the election of the board of directors B the right to receive a minimum amount of dividends C the right to sell their stock to anyone they choose D the right to share in assets upon liquidation 75 The charter of a corporation provides for the issuance of 100,000 shares of common stock Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired What is the number of shares outstanding? A 10,000 B 40,000 C 30,000 D 50,000 76 The par value per share of common stock represents A the minimum selling price of the stock established by the articles of incorporation B the minimum amount the stockholder will receive when the corporation is liquidated C an arbitrary amount established in the articles of incorporation D the amount of dividends per share to be received each year 77 A corporation issues 2,500 shares of common stock for $ 45,000 The stock has a stated value of $10 per share The journal entry to record the stock issuance would include a credit to Common Stock for A $25,000 B $45,000 C $20,000 D $ 5,000 78 The excess of issue price over par of common stock is termed a(n) A discount B income C deficit D premium 168 On February 13, Epperson Company issue for cash 75,000 shares of no-par common stock (with a stated value of $125) at $140 On September 9, Epperson issued at par 15,000 share of 1%, $60 par preferred stock at par for cash On November 23, Epperson issued for cash 8,000 shares of 1%, $60 par preferred stock at $70 Required: Journalize the entries to record the February 13, September and November 23 transactions Feb 13 Cash 10,5 (75,0 00,0 00 00 shares ´ $140) Com9,375,000 mon Stoc k Paid 1,125,000 -In Capi tal in Exc ess of Stat ed Valu e [75,000 shares ´ ($140-125)] Sept Cash 900, 000 Pref 900,000 erre d Stoc k (15,000 shares ´ $60) Nov 23 Cash 560, 000 Pref 480,000 erre d Stoc k Paid 80,000 -In Capi tal in Exc ess of Par [8,000 shares ´ ($70-60)] 169 Solar Company has 600,000 shares of $75 par common stock outstanding On February 13, Solar declared a 3% stock dividend to be issued on April 30 to stockholders of record on March 14 The market price of the stock was $90 per share on February 13 Required: Journalize the entries required on February 13, March 14, and April 30 Feb 13 Stoc 1,620,000 k Divi dend s (600 ,000 ´ 3% ´ $90) Stock Dividends Distributable (18,000 ´ $75) Paid-In Capital in Excess of Par— Common Stock ($1,620,000 – $1,350,000) Mar 14 No entr y requ ired Apr 30 Stoc 1,350,000 k Divi dend s Dist ribut able Common Stock 1,350,000 270,000 1,350,000 170 On February 1, Marine Company reacquired 7,500 shares of its common stock at $30 per share On March 15, Marine sold 4,500 of the reacquired shares at $34 per share On June 2, Marine sold the remaining shares at $28 per share Required: Journalize the transaction of February 1, March 15, and June Feb Mar June 15 Treas 225,000 ury Stock (7,50 0´ $30) Cash Cash 153,000 (4,50 0´ $34) Treasury Stock (4,500 ´ $30) Paid-In Capital from Sale of Treasury Stock [4,500 ´ ($34 – $30)] Cash 84,000 (3,00 0´ $28) Paid-I n Capit al from Sale of Treas 6,000 ury Stock [3,00 0´ ($30 – $28)] Treasury Stock (3,000 ´ $30) 225,000 135,000 18,000 90,000 171 The following transactions took place for the XYZ Corporation; a November 12th - Declared a total cash dividend of $45,000 for stockholders of record November 20th payable on December 1st Record the journal entry, if necessary, for the following events; Nov 12 Nov 20 Dec b Briefly describe the significance of November 20th a Nov 12 Cash Dividends Cash Dividends Payable 45,000 45,000 Nov 20 - no journal entry Dec Cash Dividends Payable 45,000 Cash 45,000 b The stock must be owned on or before November 20 in order to receive this dividend 172 A company had the following stockholders equity information available at year end - issued 11,000 shares of $2.00 par value common stock for $12.00 per share - issued 5,000 shares of $50 par value 6% preferred stock for $70 per share - purchased 1,000 shares of previously issued common stock for $15.00 per share -reported net income of $200,000 - declared and paid the preferred stock dividend Calculate the earnings per share for the current year ($200,000 - $15,000)/10,000 common shares = $18.50 EPS 173 On January 1, 2011 a company had the following data: - issued 10,000 shares of $2.00 par value common stock for $12.00 per share - issued 3,000 shares of $50 par value 6% cumulative