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Exam 11: Proprietorships, Partnerships, and Corporations

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Question 41

Multiple Choice

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Flagler Corporation shows a total of $660,000 in its Common Stock account and $1,600,000 in its Paid-in Capital Excess account. The par value of Flagler's common stock is $8. How many shares of Flagler stock have been issued?

A) 117,500
B) 200,000
C) 82,500
D) The number of shares cannot be determined using the information provided.

E) A) and D)
F) B) and C)

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Question 42

Multiple Choice

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Which of the following best describes how each share of par value stock issued is reported in the Common Stock account?

A) Current market value
B) Average issue price
C) Par or stated value
D) Lower of cost or market

E) A) and D)
F) All of the above

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Question 43

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Ogilvie Corporation issued 12,000 shares of no-par stock for $40 per share. Ogilvie was authorized to issue 35,000 shares. What effect will this event have on the company's financial statements?

Which of the following statements is a reason why a company would buy treasury stock?

Which of the following would not be a reason to expect an increase in the market price of the stock of Carlyle Corporation?

A corporation must record a liability for cash dividends on the date of record.

On January 1, Year 1, the organizers of Fredonia Corporation obtained their charter authorizing 400,000 shares of $2 par common stock. Fredonia issued 30,000 shares of $2 par common stock for $8 per share. During Year 1, the corporation earned $820,000 in cash revenue and paid $700,000 in cash expenses, not including income tax. The company declared and paid cash dividends totaling $28,000. Fredonia Corporation is in the 30% tax bracket. Required: Using the above information, prepare an income statement and a balance sheet for the Fredonia Corporation.

In which section of the balance sheet would Treasury Stock be reported?

Voiles Company reissued 200 shares of its treasury stock. The treasury stock originally cost $25 per share and was reissued for $35 per share. Select the answer that accurately reflects how the reissue of the treasury stock would affect Voiles financial statements.

Indicate how each event affects thefinancial statements. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA.You do not need to enter dollar amounts Miller Co. declared and distributed a stock dividend.

Identify the primary characteristics of sole proprietorships, partnerships and corporations.

Garber Corporation had 40,000 shares of $10 par common stock outstanding on January 1, Year 2. On June 1, Year 2, Garber purchased 5,000 shares of its own stock on the open market for $22 per share and held it as treasury stock. On October 1, Year 2, Garber declared and issued a 10% stock dividend. The market value of Garber's stock was $24 per share on October 1, Year 2. Garber's board of directors declared and paid a cash dividend of $57,750 on December 15, Year 2. Required: a)What was the cash dividend per share that was paid on December 15?

What is meant by "cumulative dividends"?

Discuss some of the information items normally included in a corporation's articles of incorporation.

On December 15, Year 1, Binghamton Corporation established a retained earnings appropriation of $20,000 for future expansion. The balance of the retained earnings account prior to the transaction was $60,000. At December 31, Year 1, Binghamton had 2,000 shares of $10 par common stock (issued at par)outstanding. The corporate charter indicates 20,000 shares of common stock are authorized and there is no treasury stock. Required: a)Indicate the effect of the appropriation on the financial statements. b)Prepare the Stockholders' Equity section of the Binghamton Corporation's Balance sheet of December 31, Year 1.

Will the number of shares of stock issued and the number of shares of stock outstanding always be the same? Why or why not?

The Rubble-Flintstone Company was started on January 1, Year 1 as a partnership. The initial investments from the two partners were $50,000 from Rubble and $30,000 from Flintstone. During Year 1, Rubble-Flintstone Company earned $70,000 in cash revenue, paid $42,000 in cash expenses and the partners withdrew $5,000 each for their personal use. The partnership agreement calls for equal sharing of net income or loss.Required: Using only the above information, prepare an income statement, a capital statement, and a balance sheet for the Rubble-Flintstone Company.

What is the importance of the date of record for a corporation that has declared dividends?

A corporation might buy some of its own stock to help keep the market price from falling.

Which of the following statements about types of business entities is true?