Accounting Expert Answers & Study Resources : Page 37

12.Prepare in proper form the stockholders' equity section of the balance sheet from the following selected accounts and balances taken from the adjusted trial balance of Pathway Corporation on June 30, 20xx. Partial Adjusted Trial Balance AccountDebitCredit Common Stock—$10 stated value, 50,000 shares authorized, 45,000 shares outstanding450,000 Preferred Stock—$100 par value, 8 percent cumulative convertible, 3,000.

10.When are eliminating entries made, where are they entered, and why are they needed? 11.At the beginning of the current year, Morris Corporation acquired 100 percent of the common stock of Nash Corporation for $200,000. Nash's stockholders' equity included common stock for $125,000 and retained earnings of $75,000. Prepare the eliminating.

32.Prepare entries in journal form without explanations to record the following transactions involving Dailey Corporation's $5 par value common stock: Apr.1Purchased 500 shares of its own common stock for $12, the current market price. This is the first transaction involving its own stock engaged in by the company. May1Sold 100 of the.

30.Prepare the entries in journal form necessary to record the following stock transactions of Fitzgerald Corporation. These transactions represent all treasury stock transactions entered into by the company. (Omit explanations.) June1Purchased 2,000 shares of its own $30 par value common stock for $70 per share, the current market price. 10Sold 500 shares.

51.When a subsidiary has borrowed cash from the parent company, the related receivable and payable are eliminated in preparing a consolidated balance sheet so that a.stockholders' equity will not be understated. b.stockholders' equity will not be overstated. c.assets and liabilities will not be understated. d.assets and liabilities will not be overstated. 52.When a parent company.

11.A corporation has a.government regulations. b.a limited existence. c.unlimited liability. d.no tax liability. 12.Par value a.is established for a share of stock after it is issued. b.is the legal capital established for a share of stock. c.represents what a share of stock is worth. d.represents the original selling price for a share of stock. 13.A good measure of confidence in.

44.Kagel Corporation had 30,000 shares of $5 par value common stock issued and outstanding on December 31, 2009. Each share was issued during 2007 at $14 per share. Prepare the entries in journal form without explanations for the following transactions occurring in 2010: Jan.4Purchased 5,000 shares of treasury stock for $16.

21.Unless there is evidence to the contrary, an investor owning 25 percent of the stock of an investee is assumed to have significant influence. 22.An ownership interest of greater than 50 percent is required for an investor to have accounting control over an investee. 23.The equity method usually is the most appropriate.

3.Distinguish between the financial statement presentation of unrealized gains and losses related to trading securities and the financial statement presentation of unrealized gains and losses related to available-for-sale securities. 4.Discuss the financial statement presentation of the account Allowance to Adjust Short-Term Investments to Market, distinguishing between the effect of a debit.

41.If Willis Corporation has 80,000 shares of common stock authorized,  50,000 shares of common stock issued, and holds 12,000 shares of common stock as treasury stock, the total number of outstanding shares of Willis Corporation amounts to a.22,000. b.68,000. c.38,000. d.26,000. 42.Outstanding shares of stock are a.authorized shares that have not yet been issued. b.also called treasury.

41.In preparing consolidated financial statements, intercompany receivables and payables must be eliminated because they do not represent amounts due to or receivable from parties outside the consolidated entity. 42.When a parent company and a 100 percent owned subsidiary company are consolidated using the purchase method, only the stockholders' equity of the.

51.The balance in the Additional Paid-in Capital account must be added to the balance of the Common Stock account to compute the amount of legal capital for a corporation with a par value common stock. 52.The concept of legal capital exists to protect the corporation's assets for the stockholders of the.

25.Brandt Corporation is authorized to issue 100,000 shares of $5 stated value common stock and 2,000 shares of $100 par value, 8 percent preferred stock. Prepare entries in journal form without explanations to record the following transactions: Apr.15Issued 1,000 shares of common stock to an attorney for a bill of $9,000.

