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13 - 1 Corporations: Organization and Capital Stock Transactions 57.Which of the following statements is not considered a disadvantage of the corporate form of organization? a.Additional taxes b.Government regulations c.Limited liability of stockholders d.Separation of ownership and management 58.What is ordinarily the first step in the formation of a corporation? a.Development of by-laws for the corporation b.Issuance of the.
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13 - 1 Corporations: Organization and Capital Stock Transactions 137.Additional paid-in capital includes all of the following except a.paid-in capital from treasury stock. b.paid-in capital in excess of par. c.paid-in capital in excess of stated value. d.paid-in capital in excess of book value. 138.Which of the following is an incorrect statement about a corporation? a.A corporation is an.
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13 - 1 Corporations: Organization and Capital Stock Transactions Ex. 183 Niley-Cook Corporation issued 200,000 shares of $20 par value, cumulative, 6% preferred stock on January 1, 2013, for $4,500,000. In December 2015, Niley-Cook declared its first dividend of $800,000. Instructions (a)Prepare Niley-Cook’s journal entry to record the issuance of the preferred stock. (b)If the preferred.
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13 - 1 Corporations: Organization and Capital Stock Transactions TRUE-FALSE STATEMENTS 1.A corporation is not an entity which is separate and distinct from its owners. 2.A corporation can be organized for the purpose of making a profit or it may be not-for-profit. 3.A corporation acts under its own name rather than in the name of.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 61.The board of directors must assign a per share value to a stock dividend declared that is a.greater than the par or stated value. b.less than the par or stated value. c.equal to the par or stated value. d.at least equal to the par or stated.
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13 - 1 Corporations: Organization and Capital Stock Transactions BRIEF EXERCISES BE 155 Identify (by letter) each of the following characteristics as being an advantage, a disadvantage, or not applicable to the corporate form of business organization. A = Advantage D = Disadvantage N = Not Applicable Characteristics _____              1.Separate legal entity _____              2.Taxable entity resulting in additional taxes _____              3.Continuous.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 51.Dividends Payable is classified as a a.long-term liability. b.contra stockholders' equity account to Retained Earnings. c.current liability. d.stockholders' equity account. 52.Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections: Total AssetsTotal LiabilitiesTotal Stockholders' Equity a.IncreaseDecreaseNo change b.No changeIncreaseDecrease c.DecreaseIncreaseDecrease d.DecreaseNo changeIncrease 53.Which of the following.
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12 - 1 Accounting for Partnerships SHORT-ANSWER ESSAY QUESTIONS S-A E 208 Identify and explain the principal characteristics of the partnership form of business organization. S-A E 209 Castle and Berry are discussing how income and losses should be divided in a partnership they plan to form. What factors should be considered in determining the division.
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13 - 1 Corporations: Organization and Capital Stock Transactions Ex. 179 Rowlands Corporation has 100,000 shares of $40 par value preferred stock authorized. During the year, it had the following transactions related to its preferred stock. (a)Issued 20,000 shares at $55 per share. (b)Issued 10,000 shares for equipment having a $700,000 asking price. The stock.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting TRUE-FALSE STATEMENTS 1.Dividends may be declared and paid in cash or stock. 2.Cash dividends are not a liability of the corporation until they are declared by the board of directors. 3.The amount of a cash dividend liability is recorded on the date of record because.
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13 - 1 Corporations: Organization and Capital Stock Transactions S-A E 203 Land appraised at $60,000 is purchased by issuing 1,000 shares of $25 par value common stock. The market price of the shares at the time of the exchange, based on active trading in the securities market, is $75 per share. Should.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 81.CCCR Inc., has 2,000 shares of 6%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2013, and December 31, 2014. The board of directors declared and paid a $4,000 dividend in.
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13 - 1 Corporations: Organization and Capital Stock Transactions 87.Abbie’s Organics Corporation began business in 2014 by issuing 50,000 shares of $3 par common stock for $8 per share and 20,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $12..
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13 - 1 Corporations: Organization and Capital Stock Transactions EXERCISES Ex. 163 The following selected transactions pertain to L. Lewis Corporation: Jan.3Issued 100,000 shares, $10 par value, common stock for $25 per share. Feb.10Issued 6,000 shares, $10 par value, common stock in exchange for special purpose equipment. L. Lewis Corporation's common stock has been actively traded.
