Reference no: EM132768321

Questions -

Q1 - A company had a beginning balance in retained earnings of $65,000. Net profit for the current year was $122,000. A cash dividends of $8,500 was declared and to be paid out early next year. The ending balance in retained earnings equals:

A. Cr. balance $113,500.

B. Cr. balance $178,500.

C. Dr. balance $ 48,500.

D. Cr. balance $187,000.

Q2. A company so far has issued 900 shares at $2 par value for $2,000 cash. The total amount of contributed capital is:

A. $900.

B. $1,800.

C. $200.

D. $2,000.

Q3. Treasury share represents ___________________________.

A. shares of ownership in the Local Government Treasury Department

B. a current asset

C. authorized shares that have never been issued

D. previously outstanding shares that have been repurchased by the issuing company

Q4. Skyhigh Co. has 10,000 shares authorized of which 5,000 shares are issued and outstanding. Mr. Koo bought 1,000 shares of Skyhigh Co. from Mr. Chan at $25,000, this transaction will:

A. increase the contributed capital of Skyhigh Co. by $25,000

B. increase the issued and outstanding shares of Skyhigh Co. to 6,000

C. decrease the issued and outstanding shares of Skyhigh Co. to 4,000

D. have no effect on Skyhigh Co

Q5. Tripod Co. has 100,000 authorized, issued and outstanding 6% cumulative preference shares, at par value $2. It also has 10,000 shares of $1 par value ordinary shares issued and outstanding. In the Company's first year of operations, no dividends were paid. During the second year, Tripod paid cash dividends of $18,000. The dividend should be distributed as:

A. $12,000 preference; $6,000 ordinary.

B. $8,000 preference; $10,000 ordinary.

C. $0 preference; $18,000 ordinary.

D. $18,000 preference; $0 ordinary.

Q6. Purity Corporation is a company formed for selling water filters. It was authorised to issue 40,000 ordinary share of $5 par value. Half of the shares were issued at the price of $7 per share. During the year of 2014, the Company purchased 2,000 of its own share in the open market for $12,000. The Company had retained earnings of $100,400 as at 1 January, 2014 and the profit of $82,045 for the year. On 31 December, 2014, the company declared a cash dividend of $0.2 per share on the outstanding shares that were held by the shareholders.

Required - Prepare the shareholders' equity section of the Statement of Financial Position for Purity Corporation as at 31 December, 2014.