ACC211 Ch. 11 and 12 MCQ

The following data were reported by a corporation: Authorized shares 34,000 Issued shares 29,000 Treasury shares 10,500 The number of outstanding shares is:

18,500 29,000-10,500=18,500

Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 330 shares to its attorneys in payment of a $5,300 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

A debit to Organization Expenses for $5,300

A corporation issued 5,600 shares of $10 par value common stock in exchange for some land with a market value of $82,000. The entry to record this exchange is:

Debit Land $82,000; credit Common Stock $56,000; credit Paid-In Capital in Excess of Par Value, Common Stock $26,000.

Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 45,000 shares authorized, 24,000 shares issued, and 18,000 shares of common stock outstanding. The journal entry to record the dividend declaration is:

Debit Retained Earnings $9,000; credit Common Dividends Payable $9,000.

A company reported that its bonds with a par value of $50,000 and a carrying value of $64,500 are retired for $69,000 cash, resulting in a loss of $4,500. The amount to be reported under cash flows from financing activities is:

$(69,000)

A machine with a cost of $146,000 and accumulated depreciation of $93,000 is sold for $66,000 cash. The amount that should be reported in the operating activities section reported under the direct method is:

$0

Ultimate Sportswear has $170,000 of 10% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $570,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $37,000. This dividend should be distributed as follows:

$17,000 preferred; $20,000 common. 170,000*10% =17,000 37,000-17,000=20,000

A company's income statement showed the following: net income, $141,000 and depreciation expense, $35,100. An examination of the company's current assets and current liabilities showed the following changes: accounts receivable decreased $11,100; merchandise inventory increased $21,400; and accounts payable increased $5,100. Calculate the net cash provided or used by operating activities.

$170,900 141,000+35,100+11,100-21,400+5,100=170,900

In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income $54,000 Accounts payable decreased by 20,000 Accounts receivable increased by 27,000 Inventories increased by 7,000 Cash dividends paid 14,400 Depreciation expense 22,000 Net cash provided by operating activities was:

$22,000 54,000+22,000-27,000-7,000-20,000=22,000

Mayan Company had net income of $32,670. The weighted-average common shares outstanding were 9,900. The company has no preferred stock. The company's earnings per share is:

$3.30 Earnings per Share = (32,670-0)/ 9,900

Mayan Company had net income of $34,000. The weighted-average common shares outstanding were 8,500. The company declared a $3,200 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:

$3.62 (34,000-3,200)/ 8,500

A company has 975 shares of $64 par value preferred stock outstanding. It also has 11,000 shares of common stock outstanding, and the total value of its stockholders' equity is $440,800. The company's book value per common share equals:

$34.40 [440,800-(975*64)/11,000 = 34.40

In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income $56,000 Accounts payable decreased by 20,000 Accounts receivable increased by 27,000 Inventories increased by 7,000 Depreciation expense 34,000 Net cash provided by operating activities was:

$36,000 56,000+34,000-27,000-7,000-20,000=36,000

A company had a beginning balance in retained earnings of $438,000. It had net income of $69,000 and declared and paid cash dividends of $74,000 in the current period. The ending balance in retained earnings equals:

$433,000 438,000+69,000-74,000=

A company issued 260 shares of $100 par value common stock for $31,000 cash. The total amount of paid-in capital in excess of par is:

$5,000 31,000-(260*100)= 5,000

Fargo Company's outstanding stock consists of 850 shares of noncumulative 6% preferred stock with a $10 par value and 4,400 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid year 1 $39,000 year 2 $8,000 year 3 $48,000

$510 preferred; $38,490 common. Preferred stock dividend: 850 shares × $10/share × 6% = $510 $39,000 − $510 preferred = $38,490 to common

A machine with a cost of $170,000, accumulated depreciation of $105,000, and current year depreciation expense of $27,000 is sold for $56,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:

$56,000

A machine with a cost of $144,000 and accumulated depreciation of $92,000 is sold for $45,600 cash. The total amount related to this machine that should be reported in the operating section of the statement of cash flows under the indirect method is:

