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Exam 11: Proprietorships, Partnerships, and Corporations

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Question 61

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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 Taylor Bennett began his sole proprietorship by contributing $25,000 of his own money to the business.

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Question 62

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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 Jim Caldwell and Pam Ennis, both CPAs, began their new partnership by each contributing $50,000 to their business.

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Question 63

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Garber Corporation had 20,000 shares of $12 par value common stock outstanding and declared a four-for-one stock split. How many new shares of stock would then be outstanding and what would be the par value of the new stock?

During Year 1, Hollowell Corporation and Chester Corporation reported net incomes of $260,000 and $480,000 respectively. Both companies had 200,000 shares of common stock issued and outstanding. At December 31, Year 1, the market price per share of Hollowell's stock was $39 and Chester's stock was $36. Required: a)Calculate the price-earnings ratio for:1)Hollowell2)Chesterb)Based on the price-earnings ratios computed in part (a), which company do investors believe has more potential for future income growth? Explain your answer.

On January 2, Year 1, Torres Corporation issued 20,000 shares of $10 par-value common stock for $11 per share. Which of the following statements is true?

The following items appeared on the financial statements of Monroe, Incorporation on December 31, Year 1:. _____ a)Retained earnings increases by $224,000 as a result of the stock dividend. _____ b)The balance in the common stock account increases by $64,000 as a result of the stock dividend. _____ c)Total paid-in capital will be $2,224,000 after the stock dividend had been distributed. _____ d)Total stockholders' equity is not affected by the dividend. _____ e)Cash flows from financing activities increases by $224,000 as a result of the stock dividend.

Which of the following is a contra equity account?

Blair Scott started a sole proprietorship by depositing $75,000 cash in a business checking account. During the accounting period, the business borrowed $30,000 from a bank, earned $18,000 of net income, and Scott withdrew $12,000 cash from the business. Based on this information, what is the balance in Scott's capital account at the end of the accounting period?

On January 1, Year 1, Charlotte Curtis started Curtis Company as a sole proprietorship with an initial investment of $80,000. During Year 1, the business earned $60,000 in cash revenue and paid $45,000 in cash expenses. During Year 1, Ms. Curtis withdrew $7,000 for her personal use.Required: Using the above information, prepare an income statement, a capital statement, and a balance sheet for the Curtis Company.

How does the payment of a previously declared cash dividend affect the financial statements?

Kellogg, Incorporated purchased 200 shares of its own $20 par value stock for $30 cash per share. Which of the following answers reflects how this purchase of treasury stock would affect Kellogg's financial statements?

Which of the following statements about why companies choose not to pay cash dividends is (are) true?

A sole proprietorship was formed on January 1, Year 1, when it received $90,000 cash from Kaitlyn Conrad, the owner. During Year 1, the business earned $138,000 in cash revenues and paid $102,400 in cash expenses. Conrad withdrew $16,000 in cash during the year.Required: Prepare an income statement, capital statement, and balance sheet.

Preferred stockholders generally have no voting rights in a corporation.

Which of the following statements about par value is true?

The number of shares of stock outstanding generally is greater than the number of shares of stock issued.

In a closely held corporation, exchanges of stock are limited to transactions between individuals.

Why might a board of directors appropriate an amount of retained earnings?

During the year, Todd Corporation issued 200 shares of $20 par value common stock for $50 a share. A total of 500 shares were authorized. In addition, the company purchased 75 shares of treasury stock at $44 a share. Which of the following best presents the related lines in the stockholders' equity section of the company's balance sheet?

A separate capital account is maintained for each partner in a partnership.