ACCT 2300 ch:10-11 final exam
On July 1, 2016, Mina, Inc. issued 2,000 shares of 8%, $100 par preferred stock at a price of $105 per share. This transaction will result in additional paid-in capital for preferred stock of:
10,000
A company paid dividends to its common stockholders. When preparing a Statement of Cash Flows this transaction would be classified as:
Financing Activity
How does the declaration of a cash dividend affect a company's assets, liabilities, and equity?
It results in an increase to liabilities and a decrease to stockholders' equity, while assets remain the same.
If a corporation issues 2,000 shares of $1.80 par value common stock for $16,000, the journal entry would include a credit to
common stock for 3,600
photo ease Camera Co. sold equipment with a cost of $22,000 and accumulated depreciation of $10,000 for an amount that resulted in a gain of $2,000. What amount should Photo Ease report on the statement of cash flows as "proceeds from sale of plant assets"?
$14,000 Book value = Cost - Accumulated depreciation Book value = $22,000 - $10,000 = $12,000 Proceeds from sale = Book value + Gain on sale Proceeds from sale = $12,000 + $2,000 =
In 2021, Conclave Company repurchased its own stock at a cost of $50,000. During the year, the company purchased land with cash for $118,000 and issued bonds payable for $325,000. Net cash provided by financing activities for the year would have been
$275,000 325,000-50,000=275,000
A corporation has 15,000 shares of 2% preferred stock outstanding. Also, there are 15,000 shares of common stock outstanding. Par value for each is $100. If a $450,000 dividend is paid, what is the amount of dividends per share on common stock?
$28.00 Preferred dividend = 15,000 × 2% × $100 par = $30,000 Common dividend = Total dividend - Preferred dividend Common dividend = $450,000 - $30,000 = $420,000 Common dividends per share = Common dividend ÷ Common shares outstanding Common dividends per share = $420,000 ÷ 15,000 =28.00
shelling Company reports the following information for its fiscal year end of March 31, 2022: What is the total paid-in capital for Shelling Company at March 31, 2022?
$393 million data table cs-78 million + PIC- 315 million = 393 million
In the current year, LVRP Company sold land for $81,000 cash, purchased a delivery van for $29,000 cash, and issued common stock for $98,000 cash. The net cash provided by investing activities is
$52,000 81,000-29,000=52,000
These account balances at December 31 relate to Sportworld, Inc.: What is total paid-in capital for Sportworld?
$619,000 (common stock)315,000+(preferred stock)84,000+(paid-in capital in excess of par--common) 220,000=619,000
The following balance sheet items, listed in alphabetical order, are available from the records of Breaking Bad Company as of December 31, 2015. Total current assets is $[a].
$650,000Cash + Accounts Receivable + Marketable Securities + Office Supplies = Total Current Assets 100,000+200,000+250,000+100,000=650,000
jonas Corporation formats operating cash flows using the indirect method jonas's net cash provided by operating activities during 2021 was
$67,000 (Increase) decrease in accounts receivable ($13,000 - $6,500) = $6,500 (Increase) decrease in inventory ($9,000 - $10,000) = ($1,000) Increase (decrease) in accounts payable ($6,000 - $7,000) = $(1,000) Increase (decrease) in accrued liabilities ($8,500 - $5,500) = $3,000 Cash flows from operating activities: Net income $57,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation $8,000 Gain on sale of equipment (5,500) Decrease in accounts receivable 6,500 Increase in inventory (1,000) Decrease in accounts payable (1,000) Increase in accrued liabilities 3,000 10,000 Net cash provided by (used for) operating activities $67,000
total PS div per year is $5,000. last year declared and paid $3,000. this year BOD declared $18,000 dividend. PS gets?
