Exam 4 - 11, 12

The following data has been collected about Keller Company's stockholders' equity accounts: Common stock $10 par value 20,000 shares authorized and 10,000 shares issued, 9,000 shares outstanding $100,000 Paid-in capital in excess of par value, common stock 50,000 Retained earnings 25,000 Treasury stock 11,500 Assuming the treasury shares were all purchased at the same price, the cost per share of the treasury stock is:

$11.50.

A company reported that its bonds with a par value of $50,000 and a carrying value of $66,500 are retired for $71,400 cash, resulting in a loss of $4,900. The amount to be reported under cash flows from financing activities is:

$16,500.

In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: Net income for the year was $ 53,500 Accounts payable decreased by $19,500 Accounts receivable increased by $26,500 Inventories increased by $6,500 Cash dividends paid were $14,300 Depreciation expense was $21,500 Net cash provided by operating activities was:

$22,500.

Marshland Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Cash dividends declared for the year $40,000 Cash dividends payable at the beginning of the year $17,000 Cash dividends payable at the end of the year $13,000 The amount of cash paid for dividends was:

$44,000.

Treasury stock is classified as:

A contra equity account.

A cash dividend payment to shareholders during the year should be reported on the statement of cash flows as:

A decrease in cash flows from financing activities

The statement of cash flows is:

A financial statement that reports the cash inflows and cash outflows for an accounting period, and that classifies those cash flows as operating activities, investing activities, or financing activities.

An example of a transaction that must be disclosed as a noncash investing and financing activity includes all but which of the following?

A transaction exchanging cash equivalents for cash.

The statement of cash flows helps analysts evaluate all but which of the following?

Ability of the company to generate profit.

The statement of cash flows helps analysts evaluate all things but which of the following?

Ability of the company to generate profit.

A cash equivalent is:

An investment readily convertible to a known amount of cash.

The number of shares that a corporation's charter allows it to sell is referred to as:

Authorized stock.

A statement of cash flows explains the differences between the beginning and ending balances of:

Cash and cash equivalents.

When using the indirect method to calculate and report the net cash provided or used by operating activities, net income is adjusted for all but which of the following?

Changes in noncurrent assets and noncurrent liabilities.

Preparation of the statement of cash flows does not involve:

Computing the profit compared to the net increase or decrease in cash.

The date the directors vote to declare and pay a dividend is called the:

Date of declaration.

Comfort Mattresses, Inc. sold 26,000 shares of its $1 par value common stock at a cash price of $12 per share. The entry to record this transaction would be:

Debit Cash $312,000; credit Common Stock $26,000; credit Paid-in Capital in Excess of Par Value, Common Stock $286,000.

West Company declared a $0.50 per share cash dividend. The company has 190,000 shares issued, and 10,000 shares in treasury stock. The journal entry to record the payment of the dividend is:

Debit Common Dividends Payable $90,000; credit Cash $90,000.

A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000. The entry to record this exchange is:

Debit Land $70,000; credit Common Stock $50,000; credit Paid-In Capital in Excess of Par Value, Common Stock $20,000.

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the declaration of the cash dividend is:

Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000.

Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the journal entry necessary to record the repurchase of stock on June 30?

Debit Treasury Stock, Common $4,000; credit Cash $4,000.

Book value per common share is computed by:

Dividing stockholders' equity applicable to common shares by the number of common shares outstanding.

Which of the following is true of a stock dividend?

Does not affect total equity, but transfer amounts between the components of equity.

Retained earnings:

Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.

Addams Corporation paid cash dividends totaling $75,000 during its most recent fiscal year. How should this information be reported on Addams's statement of cash flows?

In financing activities as a use of funds.

A corporation's minimum legal capital is established by recording the par or stated value of the number of shares:

Issued.

The price-earnings ratio is calculated by dividing:

Market value per share by earnings per share.

In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the:

Minimum legal capital.

The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is:

Net income (loss).

Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

Noncumulative preferred stock.

A premium on common stock:

Occurs when a corporation sells its stock for more than par or stated value.

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

Operating activities.

If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n):

Operating activity.

Stockholders' equity consists of which of the following?

Paid-in capital and retained earnings.

A dividend preference for preferred stock means that:

Preferred stockholders are allocated their dividends before dividends are allocated to common shareholders.

Changes in retained earnings are commonly reported in the:

Statement of stockholders' equity.

Alto Company issued 7% preferred stock with a $100 par value. This means that:

The amount of the potential dividend is $7 per year per preferred share.

A company made an error in calculating and reporting amortization expense in Year 1. The error was discovered in Year 2. The item should be reported as a prior period adjustment:

on the Year 2 statement of retained earnings.