$6,400 144,000-92,000=52,000 52,000-45,600=6,400

Barclays Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year$328,000 Cash dividends declared for the year 73,750 Proceeds from the sale of equipment 126,800 Gain on the sale of equipment 7,350 Cash dividends payable at the beginning of the year 32,450 Cash dividends payable at the end of the year 39,500 Net income for the year 162,250 The amount of cash paid for dividends was:

$66,700 73,750-32,450-39,500=66,700

Use the following information to calculate cash received from dividends: Dividends revenue $72,500 Dividends receivable, January 1 6,300 Dividends receivable, December 31 4,900

$73,900 6,300-4,900=1,400 72,500+1,400=73,900

Salah's net income for the year ended December 31, Year 2 was $201,000. Information from Salah's comparative balance sheets is given below. Compute the cash paid for dividends during Year 2. At December 31 Year 2 Year 1 Common Stock, $5 par value $516,000 $464,400 Paid-in capital in excess of par 964,000 867,400 Retained earnings 704,000 596,400

$93,400 596,400-201,000-704,000=93,400

Fetzer Company declared a $0.35 per share cash dividend. The company has 400,000 shares authorized, 380,000 shares issued, and 16,000 shares in treasury stock. The journal entry to record the payment of the dividend is:

Debit Common Dividends Payable $127,400; credit Cash $127,400. $0.35 × (380,000 issued shares − 16,000 treasury shares) = $127,400

Analysis reveals that a company had a net increase in cash of $22,310 for the current year. Net cash provided by operating activities was $20,100; net cash used in investing activities was $11,050 and net cash provided by financing activities was $13,260. If the year-end cash balance is $27,150, the beginning cash balance was:

$4,840 27,150-22,310=4,840

A company had net cash flows from operations of $127,000, cash flows from financing of $344,000, total cash flows of $521,000, and average total assets of $2,920,000. The cash flow on total assets ratio equals:

4.3% 127,000/2,920,000=4.3%

A corporation issued 130 shares of its $5 par value common stock in payment of a $2,100 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include:

A $1,450 credit to Paid-in Capital in Excess of Par Value, Common Stock

A company has 39,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $479,700, and the par value per common share is $10. The book value per share is:

$12.30 $479,700/39,000 shares = $12.30 per shares

Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 210 shares of its common stock on May 1 for $10,500. On July 1, it reissued 105 of these shares at $53 per share. On August 1, it reissued the remaining treasury shares at $48 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2?

$105 10,500/210=105

In preparing a company's statement of cash flows for the most recent year, the following information is available: Loss on the sale of equipment$15,600Purchase of equipment 161,000Proceeds from the sale of equipment 142,000 Repayment of outstanding bonds 95,000 Purchase of treasury stock 70,000 Issuance of common stock 104,000Purchase of land 131,000 Increase in accounts receivable during the year 51,000 Decrease in accounts payable during the year 83,000 Payment of cash dividends 43,000 Net cash flows from investing activities for the year were:

$105,000 of net cash used -161,000-131,000+142,000=-150,000

Stormer Company reports the following amounts on its statement of cash flow: Net cash provided by operating activities was $34,500; net cash used in investing activities was $12,600 and net cash used in financing activities was $15,900. If the beginning cash balance is $6,300, what is the ending cash balance?

$12,300 34,500-12,600-15,900=6,000 6,000+6,300=12,300

In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income $56,000 Accounts payable increased by 18,400 Accounts receivable decreased by 25,400 Inventories increased by 5,800 Depreciation expense 31,200 Net cash provided by operating activities was:

$125,200 56,000+31,200+25,400-5,800+18,400=125,200

A company's income statement showed the following: net income, $129,000; depreciation expense, $37,500; and gain on sale of plant assets, $11,500. An examination of the company's current assets and current liabilities showed the following changes accounts receivable decreased $10,900; merchandise inventory increased $25,500; prepaid expenses increased $7,700; accounts payable increased $4,900. Calculate the net cash provided or used by operating activities.