$7,000
Mountain, Inc. had the following accounts related to owners' equity on December 31, 2017: 6% Preferred stock, $50 par, 10,000 shares issued and outstanding $500,000 Cr. Additional paid-in capital, Preferred Stock 56,000 Cr. Common stock, $2 par, 1,000 shares issued and outstanding 2,000 Cr. Additional paid-in capital, Common stock 10,000 Cr. Retained earnings 882,000 Cr. On December 31, 2017, Mountain declares a $200,000 cash dividend payable on January 18, 2018. The preferred stock dividends are cumulative. Dividends have not been paid for the past two years (2015 and 2016). Dividends that will be paid to preferred stockholders will be $
$90,000 50*10,000*6%=30,000 (30,000*2)+30,000=90,000
calculate total PS dividend per year.PS is 10% $50 par, 2000 shares issued &1000 shares outstanding. market=$150
10%*$50*1000=5,000
The 2015 net income of Theon Corp. was $600,000 including the depreciation expense of $200,000. During the year Theon purchased equipment at a cost of $300,000 and sold land for $200,000 with a gain of $150,000. On July 1, 2015, Theon paid off $400,000 in loans from Yara First National Bank. In October 2015, Theon received $500,000 from an issue of common stock. Theon's cash flow from financing activities is $[a] net cash [b]
100,000 Inflow
Varys, Inc. had net income of $300,000 and paid a cash dividend of $60,000 for the year ending December 31, 2016. Depreciation expense was $100,000. During the year, Varys purchased $50,000 in equipment, received a new $80,000 bank loan, issued $200,000 in common stock, and retired $150,000 in bonds with cash. The company also sold land for $250,000 and recorded a gain of $25,000 on the sale. Based on this information, Varys's 2016 "net cash flow from investing activities" was $[a] net cash [b]
100,000 inflow
calculate financing SCF; $30k proceed PPE sale;CS issued $100k;paid dividended $4k; repaid $16k NP; purchased truck $10k
100k-4k-16k=80k
The Lannister Company has the following accounts listed in its stockholders' equity section of its balance sheet: Common Stock, $5 par $400,000 Additional Paid-in Capital, Common 800,000 Retained Earnings 500,000 Lannister has issued stock twice since it was formed in 2003, What is the average price at which common stock was issued?
15
Giant Corp. provides the following information for 2016. The cash balance as of January 1, 2016 was $50,000. Giant's net income for 2016 was $38,000. During 2016, accounts receivable decreased by $3,000, inventory decreased by $10,000, and accounts payable decreased by $20,000. Depreciation expense was $8,000. Equipment was purchased for $13,000 and common stock was issued for $100,000. Based on this information, the cash balance at December 31, 2016 is
176,000
cramer Corporation formats operating cash flows using the indirect method: How many items enter the computation of Cramer's net cash flow from investing activities for 2021?
2 2 items: Sale of equipment Purchase of equipment
cramer Corporation formats operating cash flows using the indirect method: How many items enter the computation of Cramer's net cash flow from financing activities for 2021?
2 Item 1 - payment of dividends Item 2 - issuance of stock
The Arya Corp. has the following balance sheet accounts for the years ending December 31st. During 2016, Arya earned net income of $175,000, paid $64,000 in cash dividends, paid on a loan, issued some bonds, and sold common stock for cash. Further, Arya bought some land and plant and equipment for cash. Depreciation expense of $20,000 was recorded. No gains or losses occurred. Cash flow from operating activities is $[a] net cash [b].
209,000 Inflow 20,000-6,000+10,000-2,000-1,000+13,000=34,000 175,000+34.,000=209,000
calculate investing SCF; $30k proceeds PPE sale;$8k loss on PPE, CS issued $100kl; paid cash purchased truck $10k
30k-10k=20k
Tommen, Inc. has the following stock issued as of December 2015: 5% Preferred Stock, $100 par, 10,000 shares issued and outstanding Common Stock, $5 par, 50,000 shares issued and outstanding The preferred stock dividend is non-cumulative. Dividends were paid in 2013, but were not paid during 2014. On December 15, 2015, Tommen declares dividends of $210,000. How much of this dividend will be distributed to Preferred Stock?
