Reference no: EM13861866

1. Jack Grimes started a sole proprietorship by depositing $30,000 cash in a business checking account. During the accounting period the business earned $3,800 of net income and Grimes withdrew $5,000 cash from the business. Based on this information, at the end of the accounting period, Grimes' capital account contained a balance of:

o $33,800.
o $28,800.
o $31,200.
o $40,800.

2. Laverne and Shirley started a partnership. Laverne invested $11,000 in the business and Shirley invested $19,500. The partnership agreement stipulated that profits would be divided as follows. Each partner would receive a 12% return on their invested capital with the remaining income being distributed equally between the two partners. Assuming that the partnership earned $26,000 during an accounting period, the amount of income assigned to the two partners would be:

	Laverne		Shirley
A)	$	9,850	$	8,830
B)	$	11,000	$	15,000
C)	$	13,000	$	13,000
D)	$	12,490	$	13,510

o Option A
o Option C
o Option B
o Option D

3. Corey and Malinda started a partnership on January 1, 2014. Corey invested $42,000 in the business, and Malinda invested $14,000. The partnership agreement stated that profits would be divided between the partners based on their initial investment in the partnership. The business's net income for 2014 was $51,000. During the year, Corey withdrew $10,500, and Malinda withdrew $7,250. The balances in the partners' accounts at the end of 2014 were (Do not round intermediate calculations.)

	Corey		Malinda
A	$	67,500	$	39,500
B	$	31,500	$	6,750
C	$	44,625	$	44,625
D	$	69,750	$	19,500

o Choice B.
o Choice C.
o Choice D.
o Choice A.

4. Flynn Company issued 16,000 shares of $10 par value common stock at a market price of $25. As a result of this accounting event, total paid-in capital would

o increase by $240,000.
o increase by $160,000.
o increase by $400,000.
o be unaffected by the event.

5. Vargas Corp., which is authorized to issue 40,000 shares of no-par common stock, issued 27,000 shares for $540,000. What effect will this event have on the accounting equation?

o Increase assets by $540,000, increase equity by $540,000.
o Increase assets by $800,000 increase, equity by $800,000.
o Increase assets by $540,000, increase net income by $540,000 and increase equity by $540,000.
o Increase assets by $540,000, increase net income by $540,000.

6. On January 2, 2014, the Hoover Corporation issued 44,000 shares of $10 stated-value common stock for $30.00 per share. Which of the following statements is true?

o The Cash account will increase by $880,000.
o The Stock Payable account will increase by $1,320,000.
o The Paid-in Capital in Excess of Stated Value account will increase by $880,000.
o The Common Stock account will increase by $1,320,000.

7. Mitchell Company was authorized to issue 86,000 shares of common stock. The company issued 45,000 shares of stock and later purchased 8,600 shares of treasury stock. The number of outstanding shares of common stock is:

o 36,400.
o 32,400.
o 49,600.
o 77,400.

8. At the end of the accounting period, Harris Company had a balance of $7,600 in its common stock account, additional paid in capital of $9,700, retained earnings of $8,000, and $5,500 of treasury stock. The total amount of stockholders' equity is:

o $11,800.
o $23,200.
o $19,800.
o $30,800.

9. Which answer would represent the financial statement presentation of stockholders equity after the following transactions?

Issued 300 shares of $10 par value common stock for $25.00 a share. Five hundred shares are authorized. Purchased 90 shares of treasury stock at $21.00 a share.

A

Common Stock, $25 par value, 500 shares authorized,
300 shares issued, 210 outstanding	$7,500
Less: Treasury Stock, 90 shares @ $21 per share	($1,890)

B

Common Stock, $10 par value, 500 shares authorized,
300 shares issued, 410 outstanding	$4,100
Paid in Capital in Excess of Par - Common	$6,150
Less: Treasury Stock, 90 shares @ $21 per share	($1,890)

C

Common Stock, $10 par value, 500 shares authorized,
300 shares issued, 210 outstanding	$3,000
Paid in Capital in Excess of Par - Common	$4,500
Less: Treasury Stock, 90 shares @ $21 per share	($1,890)

D

Common Stock, $10 par value, 500 shares authorized,
300 shares issued and outstanding	$3,000
Paid in Capital in Excess of Par - Common	$4,500
Less: Treasury Stock, 90 shares @ $10 par value	($ 900)

10. Madison Co. paid dividends of $4,500; $9,000; and $15,000 during 2012, 2013 and 2014 respectively. The company had 750 shares of preferred stock outstanding with a $10 per share cumulative dividend. The amount of dividends received by the common shareholders during 2014 would be:

o $6,000.
o $4,500.
o $7,500.
o $9,000.

11. At the time that Stellar Company issued a 2-for-1 stock split, the company had 1,100 shares of $5 par value common stock outstanding. Stockholders' equity also included $15,400 of additional paid in capital in excess of par value and $22,000 of retained earnings. Immediately after the stock split, (Do not round intermediate calculations.)

o the balance in the retained earnings account would be $16,500.
o the balance in the common stock account would be $11,000.
o the amount of paid-in capital would be $22,000.
o the balance in the common stock account would be $5,500.

12. Bridge Corporation issued a 10% stock dividend on 34,000 outstanding shares of $10 stated value common stock. The distribution was made at the time the market value of the stock was $40 a share. How did this transaction affect the company's total stockholders' equity?

o The total balances in equity accounts increased by $136,000.
o Total stockholders' equity was not affected by this transaction.
o The sum of the balances in equity accounts decreased by $136,000.
o The sum of the balances in equity accounts increased by $34,000.

13. STU Corporation is authorized to issue 500,000 shares of $12.00 par value common stock. As of December 2014, STU's stockholders' equity accounts report the following balances:

Common Stock, $12 par, 500,000 shares authorized, 59,000 shares issued and outstanding	$	708,000
Retained Earnings		862,580
Total Stockholders' Equity	$	1,570,580

At the end of 2014, STU decided to issue a 15% stock dividend, when the market price of the stock was $12 per share.

Determine the dollar amount to be transferred from Retained Earnings to paid-in capital accounts as a result of the stock dividend.

o $106,000
o $1,570,580
o $6,000,000
o $106,200

14. STU Corporation is authorized to issue 500,000 shares of $11.00 par value common stock. As of December 2014, STU's stockholders' equity accounts report the following balances:

Common Stock, $11 par, 500,000 shares authorized,  57,000 shares issued and outstanding	$	627,000
Retained Earnings		833,340
Total Stockholders' Equity	$	1,460,340

At the end of 2014, STU decided to issue a 15% stock dividend, when the market price of the stock was $12 per share.

Calculate the number of shares outstanding after the stock dividends are issued.

o 85,500 shares
o 8,550 shares
o 65,550 shares
o 57,000 shares

15. On September 11, 2014, the Hafar Corporation has unrestricted Retained Earnings of $7,000,000, Appropriated Retained Earnings of $5,000,000, Cash of $8,500,000, and Accounts Payable of $1,500,000. What is the maximum amount that the corporation could use for cash dividends on that date?

o $7,000,000
o $5,500,000
o $7,000,000
o $8,500,000