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Exam 8: Proprietorships, Partnerships, and Corporations

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Question 71

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All corporations are subject to extensive government regulation.

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B) False

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Question 72

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What is the importance of record date for a corporation that has declared dividends?

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Record date is the d...

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Question 73

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

The Mason-Dixon partnership was formed on January 1, Year 1, when Rebecca Mason and Steve Dixon contributed cash of $40,000 and $60,000, respectively. During Year 1, the partnership earned $160,000 in cash revenues and paid $108,000 in cash expenses. Mason withdrew $12,000 cash and Dixon withdrew $8,000 cash from the business. Net income was allocated to the partners' capital accounts in proportion to their initial investment in the business.Required: Prepare an income statement, capital statement, balance sheet, and statement of cash flows for the partnership for Year 1.

Indicate how each event affects the horizontal financial statements model. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. Use only one letter for each element. You do not need to enter amounts. Increase = IDecrease = D No Affected = NASierra Company issued 10,000 shares of common stock for $45 per share. The stock has a par value of $10.

A distribution by a sole proprietorship to the owner is called a withdrawal.

What is treasury stock?

Proprietorships are not separate legal entities; their earnings are taxable to the owners and not to the business itself.

On January 2, Year 1, Torres Corporation issued 20,000 shares of $10 par-value common stock for $11 per share. Which of the following statements is true?

The book value of a share of stock is equal to the market or selling price of the stock.

Garber Corporation had 20,000 shares of $12 par value common stock outstanding and declared a four-for-one stock split. How many new shares of stock would then be outstanding and what would be the par value of the new stock?

Which of the following statements about types of business entities is true?

What effect will the declaration and distribution of a stock dividend have on net income and cash flows? $\begin{array}{cc}\text { Net Income } & \text { Cash Flows } \\\end{array}$ A. $\begin{array}{cc}\text { Not affected } & \text { Not affectec } \\\end{array}$ B. $\begin{array}{cc}\text { Not affected } & \text { Decrease }\end{array}$ C. $\begin{array}{cc}\text { Increase} &&& \text { Decrease }\end{array}$ D. $\begin{array}{cc}\text { Decrease} &&& \text { Decrease }\end{array}$

Discuss a few of the characteristics of sole proprietorships, partnerships and corporations.

Green Corporation has the following stock outstanding: $\begin{array}{llr} \text { 4 \% cumulative preferred stock, \( \$ 20 \) stated value } &\$400,000\\ \text { Common stock, \$12 par } &2,400,000\\\end{array}$ During the current year, Green paid $100,000 in dividends. No dividends were paid in the two previous years.Required:Compute the total amount of dividends that was paid to each class of stock in the current year.Compute the amount of dividends per share for each class of stock

Indicate how each event affects the horizontal financial statements model. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. Use only one letter for each element. You do not need to enter amounts. Increase = IDecrease = D No Affected = NA Taylor Bennett began his sole proprietorship on February 28, Year 1 by contributing $25,000 of his own money to the business. Indicate the effects of this transaction on the financial statements.

Articles of incorporation, prepared by a business that wishes to incorporate, normally include the corporation's name and purpose, its location, and provisions for capital stock.

The stock market crash of 1929 and the subsequent Great Depression resulted in the beginning of extensive regulation of corporations.

Llewelyn Company purchased 1,000 shares of its own $10 par value common stock when the market price of the stock was $36 per share. How would this event affect the company's financial statements?

Which of the following entities would have a paid-in capital in excess of par (or stated) value account in the equity section of the balance sheet?