50,000
A corporation has 10,000 shares of 6% preferred stock outstanding. Also, there are 10,000 shares of common stock outstanding. Par value for each is $100. If a $450,000 dividend is paid, how much goes to the preferred stockholders?
60,000 10,00*$100*6%=60,000
calculate the number share outstanding... authorized 100; issued 70; treasury stock purchased=10, and resold 2
62 70-10+2
cramer Corporation formats operating cash flows using the indirect method. How many items enter the computation of Cramer's net cash provided by operating activities?
7 7 Items: Net income Depreciation Gain on sale of equipment Decrease in accounts receivable Increase in inventory Decrease in accounts payable Increase in accrued liabilities
guillaume Corporation issued 75,000 shares of $1.20 par value common stock. Later that year, Guillaume purchased 6,000 shares of its own common stock. Two months later, it reissued 2,200 shares. How many shares are issued and outstanding?
75,000 issued and 71,200 outstanding Shares outstanding = Common shares issued - Treasury shares purchased + Treasury shares reissued Shares outstanding = 75,000 - 6,000 + 2,200 =
Mountain, Inc. had the following accounts related to owners' equity on December 31, 2017: 6% Preferred stock, $50 par, 10,000 shares issued and outstanding $500,000 Cr. Additional paid-in capital, Preferred Stock 56,000 Cr. Common stock, $2 par, 1,000 shares issued and outstanding 2,000 Cr. Additional paid-in capital, Common stock 10,000 Cr. Retained earnings 882,000 Cr. On December 31, 2017, the Board of Directors declares a $200,000 cash dividend payable on January 18, 2018. The preferred stock dividends are non-cumulative. Dividends have not been paid for the past two years (2015 and 2016). Dividends that will be paid to common stockholders will be $
90,000
Corgi, Inc. has the following stock issued as of December 2015: 6% Preferred Stock, $100 par, 10,000 shares issued and outstanding Common Stock, $5 par, 50,000 shares issued and outstanding The preferred stock dividend is cumulative. Dividends were paid in 2013, but were not paid during 2014. On December 15, 2015, Corgi declares dividends of $210,000. How much of this dividend will be distributed to Common Stock?
90,000 10,000*100*6%=60,000 210,000-60,000*2 = 90,000
The basic form of capital stock is
A share of common stock
Which of the following transactions does not affect cash during a period?
A write-off an uncollectible account
Stockholders are eligible for a dividend if they own the stock on the date of
record
The Wonder Woman Co. purchased a small building in exchange for a five-year note payable and common stock. Using the following abbreviations to fill in the blanks, indicate whether this transaction would:
Assets: increase liabilities: increase equity: increase
firms issues 10 shares stock with $1 par. the market price is $8 per share in JE, we will credit:
CS $10 and APIC-CS $70
What type of account is Capital Stock and on which financial statement is it reported?
Owners equity and balance sheet
June 30, 2015, Star Wars Co. issued 10,000 shares of $5 par common stock to Luke Corp. for a patent on a device. Luke had purchased the patent in 2011 for $600,000 and was asking $1,000,000 for the patent. Star Wars Co shares were selling for $85 per share on June 30, 2015. The journal entry to record this transaction should be:
Patents 1,000,000 Common stock 50,000 Additional paid-in capital 950,000
the contributed capital part of equity does NOT include
RE
A company buys treasury stock for $10 per share. later it resells the treasury stock for $110, we will credit
TS $100 and APIC-TS $10
On December 1, 2016, Jon Snow, Inc. acquired 30,000 shares of its own $5 par, Common stock for $600,000. The entry to record the acquisition of these shares is:
Treasury stock- 600,000 Cash- 600,000
Brenda has developed two estimates of possible loss to the business due to a situation in which there is uncertainty about how to account for a particular item. Both estimates are of amounts that are equally likely. The practice of using the least optimistic estimate would be the application of
conservatism
the equity section is split up into
contributed capital and retained earning
On June 1, 2012, Rob Co. reacquired 75,000 shares of its own $10 par common stock at $12 per share. On December 8, 2016, Rob reissued 50,000 of their treasury shares for $700,000. The journal entry to record the reissuance of the treasury shares includes
a credit to additional paid-in capital-treasury stock for $100,000
A company uses the direct method to prepare the statement of cash flows. Select an activity for each of the following transactions: Receiving cash dividends is a(n)____ activity. 2. Paying cash dividends is a(n) ____activity.