preferred stock for $70 per share - purchased 1,000 shares of previously issued common stock for $15.00 per share The company had the following dividend information available: 2011 - No dividend paid 2012 - Paid a $2,000 total dividend 2013 - Paid a $17,000 total dividend 2014 - paid a $32,000 total dividend Using the following format, fill in the correct values for each year; 2011 2012 Common stock dividend Preferred stock dividend Dividends in arrears 2011 Common stock dividend` Preferred stock dividend Dividends in arrears 2013 2012 None None $9,000 2014 2013 None $2,000 $16,000 2014 None $15,000 $17,000 $17,000 $8,000 None 174 A corporation was organized on January of the current year, with an authorization of 20,000 shares of $4 preferred stock, $12 par, and 100,000 shares of $3 par common stock The following selected transactions were completed during the first year of operations: Jan 31 Issued 15,000 shares of common stock at $23 per share for cash Issued 200 shares of common stock to an attorney in payment of legal fees for organizing the corporation The value of the stock at the time of payment was $25 per share Feb 24 Issued 20,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $65,000 $120,000, and $45,000 respectively Mar 15 Issued 2,000 shares of preferred stock at $56 for cash Required: Journalize the transactions Jan 31 Feb 24 Mar 15 Cash Common Stock Paid-In Capital in Excess of Par - Common Stock 345,000 Organizational Expense Common Stock Paid-In Capital in Excess of Par - Common Stock 5,000 Land Buildings Equipment Common Stock Paid-In Capital in Excess of Par-Common Stock 65,000 120,000 45,000 Cash Preferred Stock Paid-In Capital in Excess of Par-Preferred Stock 112,000 45,000 300,000 600 4,400 60,000 170,000 24,000 88,000 175 Prepare entries to record the following: (a) (b) (c) (d) Issued 1,000 shares of $15 par common stock at $54 for cash Issued 1,400 shares of no-par common stock in exchange for equipment with a fair market price of $24,000 Purchased 100 shares of treasury stock at $26 Sold 100 shares of treasury stock purchased in (c) at $29 (a) Cash Common Stock ($15 par) Paid-In Capital in Excess of Par - Common Stock 54,000 15,000 39,000 (b) Equipment Common Stock (no-par) 24,000 (c) Treasury Stock Cash 2,600 (d) Cash Treasury Stock Paid-In Capital from Sale of Treasury Stock 24,000 2,600 2,900 2,600 300 176 On April 10, Maranda Corporation issued for cash 11,000 shares of no-par common stock at $25 On May 5, Maranda issued at par 1,000 shares of 4%, $50 par preferred stock for cash On May 25, Maranda issued for cash 15,000 shares of 4%, $50 par preferred stock at $55 Journalize the entries to record the April 10, May 5, and May 25 transactions April 10 May May 25 Cash Common Stock (11,000 ´ $25) 275,000 Cash Preferred Stock (1,000 ´ $50) 50,000 Cash Preferred Stock Paid-in Capital in Excess of Par [15,000 ´ ($55 - 50)] 825,000 275,000 50,000 750,000 75,000 177 Prepare entries to record the following: (a) (b) (c) (d) Issued 1,000 shares of $10 par common stock at $56 for cash Issued 1,400 shares of common stock in exchange for equipment with a fair market price of $21,000 Purchased 100 shares of treasury stock at $25 Sold 100 shares of treasury stock at $30 (a) Cash Common Stock Paid-In Capital in Excess of Par - Common Stock (b) Equipment Common Stock Paid-in Capital - Common Stock (c) Treasury Stock Cash (d) Cash Treasury Stock Paid-In Capital from Sale of Treasury Stock 56,000 10,000 46,000 21,000 14,000 7,000 2,500 2,500 3,000 2,500 500 178 Prepare entries to record the following: (a) (b) (c) (d) Issued 1,000 shares of $10 par common stock at $59 for cash Issued 1,400 shares of common stock in exchange for equipment with a fair market price of $60,000 Purchased 100 shares of treasury stock at $32 Sold 100 shares of treasury stock at $42 (a) Cash Common Stock Paid-In Capital in Excess of Par - Common Stock (b) Equipment Common Stock Paid-in Capital in excess of Par - Common Stock (c) Treasury Stock Cash (d) Cash Treasury Stock Paid-In Capital from Sale of Treasury Stock 59,000 10,000 49,000 60,000 14,000 46,000 3,200 3,200 4,200 3,200 1,000 179 Wonder Sales is authorized to issue 100,000 shares of $100 par, 2% preferred stock and 1,000,000 shares of $10 par common stock (a) On January 2nd, Wonder Sales issues 5,000 shares of preferred stock for $110 per share and 65,000 shares