$137,600 129,000+37,500-11,500+10,900-25,500-7,700+4,900=137,600

A company issued 130 shares of $100 par value common stock for $14,000 cash. The total amount of paid-in capital is:

$14,000

A company's board of directors votes to declare a cash dividend of $1.00 per share of common stock. The company has 20,000 shares authorized, 15,000 issued, and 14,500 shares outstanding. The total amount of the cash dividend is:

$14,500 1.00*14,500 = 14,500

Jordan's net income for the year ended December 31, Year 2 was $200,000. Information from Jordan's comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2. At December 31 Year 2 Year 1 Common Stock, $5 par value $515,000 $463,500 Paid-in capital in excess of par 963,000 866,500 Retained earnings 703,000 595,500

$148,000

Sweet Company's outstanding stock consists of 1,300 shares of noncumulative 5% preferred stock with a $100 par value and 11,300 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $3,300 Year 2 $8,600 Year 3 $38,500 The total amount of dividends paid to preferred and common shareholders over the three-year period is:

$16,300 preferred; $34,100 common. 1,300*$100/share * .05 = $6,500 per year. Year 1: $3,300 to preferred, $0 to common. Year 2: $6,500 to preferred, $2,100 to common. Year 3: $6,500 to preferred, $32,000 to common. Preferred total = $3,300 +6,500 +6,500 = $16,300. Common total = $0+2,100+32,000 = $34,100.

James Company has 1,900 shares of $100 par preferred stock, which were issued at par. It also has 34,000 shares of common stock outstanding, and its total stockholders' equity equals $764,600. The book value per common share is:

$16.90 [764,600-(1,900*100)/34,000=16.90

The accountant for Crusoe Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year. $130,000 Cash dividends declared for the year 50,000 Proceeds from the sale of equipment 85,000 Gain on the sale of equipment 7,800 Cash dividends payable at the beginning of the year 22,000 Cash dividends payable at the end of the year 24,800 Net income for the year 96,000 What is the ending balance for retained earnings?

$176,000 130,000+96,000-50,000=176,000

The accountant for TI Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $155,000 Cash dividends declared for the year 47,600 Net income for the year 94,000 What is the ending balance for retained earnings?

$201,400 155,000+94,000-47,600=201,400

Mayweather reports net income of $325,000 for the year ended December 31. It also reports $104,100 depreciation expense and a $11,200 loss on the sale of equipment. Its comparative balance sheet reveals a $45,000 increase in accounts receivable, a $11,400 decrease in prepaid expenses, a $17,200 increase in accounts payable, a $14,100 decrease in wages payable, a $83,800 increase in equipment, and a $112,000 decrease in notes payable. Calculate the net increase in cash for the year.

$214,000 325,000+104,100+11,200+11,400+17,200-45,000-14,100=409,800 409,800-83,800-112,000=214,000

In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income$69,000 Accounts payable increased by 35,000 Accounts receivable decreased by 59,000 Inventories decreased by 22,000 Cash dividends paid 31,000 Depreciation expense 54,000 Net cash provided by operating activities was:

$239,000 69,000+54,000+59,000+22,000+35,000=239,000

A corporation declared and issued a 25% stock dividend on October 1. The following information was available immediately prior to the dividend: Retained earnings $730,000 Shares issued and outstanding 58,000 Market value per share $17 Par value per share. $5 The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

$246,500 58,000 * 0.25 = 14,500 * 17 = 246,500

Sweet Company's outstanding stock consists of 1,400 shares of cumulative 6% preferred stock with a $100 par value and 10,400 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $2,400 Year 2 $6,400 Year 3 $34,000 The total amount of dividends paid to preferred and common shareholders over the three-year period is:

$25,200 preferred; $17,600 common. Preferred stock dividend: 1,400 shares × $100/share × 6% = $8,400 per year. Year 1: $2,400 to preferred, $0 to common. Year 2: $6,400 to preferred, $0 to common. Year 3: $16,400 to preferred, $17,600 to common. Preferred total = $2,400 + $6,400 + $16,400 = $25,200. Common total = $0 + $0 + $17,600 = $17,600.