a: operating b:financing
Which of the following accounts are all increased with a credit?
accumulated depreciation, common stock and revenue
Kenny Company called in its $100,000 par value bonds at 103. The carrying value of the bonds was $101,000. Which of the following is the correct presentation of this transaction on the statement of cash flows?
add a $2,000 loss to net income in the operating activities section and show a cash outflow of $103,000 in financing activities section
On an indirect method statement of cash flows, an increase in accounts payable is
added to net income in the operating activities section
Which of the following classifications represents the most shares of common stock?
authorized shares
Stockholders of a corporation directly elect the
board of directors
On the statement of cash flows, which of the following items is classified as a financing activity?
borrowing cash by signing a long-term note
which is included in the investing section of indirect SCF?
both cash purchase of land and proceeds for sale of truck
aqua sport, inc., issued 230,000 shares ofno-par common stock for $8 per share. The journal entry to record the issuance wouldbe:
cash---1,840,000 common stock---1,840,000
which is included in the operating section of indirect SCF?
change in AR
S-Works Corporation purchased 3,200 shares of its own $1.20 par value common stock for $125,000. As a result of this transaction, the company's stockholders' equity
decreased by 125,000
On an indirect method statement of cash flows, an increase in a prepaid insurance is
deducted from net income
On an indirect method statement of cash flows, a gain on the sale of plant assets is
deducted from net income in the operating activities section
If the indirect method is used, which of the following items appears on a statement of cash flows?
depreciation expense
Which of the following is NOT an account that appears in the Stockholders' Equity section of the balance sheet?
dividends
Which of the following is not considered to be an advantage of a corporation?
double taxation
on the indirect SCF, the change to cash is included in the Operating section
false
The issuance of stock for cash is reported on the statement of cash flows under
financing activites
On the statement of cash flows, increases and decreases in long-term liabilities resulting from cash transactions are reported as
financing activities
Paying off bonds payable is reported on the statement of cash flows under
financing activities
which is included in the operating section of indirect SCF?
gain of sale of land
Which of the following would NOT be added to the net income in the operating activities section of a Statement of cash flows when using the indirect method?
gain on sale of equipment
A stock split
has no effect on total stockholders' equity
if liabilities increased by $95,000 and owners' equity increased by $25,000, what was the change in assets? For the direction of the change use the following abbreviations to fill in the blank: increase (I) or decrease (D), or not change (NC) Assets would [a] by $[b]
increase 120,000
Cash received from the sale of a building is reported on a statement of cash flows under
investing activities
Selling equipment for cash is reported on the statement of cash flows under
investing activities
Bell Inc. buys some shares of stock of Borden Corporation. This transactions would be classified on Bell's Statement of Cash Flows as
investing cash outflow
The par value of a share of common stock
is stated in the charter
On BS, stock(which is the legal capital of the firm) is valued at
issued*par
a chronological record of each transaction is recorded first in line
journal
Which of the following is a characteristic of a corporation?