21.If a corporation grants a stock option to an employee on July 1, 2010, that allows the employee to purchase stock at a price substantially below the stock's fair value at July 1, 2010, an element of compensation expense should be recorded on the corporation's books. 22.Underwriters typically charge 5 percent.

21.Simpson Corporation is authorized to issue 100,000 shares of no-par stock. The company recently sold 40,000 shares for $13 per share. a. Prepare the entry in journal form to record the sale of the stock assuming there is no stated value. b. Prepare the entry in journal form if a $10 stated.

39.Prepare in proper form the stockholders' equity section of the balance sheet from the following selected accounts and balances taken from the adjusted trial balance of Waller Corporation as of December 31, 20xx. Partial Adjusted Trial Balance AccountDebitCredit Common Stock—$10 par value, 90,000 shares authorized, 40,000 shares issued and outstanding400,000 Preferred Stock—$100 par value, 7.

81.A company purchases 400 shares of its $50 par value common stock at $55 per share. It then reissues 60 shares at $58 per share. The entry upon reissue of the stock would be: a.Cash 3,480 Treasury Stock-Common  3,300 Paid-in Capital, Treasury Stock     180 b.Cash 3,480 Treasury Stock-Common  3,480 c.Cash 3,480 Paid-in Capital, Treasury Stock  3,480 d.Cash.

21.Rapp Corporation has invested in the stock of two other corporations, Hart Corporation and Hilker Corporation. Rapp does not own a controlling interest or exercise significant influence over either corporation. Rapp's accountant is preparing financial statements and has compiled the following information: Stock nameNo. of sharesCostMarket Hart1,000$23,000$24,000 Hilker500$27,500$25,500 What should be the balance in.

41.The equity method generally should be used to account for an investment in stock when the level of ownership is a.between 20 and 50 percent. b.10 percent or more. c.less than 10 percent. d.between 10 and 20 percent. 42.When the cost-adjusted-to-market method is used to account for a long-term investment in stock of another company,.

51.When a parent company pays less than book value for an investment in a subsidiary, the excess of book value over the cost of the investment should be used to lower the carrying value of the subsidiary's long-term assets (other than long-term marketable securities) in preparing the consolidated financial statements. 52.Although.

71.When common stock is issued by a corporation for a cash price above par value, the excess of the cash proceeds over the par value should be reported in the financial statements as a component of a.retained earnings on the balance sheet. b.total liabilities on the balance sheet. c.operating income on the income.

13.On January 1, 20xx, Hilary Corporation acquired 100 percent of the common stock of Gooden Corporation for $3,250,000. At the date of acquisition, Gooden Corporation reported total assets of $4,200,000, liabilities of $1,200,000, common stock of $2,200,000, and retained earnings of $800,000 on its balance sheet. An appraisal on the.

20.On November 19, 2009, Lassen Company purchased 30,000 shares of JCN Corporation stock for $480,000, and 10,000 shares of Canoga Corporation stock for $250,000. Lassen's management intends to hold all 40,000 shares for a short period of time. On December 31, 2009, the price of JCN's stock was $13 per.

7.Indicate on the blanks below the net effect (I = increase, D = decrease, NE = no effect) of each of the following entries on working capital. _____ 1. To record the declaration of a cash dividend _____ 2. To record the payment of a previously declared and recorded cash dividend _____ 3..

11.A controlling investment is defined as ownership of 100 percent of the stock of another company. 12.Detailed information about a company's investments is appropriately disclosed in the notes to the financial statements. 13.Insider trading is considered unethical, but it is not illegal in the United States. 14.An individual can be prosecuted by the.

  MULTIPLE CHOICE 1.The price/earnings (P/E) ratio is measured in terms of a.dollars. b.a percentage. c.times. d.days. 2.Dividends yield equals a.market price per share divided by dividends per share. b.net income divided by dividends per share. c.dividends per share divided by net income. d.dividends per share divided by market price per share. 3.Return on equity is measured in terms of a.days. b.times. c.a percentage. d.dollars. 4.A disadvantage.