of common stock at $10 per share Journalize this issuance (b) On January 25th, Wonder Sales issued 250 shares of preferred stock to a Morton Law Firm for settlement of an invoice for incorporation services The invoice was for $36,000 Journalize this issuance (c) On January 31st, Wonder Sales issues 500 shares of common stock to Setup Inc for fixtures The fixtures have a fair market value of $8,500 Journalize this issuance (a) Jan 2nd Cash 1,200,000 Preferre d Stock Paid-in Capital in Excess of Par P/S Commo n Stock (b) Jan 25th Organiz 36,000 ational Expense Preferre d Stock Paid-in Capital in Excess of Par P/S (c) Jan 31st Fixtures 8,500 Commo n Stock Paid-in Capital in Excess of Par C/S 0, 0 0, 0 0, 0 5, 0 1, 0 5, 0 3, 0 180 Carmen Company a publicly traded company with preferred and common stock issued As of January 1st, it had 50,000 shares of $100 par, 2% preferred stock outstanding and 250,000 shares of $10 par common stock outstanding (a) On January 31st, the Board of Directors issues a requirement to purchase 5,000 shares of its common stock at market price The shares are purchased at a market price of $22 per share Journalize the purchase utilizing the cost concept (b) On March 15th, Carmen declares a dividend on preferred stock of $2.75 per share The date of record is March 25th and the date of payment is March 31st Journalize these events (c) On December 1st, Carmen declares a cash dividend on common stock of $0.12 per share The date of record is December 15th and the date of payment is December 21st Journalize these events (d) On December 27th the board orders that 2,500 shares of treasury stock be sold The sale price is $25 per share Journalize this event (a) Jan 31st Treasury Stock - C/S Cash 110,000 (b) Mar 15th Cash Dividends - P/S Cash Dividends Payable 137,500 110,000 137,500 Mar 25th - date of record - no journal entry - “ownership day” Mar 31st Cash Dividends Payable Cash (c) Dec 1st Cash Dividends - C/S Cash Dividends Payable 137,500 137,500 29,400 29,400 Note: While there are 250,000 shares of common stock issued, only 245,000 are outstanding due to the 5,000 shares of C/S held in treasury Dec 15th - date of record - no journal entry - “ownership day” Dec 21st Cash Dividends Payable Cash (d) Dec 27th Cash Treasury Stock - C/S Paid-in Capital - T/S 29,400 29,400 62,500 55,000 (2,500 ´ $22) 7,500 (2,500 ´ $3) 181 A company has 10,000 shares of $10 par common stock outstanding Prepare entries to record the following: (a) (b) (c) (d) Purchased 1,000 shares of treasury stock at $12 The treasury stock is accounted for by the cost method Sold 500 shares of treasury stock at $15 Purchased equipment for $75,000, paying $25,000 in cash and issuing 4,000 shares of common stock for the remaining Sold 500 shares of treasury stock at $11 (a) Treasury Stock Cash 12,000 12,000 (b) Cash Paid-In Capital from Sale of Treasury Stock [500 sh ´ ($15 -12)] Treasury Stock (500 sh ´ $12) 7,500 1,500 6,000 (c) Equipment Cash Common Stock Paid-In Capital in Excess of Par - Common Stock (d) Cash Paid-In Capital from Sale of Treasury Stock Treasury Stock 75,000 25,000 40,000 10,000 5,500 500 6,000 182 A company has 10,000 shares of $10 par common stock outstanding Prepare entries to record the following: (a) (b) (c) (d) Purchased 1,500 shares of treasury stock at $16 The treasury stock is accounted for by the cost method Sold 1,000 shares of treasury stock at $19 Purchased equipment for $80,000, paying $25,000 in cash and issuing 4,000 shares of common stock for the remaining Sold 500 shares of treasury stock at $14 (a) Treasury Stock Cash (b) Cash Paid-In Capital from Sale of Treasury Stock Treasury Stock 24,000 24,000 19,000 3,000 16,000 (c) Equipment Cash Common Stock Paid-In Capital in Excess of Par - Common Stock (d) Cash Paid-in Capital from Sale of Treasury Stock Treasury Stock 80,000 25,000 40,000 15,000 7,000 1,000 8,000 183 Journalize the following selected transactions completed during the current fiscal year: Jan 22 The board of directors declared a stock split which reduced the par of common shares from $100 to $20 This action increased the number of outstanding shares to 400,000 Declared a dividend of $1.75 per share on the outstanding shares of common stock Feb Paid the dividend declared on January 22 Sep Declared a 5% stock dividend on the common stock outstanding (the fair market value of the stock