ACCT 2100 (W01) - Chapter 8 Study

Flagler Corporation shows a total of $960,000 in its common stock account and $1,020,000 in its paid-in capital in excess of par value - common stock account. The par value of Flagler's common stock is $6. How many shares of Flagler stock have been issued?

$960,000 total par value ÷ $6 par value per share = 160,000 shares issued

Curtain Co. paid dividends of $7,000; $12,000; and $12,000 during Year 1, Year 2, and Year 3, respectively. The company had 2,000 shares of 5.0%, $100 par value preferred stock outstanding that paid a cumulative dividend. The amount of dividends received by the common shareholders during Year 3 would be:

1. The annual preferred dividends each year = $100 × 2,000 shares × 5.0% = $10,000. 2. In Year 1, there were $3,000 of dividends in arrears ($10,000 preferred dividends − $7,000 paid). 3. In Year 2, there were $1,000 in arrears ($3,000 beginning + $10,000 preferred dividends − $12,000 paid). 4. In Year 3, the preferred dividends was $10,000 + $1,000 in arrears = $11,000. The remaining $1,000 was paid to common shareholders.

Ix Company issued 28,000 shares of $10 par value common stock at a market price of $27. As a result of this accounting event, the amount of stockholders' equity would: increase by $756,000. be unaffected. increase by $280,000. increase by $476,000.

28000 * 27 = 756,000 increase by $756,000.

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

660,000 / 8 = 82500

On January 12, Year 1, 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, Year 1 transaction?

Assets = 550 * 15 = 8250 Com Stk = 550 * 12 = 6600 PIC = 8250 - 6600 = 1650 Cash Flow = 8250 FA Choice C

On January 2, Year 1, Torres Corporation issued 12,000 shares of $10 par-value common stock for $12 per share. Which of the following statements is true?

Assets and equity increase by actual value: 12,000 * 12 = 144,000 Common stock increase by par value: 12,000 * 10 = 120,000 PIC: 144,000 - 120,000 = 24,000 The paid-in capital in excess of par value account will increase by $24,000.

On January 2, Year 1, Torres Corporation issued 21,000 shares of $15 par-value common stock for $20 per share. Which of the following statements is true? The common stock account will increase by $420,000. The cash account will increase by $315,000. Total equity will increase by $315,000. The paid-in capital in excess of par value account will increase by $105,000.

Cash goes up 420,000 Common stock increases 315,000 PIC increases 105,000 ANSWER: The paid-in capital in excess of par value account will increase by $105,000.

Ch 8 HW

Ch 8 HW

Ch 8 Practice Questions

Ch 8 Practice Questions

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 common stock account will increase by $220,000. The cash account will increase by $200,000. Total equity will increase by $200,000. The paid-in capital in excess of par value account will increase by $20,000.

Common stock = 20,000 * 10 = 200,000 Cash = 20,000 * 11 = 220,000 PIC = 220,000 - 200,000 = 20,000 ANSWER: The paid-in capital in excess of par value account will increase by $20,000.

Flagler Corporation shows a total of $600,000 in its common stock account and $1,080,000 in its paid-in capital in excess of par value - common stock account. The par value of Flagler's common stock is $5. How many shares of Flagler stock have been issued?

Common stock is increased by par value: 600,000 / 5 = 120,000

Which form of business organization is established as a legal entity separate from its owners?

Corporation

The following information pertains to JAE Corp. at January 1, 2018: ============================== Common stock, $10 par, 20,000 shares authorized, 2,000 shares issued and outstanding: $20,000 Paid-in capital in excess of par, common stock: 15,000 Retained earnings: 82,000 ============================== JAE Corp. completed the following transactions during 2018: Issued 3,000 shares of $10 par common stock for $25 per share. Repurchased 500 shares of its own common stock for $26 per share. Resold 200 shares of treasury stock for $30 per share.

How many shares of common stock were outstanding at the end of the period? 2,000 + 3,000 - 500 + 200 = 4700 How many shares of common stock had been issued at the end of the period? Beg. number + issued this period = 2,000 + 3,000 = 5,000

Elroy Corporation repurchased 4,000 shares of its own stock for $30 per share. The stock has a par of $10 per share. A month later Elroy resold 900 shares of the treasury stock for $32 per share. What is the balance of the Treasury Stock account after these transactions are recognized?

IGNORE PAR VALUE 1. Repurchase 4000 * 30 = 120,000 2. Resale 900 * 30 (NOT 32) = 27000 3. Balance 120,000 - 27,000 = 93,000

Which of the following is not considered an advantage of the corporate form of business organization?

Lack of government regulation.

More MC Questions

More MC Questions

Which of the following statements about types of business entities is true? For accounting purposes a sole proprietorship is not a separate entity from its owner. Ownership in a partnership is represented by having shares of capital stock. One advantage of a corporation is ability to raise capital. Sole proprietorships are subject to double taxation.

One advantage of a corporation is ability to raise capital.

Montana Company was authorized to issue 150,000 shares of common stock. The company had issued 69,000 shares of stock when it purchased 11,000 shares of treasury stock. The number of outstanding shares of common stock was:

Outstanding = how much is out there IGNORE "AUTHORIZED TO ISSUE" 69,000 - 11,000 = 58,000

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:

Outstanding = shares that are out there 36,000 - 5,500 = 30,500

Curtain Co. paid dividends of $8,000; $9,000; and $12,000 during Year 1, Year 2, and Year 3, respectively. The company had 1,900 shares of 4.5%, $100 par value preferred stock outstanding that paid a cumulative dividend. The amount of dividends received by the common shareholders during Year 3 would be:

SEE ABOVE

Ix Company issued 36,000 shares of $10 par value common stock at a market price of $31. As a result of this accounting event, the amount of stockholders' equity would:

Stockholders equity increase actual value: 36,000 * 31 = 1,116,000

When Crossett Corporation was organized in January 2018, it immediately issued 4,000 shares of $50 par, 6 percent, cumulative preferred stock and 50,000 shares of $20 par common stock. Its earnings history is as follows: 2018, net loss of $35,000; 2019, net income of $125,000; 2020, net income of $215,000. The corporation did not pay a dividend in 2018. How much is the dividend arrearage as of January 1, 2019?

shares issued * par value * rate 4000 * 50 * 0.06 Dividend arrearage = 12,000