  SHORT ANSWER 1.Match each of the following terms with their descriptions below by inserting the correct letter. A. Marketable securitiesE. Available-for-sale securities B. Held-to-maturity securitiesF. Control C. Significant influenceG. Trading securities D. Insider tradingH. Noninfluential and noncontrolling ___ 1. Ownership of more than 50 percent of another company's voting stock ___ 2. Debt and equity investments that.

31.The number of shares of issued stock equals a.unissued shares minus authorized shares. b.outstanding shares plus treasury shares. c.subscribed shares plus outstanding shares. d.authorized shares minus treasury shares. 32.Treasury shares plus outstanding shares equal a.unissued shares. b.subscribed shares. c.authorized shares. d.issued shares. 33.The contributed capital of a corporation does not include a.additional paid-in capital. b.preferred stock. c.the stated value of common stock issued. d.retained.

TRUE/FALSE 1.Gains and losses on the sale of investments appear as adjustments within the operating activities section of the statement of cash flows. 2.Investments are valued on the balance sheet at the original purchase price, even if the price has changed since the date of purchase. 3.If a long-term investment suffers a permanent.

  MULTIPLE CHOICE 1.The cash amounts of purchases and sales of investments appear in which section of the statement of cash flows? a.Operating activities b.Investing activities c.Financing activities d.Noncash investing and financing activities 2.Which of the following is not a category of investments? a.Held-to-maturity securities b.Trading securities c.Collateral securities d.Available-for-sale securities 3.All of the following are conditions that could affect the valuation.

15.Briefly explain, what are the consolidated financial statements, and how is the consolidation accomplished? 16.McDuff Company owns 100 percent of the stock of Goode Company. The separate income statements for the two companies for the year ended December 31, 2010, are as follows: McDuff CompanyGoode Company Sales$800,000$500,000 Cost of goods sold650,000396,000 Gross margin$150,000$104,000 Operating expenses, including.

5.Berman Corporation was organized during 20xx. In organizing, the company incurred the following costs: 1. Paid the state $900 for the corporate charter and related fees of incorporation. 2. Paid the attorney $2,500 for services rendered in connection with filing incorporation papers with the state. 3. Issued 500 shares of $5 par value.

31.The entry required to record start-up and organization costs will cause a decrease in net income for the period. 32.The stockholders' equity in a corporation consists of capital contributed by stockholders and retained earnings. 33.The number of authorized shares should always equal or exceed the number of outstanding shares. 34.Stockholders who own preferred.

35.Use the following information to obtain the ratios requested below. Where necessary, carry answers to one decimal place. Dividends per share: $.76 Market price per share: $40 Net income: $64,000 Stockholders' equity, beginning of year: $500,000 Stockholders' equity, end of year: $530,000 Earnings per share: $1.75 a. Dividends yield = _____________% b. Return on equity = _____________% c. Price/earnings.

17.Paloma Corporation had 5,000 shares of $100 par value, 9 percent cumulative preferred stock and 30,000 shares of $10 par value common stock outstanding during each of its first four years of operation. The following amounts of cash dividends were paid during the years indicated: 2007, $0; 2008, $80,000; 2009,.

41.Dividends in arrears are disclosed as liabilities of a corporation. 42.Dividends in arrears pertain to noncumulative preferred stock. 43.Dividends on cumulative preferred stock do not become a liability of the corporation until they are declared by the board of directors. 44.Callable preferred stock is preferred stock that may be redeemed or retired at.

41.The information that follows pertains to stockholders' equity data of the Keswick Corporation on December 31, 20xx. Compute the amount of each item indicated by a letter in the listing below. Round answers to two decimal places. Par value per common share$        20 Balance of Common Stock account$          a No. of shares authorized20,000 No..

21.The board of directors of Irondale Corporation declared a cash dividend of $2.50 per share on 57,000 shares of common stock on June 14, 2010. The dividend is to be paid on July 15, 2010, to shareholders of record on July 1, 2010. The effects of the entry to record.

