Exam 11: Proprietorships,partnerships,and Corporations

Discuss possible reasons why a corporation may establish an appropriation of retained earnings.

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.Use only one letter for each element.You do not need to enter amounts. -Grover Co.declared a 2-for-1 stock split.Before that announcement,Grover had 40,000 shares of outstanding common stock.

On January 12,2016,Gilliam Corporation issued 550 shares of $12 par-value common stock for $15 per share.The number of shares authorized is 5,000,and the number of shares outstanding prior to this transaction is 1,200.Which of the following answers describes the effect of the January 12,2016 transaction?

The book value of a share of stock is equal to the market or selling price of the stock.

A benefit of corporations is that they are free from double taxation.

The par value of a company's stock

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 equity accounts? D)

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.

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

The term "Retained Earnings" is best explained by which of the following statements?

Preferred stockholders generally have no voting rights in a corporation.

All corporations are subject to extensive government regulation.

Articles of incorporation,prepared by a business that wishes to incorporate,normally include the corporation's name and purpose,its location,and provisions for capital stock.

Which of the following is not considered an advantage of the corporate form of business organization?

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.Use only one letter for each element.You do not need to enter amounts. -Sierra Co.issued 10,000 shares of common stock for $45 per share.The stock has a par value of $10.

Fred and Barney started a partnership.Fred invested $20,000 in the business and Barney invested $32,000.The partnership agreement stipulated that profits would be divided as follows: Each partner would receive a 15% return on invested capital with the remaining income being distributed equally between the two partners.Assuming that the partnership earned $38,000 during an accounting period,the amount of income assigned to the two partners would be:

Explain the differences in recording the initial issue of stock for (a)par-value, (b)stated- value,and (c)no-par stock.

Prepare the journal entries needed for the following transactions occurring during 2016 for Valencia,Inc.: a)On February 1,2016,Valencia purchased for cash,in the open market,4,000 shares of its own common stock at $40 per share. b)On July 1,2016,1,600 of the shares purchased on February 1,2016 were sold at $38 per share. c)On September 1,2016,800 of the shares purchased on February 1,2016 were sold at $41 per share.

Vortex Corp.has 250,000 shares of common stock authorized.It has issued 85,000 shares and has reacquired 9,000 of these shares as treasury stock.Vortex subsequently declared a cash dividend of $6 per share.What is the total amount of dividends that were declared?

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.Use only one letter for each element.You do not need to enter amounts. -The Premier Corporation began operations on January 1,2016 by issuing 10,000 shares of no-par stock for $22 per share.Indicate the effects of this transaction on the financial statements.