Exam 11: Proprietorships,partnerships,and Corporations

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

Helena Corporation declared a 2-for-1 stock split on 8,000 shares of $6 par value common stock.If the market price of the stock had been $25 a share before the split,the par value,number of shares,and approximate market value after the split would be:

In accordance with restrictive debt covenants,Maynard Company appropriated $20,000 of retained earnings.Which of the following entries would be required to recognize this appropriation?

Which of the following statements about Treasury Stock is correct?

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

How would the declaration of a cash dividend affect the calculation of a company's price-earnings ratio? (Hint: Do not consider any change in the market price of the stock that might occur because of the declaration of the dividend. )

Which of the following is not normally a preference given to the holders of preferred stock?

Which of the following journal entries will be used to record the stock dividend?

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 31,Year 3,Gilligan's stockholders' equity accounts report the following balances: At the end of Year 3,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 amount of retained earnings that will be transferred to paid-in capital as a result of the stock dividend issued by Gilligan Corporation?

On July 1,Year 1,Village Bookstore,Inc.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 elements of the financial statements?

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.

Establishing a sole proprietorship generally requires the owner to get a charter from the state government.

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

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

A corporation might buy some of its own stock to help keep the market price from falling.

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 31,Year 3,Gilligan's stockholders' equity accounts report the following balances: At the end of Year 3,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?

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.

On September 1,Year 1,Orville Corporation has unrestricted retained earnings of $600,000,appropriated retained earnings of $400,000,cash of $850,000,and accounts payable of $50,000.What is the maximum amount that can be used for cash dividends?

Llewelyn Company purchased 1,000 shares of its own $10 par value common stock when the market price of the stock was $36 per share.Which of the following journal entries would be used to record the purchase of treasury stock?

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.