limited liability of stockholders
A company might purchase treasury stock for all of the following reasons except
management wants to decrease the earnings per share of common stock
A 12% stock dividend reduced RE by____; and a 33% stock dividend reduces by RE by____
market value of stock dividend; par value of stock dividened
Grucan Corporation formats operating cash flows using the indirect method: Grucan's net cash flow from financing activities for 2021was
net cash used $37,000 (Ending balance - Beginning balance= Cash received from issuance of stock) $34,000-$17,000=$17,000 Beginning balance-Ending balance+ Net income= Dividend payments $67,000-$73,500+ $60,500=$54,000 Cash flows from financing activities: Proceeds from issuance of common stock $17,000 Payment of dividends (54,000) Net cash provided by (used for) financing activities (37,000)
Grucan Corporation formats operating cash flows using the indirect method. The book value of equipment sold during 2021 was $27,000. Grucan's net cash flow from investing activities for 2021 was
net cash used of $18,000 (Book value of sold equipment + Gain on sale of equipment= Cash received for sale of equipment) 27,000+9,000=36,000 (Ending Beginning Book value of Cash paid for balance - balance +Depreciation +sold equipment =acquisitions) 91,000-72,000+8,000+27,000=54,000 Cash flows from investing activities: Proceeds from sale of plant and equipment $36,000 Cash paid for acquisition of plant and equipment (54,000) Net cash provided by (used for) investing activities (18,000)
When using the indirect method of preparing the statement of cash flows, the starting point to determine net cash provided by operating activities is
net income
For cash dividends, the journal entry on the date of record
no journal entry is required on the date of record
Which of the three types of activities reported on the statement of cash flows is the most important to evaluate when analyzing a company's long-term survival?
operating activities
dividends are calculated on which common share?
outstanding
Freeman Corporation formats operating cash flows using the indirect method. Freeman's largest financing cash flow for 2021 resulted from(assume no stock dividends weredistributed)
paying dividends Payment of dividends= ( Beginning retained earnings +Net Income -Ending retained earnings = Dividend payments) 67,500 +$70,500-$71,500 =$66,500 issuance of stock= (Ending common stock-Beginning common stock = Common stock issuance) 24,000-12,00=12,000
Preferred stock is least likely to have which of the following characteristics?
preference as to voting
On the statement of cash flows, which of the following items is classified as an investing activity?
purchasing a delivery truck
When treasury stock is sold for less than its cost, the entry should include a debit to
retained earnings
On the day of declaration, which of the following journal entries should be made?
retained earnings dividends payable
The two main categories of stockholders' equity are
retained earnings and pain-in capital
Toni's Foods has outstanding 500 shares of 7% preferredstock, $100 parvalue; and 2,000 shares of commonstock,$3 par value. Toni's declares dividends of $14,800. Which of the following is the correctentry
retained earnings--14,800 dividends payable,preferred--3,500 dividends payable,common-11,300 Preferred dividend = Preferred shares × Par value per preferred share × Annual dividend % Preferred dividend = 500 × $100 × 7% = $3,500 Common dividend = Total dividend - Preferred dividend Common dividend = $14,800 - $3,500 = $11,300
The statement of cash flows does not report
revenues and expenses for the current year.
If the indirect method is used to calculate net cash provided by operating activities, an increase in accounts receivable is
subtracted from net income
A company declares a 5% stock dividend. The debit to Retained Earnings is an amount equal to
the market value of the shares to be issued
Corporation formats operating cash flows using the indirect method. How do Cramer's accrued liabilities affect the company's statement of cash flows for 2021?
they increase cash provided by operating activities
cramer Corporation formats operating cash flows using the indirect method. How do accounts receivable affect Cramer's cash flows from operating activities for 2021?
they increase cash provided by operating activities
Neffie Corporation acquired land by signing a long-term note for $150,000. Which of the following is the correct presentation of this transaction on the Statement of Cash Flows?
this transaction would not affect the statement of cash flow
The statement of cash flows is designed for all of the following purposes except
to list all revenues and expense
Which of the following statements is not true about a 3-for-1 stock split?
total stockholders equity increases
Which of the following is an owners' equity account that normally has a debit balance?
treasury stock
Coffee cup Corporation paid $24 per share to purchase 200 shares of its common stock as treasury stock. The stock was originally issued at $11 per share. Which of the following would be the journal entry that Coffee Cup would make to record the purchase of the treasury stock?
treasury stock---4,800 cash---4,800 200*$24=4,800
