ACCTG 211 Chapters 11 and 12

How to calculate preferred dividend

# of shares * par value * percentage rate = dividend

A company reported that its bonds with a par value of $50,000 and a carrying value of $52,000 are retired for $60,000 cash, resulting in a loss of $8,000. The amount to be reported under cash flows from financing activities is:

$(60,000)

Net cash used in operating activities was $10,000l. Net cash provided by investing activities was $2,000. Net cash provided by financing activities was $5,000. The cash balance at the end of the year was $12,000. The case balance at the beginning of the year was $_______.

$15,000

A machine with a cost of $100,000 and an accumulated depreciation of $98,000 is sold for $70,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is ______.

$70,000

Which of the following would be correct adjustments to net income to arrive at cash flows from operating activities, using the indirect method?

- Add increase in accounts payable - Subtract increase in inventory

Which of the following items are classified as noncash investing and financing activities?

- Retirement of debt by issuing stock - Lease of assets in a long-term lease transaction - Conversion of preferred stock to common stock

At the beginning of the period, a company reported $100,000 of common stock, $10 par; and $50,000 paid-in capital excess of par. At the end of the period, this company reported $110,000 of common stock, $10 par; and $90,000 paid-in capital in excess of par. Cash received from the sale of common stock during the year is $________.

50000; (110,000+90,000)-(100,000+50,000)= 200,000 - 150,000 = 50,000

Under the indirect method of preparing the statement of cash flows, decreases in non cash current operating assets should be

Added to net income

Cameron, Inc. held 1000 shares of its own $10 par value common stock purchased for $20 per share. In March, Cameron sold 10 shares at $20 per share. The journal entry to record the sale of treasury stock would include a _______ to Treasury Stock in the amount of _______.

Credit; 200 (Reason: under the cost method, they will credit the treasury stock account for the price paid $20 per share x 10 shares = $200).

The three dates related to a cash dividend include all of the following:

Date of declaration Date of payment Date of record

On July 1, Hanson Corporation issued 10 shares of 10 shares of $100 par value preferred stock for cash of $1,000 per share, Record the journal entry.

Debit Cash for $10,000 Credit preferred stock for $1,000 Credit "PAid in capital in excess of par value" for $9,000

Prior to June 1, Sandler company had no treasury stock transactions. Then on June 1, the company paid $5,000 to purchase 100 shares of its stock on the open market. Complete the journal entry for June 1

Debit Treasury stock for $5,000 Credit cash for $5,000

Prior to June 1, Sandler Company had no treasury stock transactions. Then on June 1, the company paid $5000 to purchase 100 shares of its common stock on the open market. On July 1, the company sold 50 of these shares at $52 per share. Then on August 1, the company sold the remaining 50 shares at $46 per share. Complete journal entry for July 1.

Debit cash for 2,600 Credit Treasury stock for 2,500 Credit "paid in capital, treasury stock" for 100

Mustang Corporation had 100,000 shares of $2 par value common stock outstanding. On December 31, the company's board of directors declares a 20% stock dividend. This stock dividend will be distributed on January 30, 2022 to the stockholders of record on January 15, 2022. The market price of the company's stock is $10 per share on December 31, 2021. Complete journal entry for Dec. 31.

Debit retained earnings for $200,000. Credit "Common stock dividends distributable" for $40,000 Credit "paid in capital in excess of par value" for $160,000.

The correct order of the three-step analysis of determining cash provided or used by investing activities is:

Identify changes in investing accounts, explain the changes, report the cash flow effects.

The issuance of common stock and declaration and payment of cash dividends will result in the following:

Increase in financing activities for the issuance and a decrease in financing activities for the dividends.

Which of the following items would be added to net income when reporting cash flows from operating activities, using the indirect method?

Increase in unearned fees Increase in accounts payable

If the dividend rate on preferred stock is lower than the rate the corporation earns on its assets, the effect of issuing preferred stock is to

Increase the rate earned by common shareholders

What are the classifications in the statement of cash flows?

Operating, Investing, and Financing

Jose Garcia agrees to contribute land with a fair market value of $10,000 in exchange for 200 shares of Damian Inc's common stock with a par value of $10 per share. The journal entry to record this transaction in the books of Damian, Inc will include a credit to ____ in the amount of _______.

Paid-in capital, in excess of Par ; $8,000

Place the steps to preparing the statement of cash flows in the correct order.

Step 1--Compute net increase or decrease in cash Step 2--Compute net cash from or for operating activities Step 3--Compute net cash from or for investing activities Step 4--Compute net cash from or for financing activities Step 5--Compute net cash from all sources, then prove it

Under the indirect method of preparing the statement of cash flows, depreciation and amortization should be

added to net income

Starfish Shells had a beginning balance in Notes Payable of $35,000 and an ending balance of $40,000. This will be reported as ____ on the statement of cash flows.

an increase of $5,000 in the cash flows from financing activities section

A _______ is the distribution of cash to its owners. This is determined by the board of directors.

cash dividend

Bing Inc.'s charter authorizes 500 shares of stock with no par value. Bing Inc. sells 100 shares of stock at its initial offering for $5 per share. The journal entry to record this transaction will include a (debit/credit) _______ to Common Stock for ______.

credit; $500

Under the indirect method of preparing the statement of cash flows, decreases in current liabilities should be

deducted from net income

Under the indirect method of preparing the statement of cash flows, increases in current assets should be:

deducted from net income

The _____ method of reporting adjusts net income to get the net cash provided or used by operating activities

indirect

To compute cash flows from financing activities, accountants normally analyze changes in all of the following accounts except:

interest payable (Reason: Interest payable is a current liability and therefore would not be reported in the Financing Activities section)

______ stock refers to issued stock that is currently held by stockholders

outstanding

Unlike a stock dividend, a stock split _____

reduces the par value of the stock

Long, Inc purchased 50 shares of its own $10 par value common stock for $50 per share. The journal entry to record this transaction would include a debit to the _______ stock account in the amount of $________.

treasury, 2500