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Exam 11: Proprietorships, Partnerships, and Corporations

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Question 51

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At the time of liquidation, Fairchild Company reported assets of $200,000, liabilities of $120,000, common stock of $70,000 and retained earnings of $10,000. What is the maximum amount of Fairchild's assets that the shareholders are entitled to receive?

A) $200,000
B) $80,000
C) $90,000
D) $100,000

E) None of the above
F) A) and B)

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Question 52

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Indicate how each event affects thefinancial statements. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA.You do not need to enter dollar amounts Jack Grimes agreed to purchase 8% of Preston Corporation's outstanding common stock from Todd Barbour, one of Preston's major stockholders. (Note: Consider the effects of the transaction on Preston's financial statements.)

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A corporation is a separate legal entit...

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Question 53

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A partner is responsible for his/her own actions, but not for actions taken by another partner on behalf of the partnership.

A distribution by a sole proprietorship to the owner is called a withdrawal.

Rocco Corporation decides to issue a 7.5% stock dividend on 20,000 outstanding shares of $10 stated value common stock. The distribution is made at the time the market value of the stock is $50 a share. How will the entry to record this transaction affect the company's stockholders' equity accounts?

At the time that Kirby Company issued a 2-for-1 stock split, the company had 5,000 shares of $6 par value common stock outstanding. Stockholders' equity also included $15,000 of paid in capital in excess of par value-common and $22,000 of retained earnings. Which of the following statements regarding the impact of the stock split is true?

Personal liability is a significant disadvantage of the partnership form of business organization.

The balance sheet of a sole proprietorship will report two equity accounts: one for amounts contributed by the owner, and one for the earnings of the business.

On July 1, Year 1, Village Bookstore, Incorporated appropriated retained earnings in the amount of $36,000 for a future remodeling project in the basement of the bookstore. On June 30, Year 1, the balance of Retained Earnings was $82,800 and the Cash balance was $43,200. Which of the following answers shows the effect of the July 1 event on the financial statements?

What effect will the declaration and distribution of a stock dividend have on net income and cash flows?

Cash dividends are affected by three significant dates. On which of the dates do dividends become a legal obligation of a corporation?

For Year 2, the Sacramento Corporation had beginning and ending Retained Earnings balances of $208,054 and $231,012, respectively. Also during Year 2, the board of directors declared cash dividends of $29,000, which were paid during Year 2. The board also declared a stock dividend, which was issued and required a transfer in the amount of $16,000 to paid-in capital. Total expenses during Year 2 were $32,916. Based on this information, what was the amount of total revenue for Year 2?

Articles of incorporation, prepared by a business that wishes to incorporate, normally include, but are not limited to, the corporation's name and purpose, its location, and provisions for capital stock.

Jessup Company was founded in Year 1. It acquired $45,000 cash by issuing stock to investors and an additional $15,000 cash by borrowing from creditors. During Year 1 it received $25,000 cash revenues and paid $32,000 in cash expenses. The company then went out of business. Required: a)Explain the term, "business liquidation." b)What amount of cash should Jessup Company have had on hand immediately before going out of business? c)What amount of cash will Jessup's creditors receive? d)What amount of cash will Jessup's stockholders receive? Answer Key Test name: chapter 11

On March 1, Year 1, Gilmore Incorporated declared a cash dividend on its 1,500 outstanding shares of $50 par value, 6% preferred stock. The dividend will be paid on May 1, Year 1 to the stockholders of record as of April 1, Year 1.How will the May 1 payment of the dividend affect the financial statements?

Explain the differences in recording the initial issue of stock for (a)par-value, (b)stated- value, and (c)no-par stock in terms of the effect of each on the Common Stock account.

A purchase of treasury stock is an asset use transaction.

How is the price-earnings ratio calculated?

Green Corporation has the following stock outstanding: No dividends were paid in Year 1 or Year 2. During Year 3, Green paid $100,000 in dividends. Required: a)Compute the total amounts of dividends that were paid in Year 3 to:1)Preferred stockholders2)Common stockholdersb)Compute the amounts of dividends per share for:1)Preferred stock2)Common stock

Indicate how each event affects thefinancial statements. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA.You do not need to enter dollar amounts Fort Worth Co. declared a cash dividend but has not yet paid the money to the shareholders.