to be issued is $30) Oct Issued the certificates for the common stock dividend declared on September Jan No entry required 22 Feb Sep Oct Cash Dividends Cash Dividends Payable 700,000 Cash Dividends Payable Cash 700,000 Stock Dividends Stock Dividends Distributable Paid-In Capital in Excess of Par-Common Stock 600,000 Stock Dividends Distributable Common Stock 400,000 700,000 700,000 400,000 200,000 400,000 184 Prepare entries to record the following selected transactions completed during the current fiscal year: Feb 11 May 15 The board of directors declared a stock split which reduced the par of common shares from $100 to $20 This action increased the number of outstanding shares to 500,000 Purchased 25,000 shares of own stock at $44, recording the treasury stock at cost Declared a dividend of $2.50 per share on the outstanding shares of common stock Paid the dividend declared on May Oct 19 Declared a 2% stock dividend on the common stock outstanding (the fair market value of the stock to be issued is $55) Nov 12 Issued the certificates for the common stock dividend declared on October 19 Feb No entry required 11 May 15 Oct 19 Nov 12 Treasury Stock Cash 1,100,000 Cash Dividends Cash Dividends Payable 1,187,500 Cash Dividends Payable Cash 1,187,500 Stock Dividends Stock Dividends Distributable Paid-In Capital in Excess of Par-Common Stock 522,500 Stock Dividends Distributable Common Stock 190,000 1,100,000 1,187,500 1,187,500 190,000 332,500 190,000 185 At December 31st, the Jeter Company had the following ending balances; Retained Earnings - $100,000 Preferred Stock ($100 par, 7% cumulative, 10,000 authorized, 5,000 issued and outstanding) - 500,000 Treasury stock - $35,000 Additional paid in capital - common stock - 400,000 Additional paid in capital - preferred stock - 50,000 Common stock ($5.00 par value, 100,000 shares authorized, 60,000 issued) - 300,000 Prepare the stockholders equity section of the balance sheet in good form with all of the required disclosures Stockholder’s Equity Preferred stock - $100 par, 7% cumulative, 10,000 authorized, 5,000 issued $500,000 Additional paid in capital - preferred 50,000 Common stock - $5.00 par, 100,000 authorized, 60,000 issued 300,000 Additional paid in capital -common 400,000 Total paid in capital $1,250,000 Retained earnings 100,000 Treasury stock (35,000) Total Stockholders Equity $ 1,315,000 186 The Torre Company has the following balances in stockholders equity on December 31st Common Stock - $5.00 par, 60,000 issued $300,000 Additional paid in capital - common 600,000 Preferred stock - $100 par, 5,000 issued 500,000 Additional paid in capital - preferred 100,000 Retained earnings 200,000 Treasury stock (cost - $12.00 per share) 60,000 Answer the following questions: How many shares of treasury stock are owned? What was the average market price per share at which common stock was issued? What was the average market price per share at which preferred stock was issued? What is the total value of the Paid in Capital portion of stockholders equity? What is the total value of stockholders equity? How many shares of common stock are outstanding? If net income for the year was $75,000 and a preferred stock dividend of $20,000 was paid, what was the beginning value of retained earnings? How much is earnings per share for the year? 5,000 shares ($60,000 / $12) $15.00 per share ($900,000 / 60,000) $120.00 per share ($600,000 / 5,000) $1,500,000 paid in capital ($300,000 + $600,000 + $500,000 + $100,000) $1,640,000 total stockholders equity ($1,500,000 + $200,000 - $60,000) 55,000 shares of common stock outstanding (60,000 - 5,000 shares of treasury stock) $145,000 beginning retained earnings ($200,000 + $20,000 - $75,000) ($75,000 - $20,000) / 55,000 = $1.00 earnings per share ... accurate? A Corporations pay federal income taxes but not state income taxes B Corporations pay federal and state income taxes C Only the owners must pay taxes on corporate income D Corporations. .. agency for stockholders B unlimited liability for stockholders C corporations are subject to more governmental regulations D the ease of transfer of ownership 65 Under the corporate form of business... number of factors Which statement below is not one of those factors? A the financial condition, earnings record, and dividend record of the corporation B investor expectations of the corporation's