Checkpoint 10, 11, 12
6800 shares of treasury stock of Concord, Inc., previously acquired at $12 per share, are sold at $18 per share. The entry to record this transaction will include a
$40800. ($18 - $12) × 6800 = $40800. [Number of treasury shares sold × (Selling price of treasury stock - Cost of treasuy stock) = Credit to paid-in capital treasury stock]
Which one of the following events would not require a formal journal entry on a corporation's books?
2 for 1 stock split
The following data is available for Sheffield Corporation at December 31, 2018: Common stock, par $10 (authorized 30400 shares) $263000 Treasury Stock (at cost $15 per share) 900 Based on the data, how many shares of common stock are outstanding?
26240. ($263000/$10) - ($900/$15) = 26240. [(Common stock ÷ Par value) - (Treasury stock ÷ Price per share) = Number of shares outstanding]
The interest charged on a $62000, 60-day note payable, at the rate of 6%, would be (Hint: Use 360 days for calculation)
620
A cash register tape shows cash sales of $1804 and sales taxes of $117. The journal entry to record this information is
Cash 1921 Sales Taxes Payable 117 Sales Revenue 1804
On January 1, 2018, Sheffield Company, a calendar-year company, issued $914000 of notes payable, of which $228500 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2018, is
Current Liabilities, $228500; Long-term Debt, $685500. (Total notes payable - Portion coming due next year = L-T debt portion) $914000 - $228500 = $685500.
Which one of the following would not be considered an advantage of the corporate form of organization?
Government regulation
On October 1, Coronado's Carpet Service borrows $360000 from First National Bank on a 4-month, $360000, 7% note. What entry must Coronado's Carpet Service make on December 31 before financial statements are prepared?
Interest Expense 8400 Interest Payable 8400
Which of the following statements is not considered a disadvantage of the corporate form of organization?
Limited liability of stockholders
Which of the following show the proper effect of a stock split and a stock dividend? Item Stock Split Stock Dividend
Par value per share Decrease No change
Which of the following statements about dividends is not accurate?
The board of directors is obligated to declare dividends.
The entry to record the proceeds upon issuing an interest-bearing note is
The entry to record the proceeds upon issuing an interest-bearing note is
In the balance sheet the account Premium on Bonds Payable is
added to Bonds Payable.
Paid-in capital from treasury stock would appear on a balance sheet under the category
additional paid-in capital.
If the market interest rate is greater than the contractual interest rate, bonds will sell
at a discount.
When preferred stock is cumulative, preferred dividends not declared in a period are
called dividends in arrears.
Investing activities include
collecting cash on loans made.
The third (final) step in preparing the statement of cash flows is to
compare the net change in cash with the change in the cash account reported on the balance sheet.
Accounting for treasury stock is done by the
cost method.
Working capital is
current assets minus current liabilities.
Any balance in an unearned revenue account is reported as a(n)
current liability.
The acquisition of treasury stock by a corporation
decreases its total assets and total stockholders' equity.
If accounts payable have increased during a period,
expenses on an accrual basis are greater than expenses on a cash basis.
If stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at
fair value.
Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the
indirect method.
When equipment is sold for cash, the amount received is reflected as a cash
inflow in the investing section.
On the dividend record date,
no entry is required.
A corporation has the following account balances: Common stock, $1 par value, $59000; Paid-in Capital in Excess of Par, $1300000. Based on this information, the
number of shares issued are 59000.
In most companies, current liabilities are paid within
one year or the operating cycle out of current assets.
The cash effects of transactions that create revenues and expenses are
operating activities.
A stockholder who receives a stock dividend would
own more shares of stock.
The two ways that a corporation can be classified by purpose are
profit and not-for-profit.
Unearned Rent Revenue is
reported as a current liability.
Corporations are granted the power to issue bonds through
state laws.
The statement of cash flows
summarizes the operating, financing, and investing activities of an entity.