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13 - 1 Corporations: Organization and Capital Stock Transactions 147.Additional paid-in capital includes all of the following except the amounts paid in a.over par value. b.over stated value. c.from treasury stock. d.for the par value of common stock. 148.In the stockholders' equity section of the balance sheet, the classification of capital stock consists of a.additional paid-in capital and.
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12 - 1 Accounting for Partnerships COMPLETION STATEMENTS               195.The ______________ Act provides the basic rules for the formation and operation of partnerships in more than 90% of the states.               196.A partnership characteristic which enables each partner to act on behalf of the partnership when engaging in partnership business is called ______________.               197.A.
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12 - 1 Accounting for Partnerships S-A E  212(Ethics) Three doctors, Marshall Murrey, Andrew Shaw, and Austin Taylor, opened a family medicine clinic. All three doctors had been lifelong friends. All belonged to the same religious faith. All were very active in church affairs, and tried to mold their professional behavior to their.
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13 - 1 Corporations: Organization and Capital Stock Transactions 127.Rubio Corporation began business by issuing 300,000 shares of $5 par value common stock for $25 per share. During its first year, the corporation sustained a net loss of $50,000. The year-end balance sheet would show a.Common stock of $1,500,000. b.Common stock of $7,500,000. c.Total paid-in.
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13 - 1 Corporations: Organization and Capital Stock Transactions Ex. 185 The following information is available for Mint Corporation: Common Stock ($10 par)$1,500,000 Paid-in Capital in Excess of Par—Preferred200,000 Paid-in Capital in Excess of Stated Value—Common750,000 Preferred Stock450,000 Retained Earnings800,000 Treasury Stock—Common50,000 Instructions Based on the preceding information, calculate each of the following: (a)Total paid-in capital. (b)Total stockholders' equity. Ex. 186 Place each of the.
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13 - 1 Corporations: Organization and Capital Stock Transactions Ex. 181 In its first year of operations, Banner Elk Corporation had the following transactions pertaining to its $10 par value preferred stock. Feb.1Issued 6,000 shares for cash at $43 per share. Nov.1Issued 3,000 shares for cash at $45 per share. Instructions (a)Journalize the transactions. (b)Indicate the amount to.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 21.Earnings per share is calculated by dividing net income by the weighted-average number of shares of preferred stock and common stock outstanding. 22.Preferred dividends paid are added back to net income in calculating earnings per share for common stockholders. 23.Earnings per share indicates the.
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12 - 1 Accounting for Partnerships aEx. 189 Hu, Marcos, and Letterman share income on a 6:3:1 basis. They have capital balances of $80,000, $60,000, and $45,000, respectively, when Buffett is admitted to the partnership. Instructions Prepare the journal entry to record the admission of Buffett into the partnership if Buffett purchases one-half of Hu’s.
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13 - 1 Corporations: Organization and Capital Stock Transactions Ex. 171 On January 1, 2014, the stockholders’ equity section of Intercontinental Corporation shows: Common stock ($5 par value) $1,500,000; paid-in capital in excess of par value $1,000,000; and retained earnings $1,200,000. During the year, the following treasury stock transactions occurred. Mar.1   Purchased 30,000 shares.
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13 - 1 Corporations: Organization and Capital Stock Transactions MATCHING 199.Match the items below by entering the appropriate code letter in the space provided. A.Limited liabilityF.Preemptive right B.Capital stockG.Par value C.Board of directorsH.Legal capital D.Paid-in capitalI.Treasury stock E.Retained earningsJ.Cumulative feature ____              1.Net income retained in the corporation. ____              2.The amount that must be retained in the business for the protection.
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13 - 1 Corporations: Organization and Capital Stock Transactions Ex. 169 The following items were shown on the balance sheet of Westwind Corporation on December 31, 2014: Stockholders’ equity Paid-in capital Capital stock Common stock, $5 par value, 400,000 shares authorized; ______ shares issued and ______ outstanding..........$1,850,000 Additional paid-in capital In excess of par............................................     165,000 Total paid-in capital......................................2,015,000 Retained earnings................................................     750,000 Total.