18.In the journal provided, prepare the entries for the transactions described below. (Omit explanations.) May5Purchased 120-day Treasury bills for $78,000. This investment will be held to maturity. Sept.2Treasury bills matured; $80,000 received. (No prior entries were made to recognize revenue.) General JournalPage 1 Date DescriptionPost. Ref. Debit Credit 19.In the journal provided, prepare the entries for the transactions described.

51.Dividends in arrears are dividends on a.noncumulative preferred stock that have not been declared for some specified period of time. b.common stock that may never be declared. c.cumulative preferred stock that have been declared but not yet paid. d.cumulative preferred stock that have not been declared for some specified period of time. 52.Honig Corporation had.

37.Sylmar Corporation has 30,000 shares of $100 stated value no-par common stock authorized, and 20,000 shares were outstanding during 2009. The following transactions relate to cash dividends of Sylmar Corporation for the year ended December 31, 2009. Prepare entries in journal form without explanations to record the following transactions: June1Declared a.

7.Knabe Corporation purchased 3,000 shares of Duncan Corporation common stock for $80 per share on January 1, 2009, as a long-term investment. Duncan reported net income of $70,000 and $90,000 for 2009 and 2010, respectively, and paid dividends of $25,000 and $30,000 during 2009 and 2010, respectively. Duncan has a.

31.Use this information to answer the following question. These facts concern the long-term stock investments of Alpha Corporation: June 1, 2009Paid cash for the following long-term investment: 5,000 shares Carey Corporation common stock (representing 5 percent of outstanding stock) at $40 per share; 3,000 shares Burns Corporation common stock (representing 3.

  1.Use the following information to obtain the ratios requested below. Where necessary, carry answers to one decimal place. Dividends per share: $.54 Market price per share: $30 Net income: $88,000 Average stockholders' equity: $625,000 Earnings per share: $1.25 a. Dividends yield = _____________% b. Return on equity = _____________% c. Price/earnings (P/E) ratio = __________times a. 1.8% b. 14.1% c. 24.

61.Dividends in arrears cannot exist in conjunction with a.callable preferred stock. b.convertible preferred stock. c.noncumulative preferred stock. d.cumulative preferred stock. 62.Which of the following would not be an account in the general ledger of a corporation? a.Dividends Payable b.Retained Earnings c.Additional Paid-in Capital d.Dividends in Arrears 63.When callable preferred stock is called and surrendered, the shareholder is entitled to all.

61.Perri Company buys 80 percent of the stock of McGrath Company for $150,000. McGrath Company has contributed capital of $100,000 and retained earnings of $60,000. The eliminating entry that would appear on the work sheet for consolidating the balance sheets of two companies is: a.Common Stock(McGrath) 100,000 Retained Earnings(McGrath)   60,000 Goodwill  22,000 Investment.

28.In its 2010 annual report, Gamma Company indicated that the number of common shares held in the treasury decreased from 45,546,171 in 2009 to 3,397,381 in 2010. The following also was reported: By Board authorization, effective December 31, 2010 the Company canceled 50 million shares of common stock held in treasury..

11.In the United States, insider trading is considered a.unethical, but not illegal. b.neither unethical nor illegal. c.both unethical and illegal. d.illegal, but not unethical. 12.Which of the following statements is true about investments categorized as trading securities? a.They are valued on the balance sheet at cost. b.They can consist of debt, but not equity, securities. c.They are purchased.

23.Poquito Corporation had both the following transactions occur on the same day: 1. Issued 30,000 shares of its $5 par value common stock for $360,000 cash. 2. Issued 10,000 shares of its $5 par value common stock in exchange for land and a building. The building is estimated to have a market.

31.At any given balance sheet date, the balance of the Unrealized Gain on Long-Term Investments account is equal in amount to the balance of the Allowance to Adjust Long-Term Investments to Market account. 32.When the equity method is used to account for an investment in stock, dividends received by the investor.