Accounting Chapter 11

For 2016, the Sacramento Corporation had beginning and ending Retained Earnings balances of $188,225 and $213,400 respectively. Also during 2016, the corporation declared and paid cash dividends of $26,200 and issued stock dividends valued at $16,000. Total expenses were $41,416. Based on this information, what was the amount of total revenue for 2016?

$108,791

At the end of the accounting period, Houston Company had $6,600 of par value common stock issued, additional paid in capital of $8,200, retained earnings of $7,500, and $4,250 of treasury stock. The total amount of stockholders' equity is:

$18,050.

Curtain Co. paid dividends of $10,000; $12,000; and $15,000 during 2014, 2015 and 2016, respectively. The company had 1,500 shares of 7.5%, $100 par value preferred stock outstanding that paid a cumulative dividend. The amount of dividends received by the common shareholders during 2016 would be:

$3,250.

Gilligan Corporation was established on February 15, 2014. Gilligan is authorized to issue 300,000 shares of $12 par value common stock. As of December 2013, Gilligan's stockholders' equity accounts report the following balances: Common stock, $12 per, 300,000 shares authorized, 30,000 shares issued and outstanding = $360,000 D Paid-in capital in excess of par - Common 60,000 D 360,000+60,000=420,000 Retained earnings 425,000 C Total stockholders' Equity $845,000 C At the end of 2016, Gilligan decides to issue a 5% stock dividend. At the time of issue, the market price of the stock was $20 per share Determine the dollar value of the stock dividend issued by Gilligan Corporation.

$30,000

If Longwood Industries had 20,000 shares of $20 par value common stock outstanding and declared a 5-for-1 stock split, how many shares would then be outstanding and what would be their par value after the split?

100,000 shares outstanding at $4 par

Gleason Corporation has authorized 40,000 shares of $10 par value common stock. The following events occurred during the year. 1. Issued 16,000 shares of the common stock for $12 per share. 2. Purchased back 2,000 shares of the common stock for $14 per share. 3. Reissued 600 of the 2,000 shares (from event 2) at a price of $15 per share. How many shares of common stock will Gleason Corporation show as issued and outstanding after these events are recorded?

16,000 shares issued; 14,600 shares outstanding

Flagler Corporation shows a total of $1,295,000 in its Common Stock account and $1,400,000 in its Paid-in Capital Excess account. The par value of Flagler's common stock is $7. How many shares of Flagler stock have been issued?

185,000.

Montana Company was authorized to issue 95,000 shares of common stock. The company had issued 36,000 shares of stock when it purchased 5,500 shares of treasury stock. The number of outstanding shares of common stock was:

30,500.

Gilligan Corporation was established on February 15, 2014. Gilligan is authorized to issue 300,000 shares of $12 par value common stock. As of December 2013, Gilligan's stockholders' equity accounts report the following balances: Common stock, $12 per, 300,000 shares authorized, 30,000 shares issued and outstanding = $360,000 D Paid-in capital in excess of par - Common 60,000 D 360,000+60,000=420,000 Retained earnings 425,000 C Total stockholders' Equity $845,000 C At the end of 2016, Gilligan decides to issue a 5% stock dividend. At the time of issue, the market price of the stock was $20 per share Calculate the number of shares outstanding after the stock dividend is issued.

31,500 shares

Blair Scott started a sole proprietorship by depositing $38,000 cash in a business checking account. During the accounting period the business borrowed $18,000 from a bank, earned $5,400 of net income, and Scott withdrew $6,600 cash from the business. Based on this information, at the end of the accounting period Scott's capital account contained a balance of:

36,800

Which of the following statements about the forms of business organizations is incorrect?

A major reason that businesses choose the corporate form of business structure over a partnership is unlimited liability.

The term "Retained Earnings" is best explained by which of the following statements?

A measure of capital generated through operating activities.

Which of the following statements best describes the term "par value?"

An amount used in determining a corporation's legal capital.

Where is treasury stock reported on a corporation's balance sheet?

As a deduction from total stockholders' equity, following Retained Earnings

Which of the following equity accounts is found on a corporation's balance sheet, but not on the balance sheet of a sole proprietorship or a partnership?

Common stock.

The term "double taxation" refers to which of the following?

Corporations must pay income taxes on their net income, and their stockholders must pay income taxes on their dividends.

Vargas Corp. issued 19,000 shares of no-par stock for $30 per share. Vargas was authorized to issue 42,000 shares. What effect will this event have on the company's financial statements?

Increase assets by $570,000, increase equity by $570,000.

Vailes 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 Vailes's financial statements. Assets = Liab. + Equity Rev. - Exp. = Net Inc Cash Flow Pd-in Cap TS - Treas. Stk. A. 7,000 = NA + 2,000 - (5,000) NA - NA = NA 7.000 FA B. 7,000 = NA + 2,000 - 5,000 NA - NA = NA 7,000 FA C. 7,000 = NA + 7,000 - NA NA - NA = NA 7,000 FA D. 5,000 = NA + 5,000 - NA NA - NA = NA 5,000 FA

Option A

Kellogg, Inc. 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? Assets = Liab. + Equity Rev. - Exp. = Net Inc Cash Flow A. (4,000) + NA = NA + (4,000) NA - NA = NA (4,000)FA B. (6,000) + 6,000 = NA + NA NA - NA = NA 6,000 IA C. (6,000) + NA = NA + (6,000) NA - NA = NA (6,000)FA D. (4,000) + 4,000 = NA + NA NA - NA = NA 4,000 IA

Option C

On January 12, 2016, Gilliam Corporation issued 550 shares of $12 par-value common stock for $15 per share. The number of shares authorized is 5,000, and the number of shares outstanding prior to this transaction is 1,200. Which of the following answers describes the effect of the January 12, 2016 transaction? Assets = Liab. + Com. Stk. + Pd-in Excess Rev. - Exp. = Net Inc. Cash A. 6,600 = NA + 6,600 + NA NA - NA = NA 6,600 FA B. 8,250 = NA + 8,250 + NA NA - NA = NA 8,250 FA C. 8,250 = NA + 6,600 + 1,650 NA - NA = NA 8,250 FA D. 8,250 = NA + 6,600 + 1,650 NA - NA = NA 8,250 IA

Option C

Fred and Barney started a partnership. Fred invested $9,500 in the business and Barney invested $18,000. The partnership agreement stipulated that profits would be divided as follows: Each partner would receive a 8% return on invested capital with the remaining income being distributed equally between the two partners. Assuming that the partnership earned $23,000 during an accounting period, the amount of income assigned to the two partners would be: Fred Barney A. $9,640 $8,960 B. $9,500 $13,500 C. $11,500 $11,500 D. $11,160 $11,840

Option D

Pratt Corporation has the following shares of stock outstanding at the end of 2016: Preferred stock, 6% cumulative, $10 stated value, 10,000 shares Common stock, $10 par value, 50,000 shares Dividends were not paid to preferred stockholders in 2014 and 2015. If Pratt Corporation pays $60,000 in total dividends in 2016, how much will each class of stock receive?

Preferred Common $18,000 $42,000

Which of the following best distinguishes the rights of preferred stockholders from the rights of common stockholders?

Right to receive dividends before common stockholders.

Ix Company issued 24,000 shares of $10 par value common stock at a market price of $25. As a result of this accounting event, the amount of stockholders' equity would

increase by $600,000.

Which of the following choices represents the transaction to record the declaration of a $4,000 cash dividend?

n/a 4,000 n/a n/a (4,000) n/a n/a n/a n/a