Question 1

Describe cumulative preferred stock.

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Question 2

For 2014, the Hilary Corporation had beginning and ending Retained Earnings balances of $198,054 and $231,000, respectively. Also during 2014, the corporation declared and paid cash dividends of $29,000 and issued stock dividends valued at $16,000. Assuming that no other items affected Retained Earnings and that total expenses were $32,916, what was the amount of revenues for 2014?

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Question 3

Explain the significance of a high price-earnings ratio.

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Question 4

What is treasury stock?

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Question 5

In which section of the balance sheet would Treasury Stock be reported?

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Question 6

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

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Question 7

Discuss a reason why a corporation might "split" its common stock.

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Question 8

The Harlan-Wells Company was started on January 1, 2012 as a partnership. The initial investments from the two partners were $20,000 each. During 2012, the Harlan-Wells Company earned $30,000 in cash revenue and paid $20,000 in cash expenses and the partners withdrew $1,000 each for their personal use. The partnership agreement calls for equal sharing of net income or loss. Using only the above information, prepare an income statement, a capital statement, and a balance sheet for the Harlan-Wells Company.

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Question 9

The Garza Company was started on January 1, 2012 as a sole proprietorship. The initial investment from J. Garza, the owner, was $40,000. During 2012, the business earned $30,000 in cash revenue and paid $20,000 in cash expenses. Ms. Garza withdrew from the business $2,000 for her personal use. Using the above information, prepare an income statement, a capital statement, and a balance sheet for the Garza Company.

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Question 10

Liu Corporation's balance sheet reflected the following information.

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Question 11

Explain any differences in recording the initial issue of stock for a) par-value, b) stated-value, and c) no-par common stock.

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Question 12

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

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Question 13

Discuss possible reasons why a corporation may establish an appropriation of retained earnings.

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Question 14

What is the importance of date of record when a corporation declares a dividend?

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Question 15

Discuss a few common reasons for decreases in the market price of a corporation's common stock.

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Question 16

Allen Corporation was organized on July 15, 2014. It was authorized to issue 150,000 shares of $25 par value common stock and 50,000 shares of 6% cumulative preferred stock. The preferred stock had a stated value of $50 per share. The following stock transactions relate to Allen Corporation.
Issued 55,000 shares of common stock for $33 per share.
Issued 2,750 shares of the class A preferred stock for $62 per share.
Issued 27,500 shares of common stock for $35 per share.
Required:
a) Indicate the effect of each of these transactions on Allen's financial statements. Include dollar amounts in the model, below. After recording the three transactions, calculate column totals.
b) After these transactions have been recorded, what is the total amount of stockholders' equity?
c) After these transactions have been recorded, how many shares of common stock are outstanding?

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Question 17

Davis Corporation had 25,000 shares of $10 par value common stock outstanding and declared a two-for-one stock split. How many shares of stock would then be outstanding and what would be the par value of the new stock?

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Question 18

On January 1, 2012, the organizers of the Parsons Corporation obtained their charter and issued 10,000 shares of $1 par common stock for $4 per share. During 2012, the corporation earned $30,000 in cash revenue and paid $20,000 in cash expenses, not including income tax. The income tax rate was 30%, and the company's income tax expense was $3,000. The company declared and paid cash dividends totaling $2,000. Using the above information, prepare an income statement and a balance sheet for the Parsons Corporation.

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Question 19

Show the effect of a stock dividend on the accounting equation.

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Question 20

Indicate how each of the following transactions affects the financial statements model, below:
a) Issued 40,000 shares of common stock with a $20 par value for cash of $25 per share.
b) Purchased 400 shares of treasury stock (common stock) at $30 per share.
c) Resold 100 shares of the treasury stock at $35 per share.

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Quiz 8: Proprietorships, Partnerships, and Corporations