PFA ch 4&10 exam

Lanthier's heating and air company began business on June 1. The articles of incorporation authorize issuance of 10,000 shares of $2 common stock and 5,000 shares of $8 par 6% cumulative preferred stock. What is the maximum amount that can be reported on the balance sheet for common stock and preferred stock if all stock is issued?

Common Stock: $20,000 Preferred Stock: $40,000

Which of the following statements is true regarding 7% cumulative participating preferred stock?

If the corporation pays a per. share dividend in excess of 7% of the preferred stock's par value and there are no dividends in arrears the preferred shares will receive a share of the amounts available for distribution as dividends to other classes of stocks

What will be the increase in the additional paid-in capital-common stock account if a corporation issues 20,000 shares of $1 par common stock for $6 per share?

$100,000

Lanier tech was incorporated as a new business on January 1. The company is authorized to issue 50,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par, cumulative, participating preferred stock. On January 1, the company issued 8,000 shares of common stock for $15 per share and 2,000 shares of the preferred stock for $30 per share. Net income for the year ended December 31 was $375,000. What is the amount of the company's total capital stock on December 31?

$180,000

The following information relates to a company's November bank reconciliation: Bank Statement balance $10,700 Unadjusted cash balance from company records 7 Deposit in transit 2100 Outstanding checks 1200 bank service charges 300 interest earned on bank account 100 customer's NSF check returned by the bank 400 What was the company's unadjusted cash balance on November 30 before the bank reconciliation process was undertaken?

12,200

When preparing the April 30 bank reconciliation, the accountant identified the following items: Company's balance according to the general ledger outstanding checks bank service charge A customer's NSF check returned by the bank What is the company's adjusted cash balance at April 30?

14,885

A company's unadjusted bank balance is $3,000. Outstanding checks amount to $500 and deposits in transit total $300. Based on this information alone, what is the company's adjusted cash balance for the purpose of preparing a bank reconciliation?

2,000

Delco Construction The following items relate to the company's March bank reconciliation Bank Statement balance $29,600 Unadjusted cash balance according to company records ? Deposit in transit 2,200 Outstanding checks 3,100 Bank service charges 200 Interest earned on the bank account 100 Customers NSF check returned by the bank 300 What is the company's adjusted cash balance at March 31?

28,700

Lasik Vision, Inc began business on June 1, prior year. The corporate charter authorized issuance of 1,000 shares of no-par common stock and 4,000 shares of $6 par, 6% cumulative preferred stock. As of the beginning of the current year, 200 shares of common stock had been issued and none of the preferred stock had been issued. If the company issues 400 shares of common stock on March 1, current year, for $10 per share, the journal entry would include a

4,000 credit to common stock

Lanier tech was incorporated as a new business on January 1. The company is authorized to issue 50,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par, cumulative, participating preferred stock. On January 1, the company issued 8,000 shares of the common stock for $15 per share and 2,000 shares of the preferred stock for $30 per share. Net income for the year that ended December 31 was $375,000. What is the number of the company's unissued shares of common stock at December 31?

42,000

Lake Lanier Grill, Inc The stockholder's equity section of the December 31, prior year, balance sheet is provided below: Common stock, $3 par, 2,000 shares issued and outstanding 60,000 Additional paid-in capital- common stock 1,000 Retained earnings 5,400 Total Stockholders Equity 12,400 Assume that all 2,000 shares of stock were issued as of December 31, prior year, for 3.50 a share. On March 1, current year, the company required 1,000 shares of its common stock for 4.50 per share. The journal entry to record the transaction on March 1, current year, includes a credit to what account and for what amount?

4500 to cash

Total stockholder's equity includes $50,000 of common stock with a stated value of 0.50 and 5,000 shares of treasury stock with total cost. of $25,000. How many total shares of common stock are outstanding?

95,000

the following information relates to LaFarge North America's stockholders' equity accounts: Common stock, $7 par, 200,000 shares authorized Additional paid-in capital-common stock retained earnings treasury stock, 2000 shares at cost Total stockholders equity How many shares of common stock are outstanding?

98,000

If a corporation declares a 2-for-1 stock split, which of the following is true

A stockholder who previously held 100 shares will have 200 shares after the split

A growing corporation had $180,000 of its $30 par common stock issued before its recent 3-for-1 stock split. The market price of the stock was $120 per share before the split. Which of the following is a result of the split

The par value of the stock decreased by $10 per share

Which of the following is not a provision of the Sarbanes-Oxley act as to the responsibility of a company's top managers?

They may deny responsibility for certain financial reporting matters if they are not knowledgeable about the proper accounting procedures for those transactions

On January 15, a corporation paid a cash dividend that had been declared prior to the end of its previous fiscal year. The entry to pay the dividends includes

a debit to dividends payable and a credit to cash

An addition to employee compensation whereby the corporation provides a right to purchase stock at a set price is called

a stock option

Lakeshore industries reported the following information on its recent balance sheet: Common stock, $10 par, 100,000 shares authorized, 75,000 shares issued and outstanding What is the effect of a 2-for-1 stock split if the market value of the common stick is $20 per share at the time the stick split is declared

a stock split has no impact on any of the stockholders' equity account balances

Having the same employee prepare company checks and sign those checks relates to which internal control activity?

a violation of proper segregation of duty

Which of the following activities would lead to violation of the internal control system

all supporting documents attached to an invoice as cancelled when the check is signed

par value represents the

arbitrary amount that establishes a minimum price for the stock when it is first issued

check presented for payment and paid by the bank are known as

cancelled checks

which of the assets listed below is considered the most liquid

cash equivalents

Identify that activity that would contribute to strengthening the internal control process

cash register tapes are recorded daily by an employee from the accounting department

When preparing a bank reconciliation, which of the following items would be added to the bank statement balance

deposits in transit

Which of the following types of information is not set forth within the corporate charter

dates of future dividend distribution

While reconciling the checking account, the accountant noticed an error had been made in recording a check received from a company. The bookkeeper had recorded the receipt at $729 but the correct amount was $279. Which of the following recorded adjustments is necessary

deduct $450 from company records

if a corporation repurchases 500 shares of its previously issued common stock for 5,000 and then reissues it for 4,000, which of the following statements is true regarding the difference in the amounts of repurchase and reissuance

it is a decrease in stockholders' equity

treasury shares represent the

number of previously issued shares that have been repurchased by the corporation

Outstanding shares represent the

number of shares that are currently held by stockholders

which of the following would never appear on a bank statement for a checking account?

outstanding checks

Each of the following represents an effective cash management practice except

payments should be expedited in order to simplify record keeping

which internal control activity is followed when inventory storage areas are secured with limited access?

safeguarding of assets and records

Dance town academy The items listed below were identified while preparing a bank reconciliation for the company's checking account as of March 31 Cash balance according to general ledger Bank statement balance outstanding checks customer's bounced checks bank service charges deposits in transit interest earned on the checking account How will the bank service charges be handled on a bank reconciliation?

subtract from the balance from the company records

Common stock usually has all of the following features except

the conversion privilege

Which of the following statements is true regarding a corporations purchase of treasury stock?

the cost of treasury stock is a reduction in stockholders equity

when petty cash balance is replenished and the expenses are recognized

the petty cash balance is not affected

Which of the following statements is true about small stock dividends?

they are capitalized using the stock's market value just before the dividend

When a corporation issues a stock dividend, which of the following is true

total stockholders equity remains the same

Which of the following is true for a corporation that issues 1,000 shares of $2 par common stock at $5 per share

total stockholders' equity will increase by $5,000