Exam 8: Proprietorships, Partnerships, and Corporations

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.Which of the following reflects the financial statement effects on the May 1, Year 1 date of payment?

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.How will the issuance of the stock dividend affect the financial statements?

Van Buren Corporation issued 5,000 shares of $6 par common stock for $24 per share. For this transaction, Common Stock should be increased for $120,000.

The corporate charter of Pinkston Corporation authorizes the issuance of 25,000 shares of 5% cumulative, preferred stock, $20 par, and 200,000 shares of $10 par common stock. At the end of the current year, the titles and balances of stockholders' equity accounts are as follows: common stock, 200,000 shares authorized, 50,000 shares issued and outstanding \ 50,000 Paid-in capital in excess of par - common stock 300,000 Preferred stock 25,000 shares issued and outstanding 500,000 Paid-in capital in excess of par - preferred stock Total Paid-in capital 1,400,000 Retained earnings Total Stockholders' Equity Pinkston declared dividends of $120,000 for the current year.Required:What is the amount of the annual dividend per share for preferred stock? If there are two years of preferred dividends in arrears at the beginning of the current year, what total amount of dividends will be paid to the preferred shareholder? What total amount will be paid to the common shareholders if there are two years of preferred dividends in arrears at the beginning of the year?

Chadwick Associates retained $850,000 of net income in the business in Year 1. If $75,000 was appropriated to satisfy the restrictive covenant of a loan agreement, what are the financial statements effects of the appropriation?

Vortex Corporation 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.Required: What is the total amount of dividends that were declared?

Indicate how each event affects the horizontal financial statements model. 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. Use only one letter for each element. You do not need to enter amounts. Increase = IDecrease = D No Affected = NAJim Caldwell and Pam Ennis, both CPAs, began their new partnership by each contributing $50,000 to their business. Indicate the effects of this transaction on the financial statements.

On what date do dividends become a legal liability of a corporation?

Garber Corporation had 40,000 shares of $10 par common stock outstanding on January 1, Year 1. On June 1, Year 1 Garber purchased 5,000 shares of its own stock on the open market for $22 per share and held it as treasury stock. On October 1, Year 1 Garber declared and issued a 10% stock dividend. The market value of Garber's stock was $24 per share on October 1. Garber's board of directors declared and paid a cash dividend of $57,750 on December 15, Year 1. Required:Show how the purchase of the treasury stock affects the financial statements.

Will the number of shares of stock issued and the number of shares of stock outstanding always be the same? Why or why not?

Indicate how each event affects the horizontal financial statements model. 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. Use only one letter for each element. You do not need to enter amounts. Increase = IDecrease = D No Affected = NAThe Premier Corporation began operations on January 1, Year 1 by issuing 10,000 shares of no-par stock for $22 per share. Indicate the effects of this transaction on the financial statements.

On January 1, Year 1, the organizers of the Fredonia Corporation obtained their charter authorizing 400,000 shares of $2 par common stock. Fredonia issued 30,000 shares of $2 par common stock for $8 per share. During Year 1, the corporation earned $820,000 in cash revenue and paid $700,000 in cash expenses, not including income tax. The company declared and paid cash dividends totaling $28,000. Fredonia Corporation is in the 30% tax bracket.Required: Using the above information, prepare an income statement and a balance sheet for the Fredonia Corporation.

The Curtis Company was started on January 1, Year 1 as a sole proprietorship. The initial investment from Charlotte Curtis, the owner, was $80,000. During Year 1, the business earned $60,000 in cash revenue and paid $45,000 in cash expenses. Ms. Curtis withdrew $7,000 for her personal use.Required: Using the above information, prepare an income statement, a capital statement, and a balance sheet for the Curtis Company.

Blair Scott started a sole proprietorship by depositing $40,000 cash in a business checking account. During the accounting period the business borrowed $20,000 from a bank, earned $5,800 of net income, and Scott withdrew $7,000 cash from the business. Based on this information, at the end of the accounting period Scott's capital account contained a balance of:

On September 1, Year 1, Orville Corporation has unrestricted Retained Earnings of $7,500,000, Appropriated Retained Earnings of $4,500,000, Cash of $9,000,000, and Accounts Payable of $1,000,000. What is the maximum amount that can be used for cash dividends?

A corporation must record a liability for cash dividends on the date of record.

Curtain Company paid dividends of $6,000; $12,000; and $20,000 during Year 1, Year 2, and Year 3, respectively. The company had 1,000 shares of 5%, $200 par value preferred stock outstanding that paid a cumulative dividend. The amount of dividends received by the common shareholders during Year 3 would be:

On January 12, Year 1, 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, Year 1 transaction?

At the time that Kirby Company issued a 3-for-2 stock split, the company had 1,000 shares of $12 par value common stock outstanding. Stockholders' equity also contained $22,000 of additional paid-in capital and $36,000 of retained earnings. Immediately after the stock split the:

Gilligan Corporation was established on February 15, Year 1. Gilligan is authorized to issue 300,000 shares of $12 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 $20 per share.What is the number of shares outstanding after the stock dividend is issued?