ACC 211 Final (CH 11&13)

David corporation issues 20,000 shares of $0.50 par common stock for $6 per share, the APIC account will increase by

$110,000

The stockholder's equity section of Henderson's Inc.'s balance sheet on January 1, 2004 reported the following: Common stock $24 par, 20,000 shares issued and outstanding: 480,000 Additional paid in capital common: 160,000 Retained earnings: 400,000 Total stockholder equity: 1,040,000 On March 1, 2004 Henderson reacquired 4,000 shares of common stock at $40 a share. How much should be reported in the treasury stock account on March 31, 2004 balance sheet?

$160,000

Wilton Company reported net income of $50,000 for the year. During the year, accounts receivable decreased by $7,000, accounts payable increased by $3,000 and depreciation expense of $5,000 was recorded. Net cash provided by operating activities for the year is

$65,000.

A company would repurchase its own stock for all of the following reasons:

- provide shares for incentive compensation programs and employee savings plans - have shares on hand for holders of convertible securities and bonds - Reduce amount of equity relative to debt - have excess cash on hand - give to employees as bonuses - protect against hostile takeover - improve earnings per share numbers - create confidence for investors

With regard to preferred stock,

? its shareholders may have a right to participate, along with common shareholders if an extra dividend is declared

Which of the following is not a financing activity?

? making a cash payment to repay a bank loan

The Donut Co. reported net income for the current year. Which of the following business transactions could cause cash from operating activities to be higher than the amount of net income?

Amortization expense was recorded

What is ordinarily the first step in the formation of a corporation?

Application for incorporation to the appropriate Secretary of State

New Corp. issues 2,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to

Common Stock $20,000 and Paid-in Capital in Excess of Par Value $8,000.

Patriot's cafe issued 5,000 shares of $1 par common stock for $30 per share, providing the company with $150,000 in cash. What effect does this have on the accounting equation for Patriot in addition to cash?

Common stock increases by $5,000. APIC increases $145,000.

Which one of the following would NOT be considered an advantage of the corporate form of organization?

Government regulation

Which is a component of stockholder's equity?

Retained earnings

When a company purchases treasury stock, which of the following statements is TRUE?

The cost of the treasury stock reduces stockholder's equity

Which of the following statements is true with regard to contributed capital?

The shares in the hands of the shareholders are said to be outstanding

Eagle foods declared a cash dividend of $1,000. The journal entry to record the declaration includes

a debit to dividends payable of $1,000

With regard to a corporation's stock, par value is

an arbitrary amount that exists to fulfill legal requirements

A company purchased machinery by issuing 2,000 for $3 par value stock. Since the company is new, there is no established market price for its stock. How would the company record the transaction?

at the appraised fair value of the machine

Which of the following is not an operating activity?

cash payments for dividends to stockholders

Five thousand shares of treasury stock of Meyer, Inc., previously acquired at $12 per share, are sold at $18 per share. The entry to record this transaction will include a

credit to Paid-In Capital from Treasury Stock for $30,000.

What is necessary to form a corporation but not for a sole proprietorship?

filing corporate paperwork with the state

Cash dividends are declared and paid

financing

Bonds payable are retired at their maturity date

financing activity

Stock is issued for cash

financing activity

Cash flows from acquiring and selling long-term assets are classified as

investing activities

Equipment is purchased for cash

investing activity

When a company declares a 3 for 1 stock split, the number of outstanding shares

is tripled compared to the number of shares that were outstanding prior to the split.

Financing activities involve

issuing debt.

A small stock dividend is defined as

less than 20-25% of the corporation's issued stock.

Authorized stock represents the

max number of stocks that can be issued

A corporation has the following account balances: Common stock, $1 par value, $40,000; Paid-in Capital in Excess of Par Value, $1,350,000. Based on this information, the

number of shares issued are 40,000.

The order of presentation of activities on the statement of cash flows is

operating, investing, and financing.

Accounts receivable increased during the year

operations

Which of the following activities results in a cash outflow?

paying creditors for merchandise

Which of the following should be considered when the company decides to declare a cash dividend on common stock?

the cash available and the retained earnings balance

Stockholders prefer to invest in preferred stock because

the dividends are paid on preferred stock before they are paid on common stock

If a company issues $5 par value stock

the minimum selling price is $5

When a company declares a 2 for 1 stock split

there is no effect on total stockholder's equity

The officer who is generally responsible for maintaining the cash position of the corporation is the

treasurer.