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13 - 1 Corporations: Organization and Capital Stock Transactions Ex. 176 On January 1, 2014, Vidalia Company issued 30,000 shares of $2 par value common stock for $150,000. On March 1, 2014, the company purchased 6,000 shares of its common stock for $8 per share for the treasury. On June 1, 2014, 1,500.
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13 - 1 Corporations: Organization and Capital Stock Transactions SHORT-ANSWER ESSAY QUESTIONS S-A E  200 Identify at least six characteristics of the corporate form of business organization. Contrast each one with the partnership form of organization. S-A E  201 Companies frequently issue both preferred stock and common stock. What are the major differences in the rights.
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12 - 1 Accounting for Partnerships MATCHING 207.Match the items below by entering the appropriate code letter in the space provided. A.Mutual agencyG.Purchase of an interest B.Unlimited liabilityH.Partnership liquidation C.Partnership agreementI.Capital deficiency D.Income ratioJ.Distribution of cash to partners in E.Partners' capital statement liquidation of a partnership. F.Admission by investment _____              1.Each partner is personally and individually liable for partnership debts. _____             .
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13 - 1 Corporations: Organization and Capital Stock Transactions Ex. 167 Zeus Corporation issued 5,000 shares of stock. Instructions Prepare the entry for the issuance under the following assumptions. (a)The stock had a par value of $5 per share and was issued for a total of $65,000. (b)The stock had a stated value of $5 per share.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 71.A stock split a.may occur in the absence of retained earnings. b.will increase total paid-in capital. c.will increase the total par value of the stock. d.will have no effect on the par value per share of stock. 72.Outstanding stock of the Larson Corporation included 40,000 shares of.
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13 - 1 Corporations: Organization and Capital Stock Transactions Ex. 174 Westglow Corporation purchased 3,000 shares of its $5 par value common stock for a cash price of $10 per share. Two months later, Westglow sold the treasury stock for a cash price of $8 per share. Instructions Prepare the journal entry to record the.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 41.Which one of the following events would not require a formal journal entry on a corporation's books? a.2 for 1 stock split b.100% stock dividend c.2% stock dividend d.$1 per share cash dividend 42.Stock dividends and stock splits have the following effects on retained earnings: Stock SplitsStock Dividends a.IncreaseNo.
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13 - 1 Corporations: Organization and Capital Stock Transactions COMPLETION STATEMENTS               187.A corporation has a separate __________________________ apart from its owners.               188.The major advantages of the corporate form of organization include (1) limited _________________ of owners, (2) continuous ____________________ and (3) ease of transferring ___________________.               189.Stockholders elect the _______________, who in turn.
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13 - 1 Corporations: Organization and Capital Stock Transactions Ex. 165 Prytania Corporation is authorized to issue 1,000,000 shares of $5 par value common stock. During 2014, its first year of operation, the company has the following stock transactions. Jan. 1Paid the state $5,000 for incorporation fees. Jan.15Issued 500,000 shares of stock at $6 per.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 11.Retained earnings that are restricted are unavailable for dividends. 12.Restricted retained earnings are available for preferred stock dividends but unavailable for common stock dividends. 13.A retained earnings statement shows the same information as a corporation income statement. 14.A detailed stockholders' equity section in the balance.
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13 - 1 Corporations: Organization and Capital Stock Transactions 31.A successful corporation can have a continuous and perpetual life. 32.Organizational costs are capitalized by debiting an intangible asset entitled Organization Costs. 33.The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value. 34.The cost of.
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13 - 1 Corporations: Organization and Capital Stock Transactions 67.A corporation has the following account balances: Common stock, $1 par value, $30,000; Paid-in Capital in Excess of Par, $650,000. Based on this information, the a.legal capital is $680,000. b.number of shares issued are 30,000. c.number of shares outstanding are 680,000. d.average price per share issued is.
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12 - 1 Accounting for Partnerships aEx. 191 Kim Locke and Mary Leigh Coker have capital accounts of $420,000 and $480,000, respectively. Jeff Doggett and Danny Cambrey are to join the partnership. Doggett invests $425,000 in the partnership for which he receives a capital credit of $425,000. Cambrey purchases a one-half interest from.