Favre Company reports depreciation expense of $52,000 for Year 2. Also, equipment costing $176,000 was sold for a $11,200 loss in Year 2. The following selected information is available for Favre Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment $670,000 $846,000 Accumulated Depreciation-Equipment 476,000 560,000

$28,800 560,000+52,000-476,000=136,000 (176,000-136,000)-11,200=28,800

Alfredo Inc. reports net income of $245,000 for the year ended December 31. It also reports $94,200 depreciation expense and a $5,750 gain on the sale of equipment. Its comparative balance sheet reveals a $38,500 decrease in accounts receivable, a $17,250 increase in accounts payable, and a $13,500 decrease in wages payable. Calculate the cash provided (used) in operating activities using the indirect method.

$375,700 245,000+94,200+38,500+17,250-13,500-5,750=375,700

Alvarez Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year$313,000 Cash dividends declared for the year 70,000 Proceeds from the sale of equipment 120,200 Gain on the sale of equipment 6,900 Cash dividends payable at the beginning of the year 30,800 Cash dividends payable at the end of the year 38,000 Net income for the year 154,000 The ending balance in retained earnings is:

$397,000 313,000+154,000-70,000=397,000

Ford Company reports depreciation expense of $51,000 for Year 2. Also, equipment costing $174,000 was sold for its book value in Year 2. There were no other equipment purchases or sales during the year. The following selected information is available for Ford Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment $665,000 $839,000 Accumulated Depreciation-Equipment 472,000 555,000

$40,000 555,000+51,000-472,000=134,000 174,000-134,000=40,000

Green Company reports depreciation expense of $50,000 for Year 2. Also, equipment costing $170,000 was sold for a $6,000 gain in Year 2. The following selected information is available for Green Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment $660,000 $830,000 Accumulated Depreciation-Equipment 468,000 550,000

$44,000 550,000+50,000-468,000=132,000 (170,000-132,000)+6,000=44,000

A company had a beginning balance in retained earnings of $44,100. It had net income of $7,100 and declared and paid cash dividends of $5,900 in the current period. The ending balance in retained earnings equals:

$45,300 44,100+7,100-5,900=

The accountant for Walter Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year. $134,500 Cash dividends declared for the year 54,500 Proceeds from the sale of equipment 89,500 Gain on the sale of equipment 8,700 Cash dividends payable at the beginning of the year 26,500 Cash dividends payable at the end of the year 30,200 Net income for the year 100,500 The amount of cash dividends paid during the year would be:

$50,800 26,500+54,500-30,200=50,800

A machine with a cost of $144,000 and accumulated depreciation of $99,000 is sold for $57,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:

$57,000

The accountant for Sysco Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $1,069,000 Net income for the year 355,000 Cash dividends declared for the year 67,000 Retained earnings balance at the end of the year 1,757,000 Cash dividends payable at the beginning of the year 15,000 Cash dividends payable at the end of the year 18,500 What is the amount of cash dividends paid that should be reported in the financing section of the statement of cash flows?

$63,500 67,000+15,000-18,500=63,500

Halverstein Company's outstanding stock consists of 9,450 shares of cumulative 5% preferred stock with a $10 par value and 4,050 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $0 Year 2 $8,100 Year 3 $36,000 The amount of dividends paid to preferred and common shareholders in Year 2 is:

$8,100 preferred; $0 common. Preferred stock dividend: 9,450 shares × $10/share × 5% = $4,725Year 1 dividends in arrears $4,725Year 2 dividends paid to preferred shareholders = $4,725 in arrears + $3,375 of remaining dividend declared; $1,350 of the Year 2 dividend is in arrears

Bagrov Corporation had a net decrease in cash of $13,500 for the current year. Net cash used in investing activities was $55,500 and net cash used in financing activities was $41,500. What amount of cash was provided (used) in operating activities?

