Exam 13: Planning Equity Financing

Which of the following is true about the characteristics of a partnership?

A recent article in a business publication described a leading cosmetics company as being in financial difficulty because it was "highly leveraged".What does "highly leveraged" mean? Can it ever be good to be "highly leveraged"? Explain.

Babylon Corporation has 1,000,000,$1 par shares of common stock authorized.A total of 400,000 shares have been sold to stockholders and 10,000 shares have been repurchased by the firm for later resale.How many shares are issued and outstanding? Issued Outstanding

Tom,Dick and Harry are partners in the Wipeout Company.Their partnership income sharing agreement calls for Tom and Dick to receive salary allowances of $24,000 and $18,500,respectively.Any remaining income or loss is to be divided equally.If the company's income was $96,500,Dick's share would be:

Chuck,Ron,and Wayne are partners in the Zieman Dance Hall Company with the following balances in their capital balances. Chuck $120,000 Ron $70,000 Wayne $40,000 Their partnership agreement has the following provision for the division of income and losses. Each partner to receive 10% of their capital balance. Wayne has a salary allowance of $50,000 Any residual is to be divided on a 5:3:2 basis Calculate how the following income and loss amounts would be divided among the parters: A.$70,000 of net income B.$15,000 net loss

During the current year,Chris,Casey,and Steve,who are partners in the CCS Company,had average capital balances of $39,000,$43,000,and $55,000,respectively.The partners share profits and losses by allowing a 12% return on average capital,with any remaining income or loss divided in a ratio of 7:5:3.If the company's income was $8,940,Casey's capital account would:

Which of the following balance sheet accounts describes the stockholders' claims on the assets of a firm that have been created by the company's operating profits?

The obligation to pay a cash dividend becomes a legal liability on the:

Which of the following is not one of the advantages of sole proprietorships and partnerships,as compared to corporations?

Which of the following is not an advantage of partnerships.

Larry,Mo,and Curley are partners in Stooges Company with the following balances in their capital balances. Larry $100,000 Mo $70,000 Curley $25,000 Their partnership agreement has the following provision for the division of income and losses. Each partner to receive 10% of their capital balance. Curley is to receive a salary of $30,000 Any residual is to be divided on a 5:3:2 basis If Stooges Company generated $20,000 of net income how will it be divided among the partners?

The total number of shares of stock that a state has approved for issuance to shareholders is referred to as the number of shares:

Financial risk is the risk associated with:

The preemptive right possessed by common stockholders gives them the right to:

An arbitrary value assigned to shares of capital stock and approved by the state when the business is incorporated is referred to as:

Which of the following is NOT a potential feature of preferred stock?

Which of the following statements is true about distribution of partners earning?

Nap,Olie,and Eon,who are partners in the Josephine Company,had beginning capital balances of $35,000,$62,000,and $28,000,respectively.If the partners share income and losses based on the ratio of their beginning capital balances,Olie's share of a $250,000 partnership loss would be:

Explain why the combination of mutual agency and unlimited liability create a great deal of risk for partnerships.

Merchants Corporation has 30,000 shares of 6.5%,$100 par value cumulative preferred stock and 200,000 shares of $10 par value common stock issued and outstanding.There are two years of dividends in arrears on the preferred stock.Determine the amount of dividends each class of stock will receive in total and per share assuming the company declares a $935,000 dividend.