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13 - 1 Corporations: Organization and Capital Stock Transactions BE 160 Orley Company had the following transactions. 1.Issued 5,000 shares of common stock with a stated value of $10 for $130,000. 2.Issued 2,000 shares of $100 par preferred stock at $108 for cash. Instructions Prepare the journal entries to record the above stock transactions. BE 161 On February 1,.
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13 - 1 Corporations: Organization and Capital Stock Transactions 97.Conecuh Manufacturing Corporation purchased 8,000 shares of its own previously issued $10 par common stock for $184,000. As a result of this event, a.Conecuh’s Common Stock account decreased $80,000. b.Conecuh’s total stockholders’ equity decreased $184,000. c.Conecuh’s Paid-in Capital in Excess of Par account decreased $104,000. d.All of.
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13 - 1 Corporations: Organization and Capital Stock Transactions 21.The acquisition of treasury stock by a corporation increases total assets and total stockholders' equity. 22.Treasury stock should not be classified as a current asset. 23.Treasury stock purchased for $35 per share that is reissued at $31 per share, results in a Loss on Sale.
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13 - 1 Corporations: Organization and Capital Stock Transactions 117.Which of the following is not a right or preference associated with preferred stock? a.The right to vote b.First claim to dividends c.Preference to corporate assets in case of liquidation d.To receive dividends in arrears before common stockholders receive dividends 118.Taylor Corporation issues 20,000 shares of $50 par.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting MULTIPLE CHOICE QUESTIONS 31.Each of the following decreases retained earnings except a a.cash dividend. b.liquidating dividend. c.stock dividend. d.All of these decrease retained earnings. 32.Each of the following decreases total stockholders' equity except a a.cash dividend. b.liquidating dividend. c.stock dividend. d.All of these decrease total stockholders' equity. 33.Which one of the following is.
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13 - 1 Corporations: Organization and Capital Stock Transactions 77.If stock is issued for less than par value, the account a.Paid-In Capital in Excess of Par is credited. b.Paid-In Capital in Excess of Par is debited if a debit balance exists in the account. c.Paid-In Capital in Excess of Par is debited if a credit.
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12 - 1 Accounting for Partnerships aEx. 193 Brislin, Humphreys, and Watkins share income and losses in a ratio of 3:2:5, respectively. The capital account balances of the partners are as follows: Brislin Capital$600,000 Humphreys, Capital360,000 Watkins, Capital260,000 aEx. 193(Cont.) Instructions Prepare the journal entry on the books of the partnership to record the withdrawal of Watkins under the.
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13 - 1 Corporations: Organization and Capital Stock Transactions 47.Which of the following would not be true of a privately held corporation? a.It is sometimes called a closely held corporation. b.Its shares are regularly traded on the New York Stock Exchange. c.It does not offer its shares for sale to the general public. d.It is usually.
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13 - 1 Corporations: Organization and Capital Stock Transactions Ex. 178 The stockholders' equity section of Makoto Corporation's balance sheet at December 31, 2013, appears below: Stockholders' equity Paid-in capital Common stock, $10 par value, 400,000 shares authorized;    250,000 issued and outstanding$2,500,000 Paid-in capital in excess of par  1,200,000 Total paid-in capital3,700,000 Retained earnings     600,000 Total stockholders' equity$4,300,000 During 2014,.
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13 - 1 Corporations: Organization and Capital Stock Transactions 107.Treasury stock should be reported in the financial statements of a corporation as a(n) a.investment. b.liability. c.deduction from total paid-in capital. d.deduction from total paid-in capital and retained earnings. 108.A company would not acquire treasury stock a.in order to reissue shares to officers. b.as an asset investment. c.in order to increase.
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13 - 1 Corporations: Organization and Capital Stock Transactions MULTIPLE CHOICE QUESTIONS 37.Which one of the following is a privately held corporation? a.Intel b.General Electric c.Caterpillar Inc. d.Cargill Inc. 38.The dominant form of business organization in the United States in terms of dollar sales volume, earnings, and employees is a.the sole proprietorship. b.the partnership. c.the corporation. d.not known. 39.Under the corporate form of.
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13 - 1 Corporations: Organization and Capital Stock Transactions 11.A corporation can issue more shares than it is authorized in its charter, if the board of directors approves of an increase in the number of authorized shares. 12.The market value of a corporation's stock is determined by the number of shares that the.
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