Unformatted Attachment Preview
Chaney Corporation issued 20,000 shares of common stock on January 1, 2014. The stock has
par value of $1.00 per share and was sold at $30 per share. The journal entry for this transaction
would:
a. credit Cash $600,000, debit Common stock $20,000, and debit Paid-in capital $580,000.
b. debit Cash $600,000 and credit Paid-in capital $600,000.
c. debit Cash $600,000, credit Common stock $20,000, and credit Paid-in capital $580,000.
d. debit Cash $600,000 and credit Common stock $600,000.
Peterson Company issued 4,000 shares of preferred stock for $240,000. The stock has a par
value of $60 per share.
The journal entry to record this transaction would:
a. credit Cash $240,000, debit Common stock $4,000, and debit Paid-in capital $236,000.
b. debit Cash $240,000, credit Common stock $4,000, and credit Paid-in capital $236,000.
c. credit Cash $240,000 and debit Preferred stock $240,000.
d. debit Cash $240,000 and credit Preferred stock $240,000.
Lerner Company had the following transactions in 2013, its first year of operations.
• Issued 20,000 shares of common stock. Stock has par value of $1.00 per share and was
issued at $14.00per share.
•
Issued 1,000 shares of $100 par value preferred stock. Shares were issued at par.
•
Earned net income of $35,000.
•
Paid no dividends.
At the end of 2013, what is the total amount of Stockholders' equity?
a. $415,000
b. $120,000
c. $260,000
d. $380,000
Lerner Company had the following transactions in 2013, its first year of operations.
• Issued 20,000 shares of common stock. Stock has par value of $1.00 per share and was
issued at $14.00per share.
•
Issued 1,000 shares of $100 par value preferred stock. Shares were issued at par.
•
Earned net income of $35,000.
•
Paid no dividends.
At the end of 2013, what is the total amount of Paid-in capital?
a. $415,000
b. $120,000
c. $280,000
d. $380,000
Notebook Company had the following transactions in 2013, its first year of operations.
• Issued 2,000 shares of common stock. Stock has par value of $1.00 per share and was
issued at $50.00per share.
•
Issued 100 shares of $100 par value preferred stock. Shares were issued at par.
•
Earned net income of $95,000.
•
Paid dividends of $5,000.
At the end of 2013, how much was the total Stockholders' equity?
a. $200,000
b. $110,000
c. $90,000
d. $100,000
Ajax Company was founded in 2012. Its yearly earnings are shown here:
2012: Net income of $4,000
2013: Net income of $23,000
2014: Net income of $2,000
2015: Net loss of $30,000
No dividends were paid.
At the end of the year 2015, what amount would be shown on the balance sheet for Retained
earnings?
a. Negative $1,000
b. Positive $29,000
c. Positive $31,000
d. Negative $30,000
Beta Company was founded in 20013. Its yearly earnings and dividend payments are shown
here:
2013: Net income of $4,000, paid zero dividends
2014: Net income of $20,000, paid $10,000 dividends
2015: Net income of $8,000, paid $5,000 dividends
2016: Net loss of $22,000, paid zero dividends
At the end of 2016, what would be the balance in Retained earnings?
a. Negative $22,000
b. . Positive $32,000
c. Negative $5,000
d. Positive $1,000
B. Jones and R. Tate began a partnership in 2012. Jones would do a larger portion of the
partnership work, and Tate would make a larger cash contribution, and so the partnership agreement
specified a profit split to recognize that situation. Profits will be split in a two step allocation. The first
step will allocate partnership profits based on 5% of each partner’s capital balance. The second step will
allocate remaining amounts in a ratio of 4:1.
Data at the end of the first year are as follows:
Partnership profits to allocate:
$ 24,000
Jones’s capital balance:
$ 36,000
Tate’s capital balance:
$120,000
At the end of the year, what will Tates’s updated capital account balance be?
a. $129,240
b. $126,000
c. $123,240
d. $132,960
On January 1, the partnership of Clark, Lipton, and Onassis had capital account balances as shown here:
Clark, capital
109,000
Lipton, capital
88,000
Onassis, capital
76,000
On the same date, Arthur Brolin offered to purchase Lipton’s partnership interest directly from him for
$120,000, and Lipton agreed.
New partnership papers were drawn up and the partnership made a journal entry. What journal entry was
made?
a. Debit Cash $120,000; credit Brolin, capital $120,000
b. Debit Lipton, capital for $88,000; debit Cash $32,000; credit Brolin, capital $120,00
c. Debit Lipton, capital for $88,000; credit Brolin, capital $88,0
d. Debit Lipton, capital $120,000; credit Brolin, capital $120,000
On June 1, the partnership of Clark, Lipton, and Onassis had capital account balances as shown here:
Clark, capital
102,000
Lipton, capital
102,000
Onassis, capital
102,000
On the same date, Betty Morales made an offer to buy in to the partnership at book value. Morales will
pay cash for her partnership interest. Assume that at the date of transaction, there are no balances in the
partners’ drawing accounts'.
If the partners accept, what journal entry would be made by the partnership?
a. Debit Cash $102,000; credit Morales, capital $102,000
b. Debit Clark, capital $102,000; credit Morales, capital $102,000
c. Debit Cash $102,000; credit Clark, capital $34,000; credit Lipton, capital $34,000; credit
Onassis, capital $34,000
d. Debit Clark, capital $34,000; debit Lipton, capital $34,000; debit Onassis, capital $34,000; credit
Morales, capital $102,000
1 points
Frank Evans and Barbara Baker have a partnership which splits profits equally, and which has become
very successful.
They are considering admitting a new partner, Pete Zhang, for an equal share—a 1/3 interest in the new
partnership.
Based on the value of the partnership’s business, they have negotiated an amount of $118,000 which
Zhang will invest to obtain a 1/3 share.
The balances in the existing partner capital accounts are:
Evans
$60,000
Baker
$62,000
After admission to the partnership, what would be the initial balance in Zhang’s capital
account?
a. $118,000
b. $ 59,000
c. $ 80,000
d. $ 66,000
G. Allman, M. Jagger, and G. Harrison had a partnership which shared profits equally. At the end
of 2012, Harrison announced his intention to retire and withdraw from the partnership.
Assets were revalued, and the capital accounts were adjusted.
After adjustments, the balance sheet appeared as follows:
Assets
Cash
Inventory
Land
$ 55,000
33,000
101,000
Total assets
$189,000
Liabilities & Owners’ Equity
Accounts payable
$ 22,000
Allman, capital
69,000
Jagger, capital
56,000
Harrison, capital
42,000
Total liabilities & owners’
equity
$189,000
It was agreed that Harrison would take a cash payment for withdrawal at book value.
How much cash did the partnership pay Harrison?
a. $42,000
b. $63,000
c. $55,000
d. $55,667