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Exam 8: Proprietorships, Partnerships, and Corporations

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Question 21

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Flagler Corporation shows a total of $660,000 in its common stock account and $1,600,000 in its paid-in capital in excess of par value − common stock account. The par value of Flagler's common stock is $8. How many shares of Flagler stock have been issued?

A) 117,500
B) 200,000
C) 82,500
D) It cannot be determined

E) C) and D)
F) All of the above

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Question 22

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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?

A) Choice A
B) Choice B
C) Choice C
D) Choice D

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

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Question 23

Multiple Choice

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A reason often given for a corporate stock split is to:

Liability is a significant disadvantage of the partnership form of business organization.

Which of the following is a reason why a corporation may choose not to pay dividends?

Describe cumulative preferred stock.

Which of the following describes the type of management structure that is in place when board members are reluctant to fire an incompetent chief executive officer?

For Year 1, the Sacramento Corporation had beginning and ending Retained Earnings balances of $208,054 and $231,012 respectively. Also during Year 1, the corporation declared and paid cash dividends of $29,000 and issued stock dividends valued at $16,000. Total expenses were $32,916. Based on this information, what was the amount of total revenue for Year 1?

The Bristol-Fuller partnership was formed on January 1, Year 1, when Bristol and Fuller invested $40,000 and $30,000 cash in the partnership, respectively. During Year 1, the partnership earned $75,000 in cash revenues and paid $52,000 in cash expenses. Bristol withdrew $5,000 cash from the business during the year, and Fuller withdrew $4,000. The partnership agreement specified that net income should be allocated equally to the partners' capital accounts.Required: Indicate how each of the transactions and events for the Bristol partnership affects the financial statements model, below. Indicate dollar amounts of increases and decreases. For cash flows, indicate whether each is an operating activity (OA), investing activity (IA), or financing activity (FA). Indicate NA if an element is not affected by a transaction.

Which of the following is a disadvantage of a sole proprietorship?

Powell Corporation had $10 par stock with a market price of $60, when it declared a 2-for-1 stock split. After the stock split, the number of shares outstanding will double, and the market price of the stock should drop to about $30.

Chandler Company declared and paid a cash dividend. Which of the following choices accurately reflects how this event would affect the company's financial statements?

Which answer would represent the financial statement presentation of the stockholders' equity section on the balance sheet after the following transactions?1) Issued 200 shares of $20 par value common stock for $50 a share. Five hundred shares are authorized.2) Purchased 75 shares of treasury stock at $44 a share.

Gilligan Corporation was established on February 15, Year 1. Gilligan is authorized to issue 500,000 shares of $6.00 par value common stock. As of December 30, Year 1, Gilligan's stockholders' equity accounts report the following balances: On December 31, Year 1, Gilligan decides to issue a 5% stock dividend. At the time of issue, the market price of the stock was $22 per share.What is the number of shares outstanding after the stock dividend is issued?

The Public Company Accounting Oversight Board (PCAOB) was created by the Sarbanes-Oxley Act of 2002.

On February 2, Year 1, the Farmer Corporation issued 9,000 shares of no-par stock for $17 per share. The next day, the stock's price jumped on the New York Stock Exchange to $21 per share. Which of the following answers describes the effect of the February 2, Year 1 transaction?

Chisolm Corporation issued 10,000 shares of $5 par common stock for $22 per share. As a result of this transaction, Chisolm's legal capital increased by $50,000.

A company may retain some or all of the earnings to finance growth and increase its potential for future earnings. A) Sole proprietorship B) Partnership C) Corporation D) None of these

Ogilvie Corporation issued 17,000 shares of no-par stock for $20 per share. Ogilvie was authorized to issue 40,000 shares. What effect will this event have on the company's financial statements?

The number of shares of stock outstanding generally is greater than the number of shares of stock issued.