$83,500 provided 55,500-41,500=13,500 97,000-13,500=83,500

Sweet Company's outstanding stock consists of 1,350 shares of cumulative 5% preferred stock with a $100 par value and 13,500 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $2,700 Year 2 $8,100 Year 3 $43,200 The amount of dividends paid to preferred and common shareholders in year 3 is:

$9,450 preferred; $33,750 common. 1,350 shares*$100/share*.05 = $6,750 per year × 2 years = $13,500 total preferred dividends. 13,500 − 10,800 paid to preferred in years 1 and 2 = $9,450 paid to preferred in year 2. $43,200 − $9,450 preferred = $33,750 to common.

Use the following information and the indirect method to calculate the net cash provided or used by operating activities: Net income $86,400 Depreciation expense 13,100 Gain on sale of land 7,200 Increase in merchandise inventory 3,150 Increase in accounts payable 7,250

$96,400 86,400+13,100-7,200-3,150+7,250=96,400

A company paid $0.54 in cash dividends per share. Its earnings per share is $4.26 and its market price per share is $29.25. Its dividend yield equals:

1.85% 0.54/29.25=1.85%

A company has earnings per share of $8.60. Its dividend per share is $1.55, its market price per share is $98.90, and its book value per share is $75. Its price-earnings ratio equals:

11.50 98.90/8.60 = 11.50

A company had average total assets of $2,660,000, total cash flows of $1,920,000, cash flows from operations of $355,000, and cash flows from financing of $1,050,000. The cash flow on total assets ratio equals:

13.35% 355,000/2,660,000=13.35%

A company paid $0.60 in cash dividends per share. Its earnings per share is $2.60, and its market price per share is $26.50. Its dividend yield equals:

2.3% 0.60/26.50=2.3%

A company has net income of $865,000; its weighted-average common shares outstanding are 173,000. Its dividend per share is $1.30, its market price per share is $105, and its book value per share is $101.50. Its price-earnings ratio equals:

21 105/(865,000/173000)

Use the following information to calculate cash received from dividends: Dividends revenue $37,800 Dividends receivable, January 1 4,200 Dividends receivable, December 31 6,600

6,600-4,200=2,400 37,800-2,400=35,400

The following data has been collected about Keller Company's stockholders' equity accounts: Common stock $10 par value 18,000 sharesauthorized and 9,000 shares issued, 2,200 shares outstanding $90,000 Paid-in capital in excess of par value, common stock48,000 Retained earnings 23,000 Treasury stock 24,860

6,800 9,000-2,200=6,800

A corporation sold 11,500 shares of its $10 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:

A credit to Common Stock for $115,000

Fetzer Company declared a $0.50 per share cash dividend. The company has 260,000 shares authorized, 247,000 shares issued, and 10,400 shares in treasury stock. The journal entry to record the dividend declaration is:

Debit Retained Earnings $118,300; credit Common Dividends Payable $118,300. $0.50 × (247,000 issued shares − 10,400 treasury shares) = $118,300

Eastline Corporation had 10,500 shares of $5 par value common stock outstanding when the board of directors declared a stock dividend of 3,255 shares. At the time of the stock dividend, the market value per share was $13. The entry to record this dividend is:

Debit Retained Earnings $16,275; credit Common Stock Dividend Distributable $16,275. 3,255 *5

Global Corporation had 44,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 5% stock dividend when the market value of each share was $29. The entry to record the dividend declaration is:

Debit Retained Earnings $63,800; credit Common Stock Dividend Distributable $44,000; credit Paid-In Capital in Excess of Par Value, Common Stock $19,800.

On September 1, Ziegler Corporation had 54,000 shares of $5 par value common stock, and $162,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

No entry is made for this transaction.

Torino Company has 1,600 shares of $50 par value, 7.5% cumulative and nonparticipating preferred stock and 16,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $5,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

Preferred stock dividend: 1,600 shares × $50/share × 7.5% = $6,000Prior year: Dividend paid = $5,000; $1,000 in arrearsCurrent year: $1,000 in arrears + $6,000 current dividend = $7,000