A corporation had several transactions affecting its stockholders’ equity accounts during
the year. In the space provided, show the impact on the accounting equation by placing
a plus sign (+) for an increase, a minus sign (-) for a decrease, or N/A for no impact or
no total net impact.
Stockholders’
Transactions: Assets = Liabilities
+ Equity
Issued 2,000 shares of $2 par common stock for an amount greater than
par
Issued 500 shares of $10 par preferred stock for an amount greater than
par
Repurchased 100 shares of common stock for $5 per share
Reissued 50 shares of treasury stock for $6 per share
Declared a cash dividend
Paid a cash dividend
Many companies assist the users of the financial statements by providing information
about the company’s accounting policy choices in the first note to the financial
statements.
Cumulative and participating dividend features are typically associated with preferred
stock.
Costs incurred to keep plant assets in normal operating condition are called revenue
expenditures.
Net loss reduces a company’s retained earnings balance.
When a corporation declares a dividend, a liability must be recorded.
When an entity’s stock issuances exceed its expenses for a period of time, the entity will
report net income.
When a company using LIFO experiences a partial or complete liquidation of its older,
lower-priced inventory, its gross margin will be ____________________ for the period.
Refer to California Condos. On January 1, there was a $0 balance in the salaries
payable account. How much cash did the company pay for salaries during the year?
Under the indirect method, a gain from the sale of land is subtracted from ___________
in the operating activities section of the statement of cash flows.
Form 8-K is the “current report“companies must file with the SEC to announce major
events that are important to investors and creditors.
The Statement of Cash Flows shows cash inflows and cash outflows for a period of
time.
Refer to Rhodes Bakery. Perform DuPont Analysis for 2015 and 2014, including the
three components of Return on Equity (ROE). Round your answers to two decimal
places, then comment on the company’s relative ROE from 2014 to 2015.
Additional information is available below:
2015 2014
Total Sales $500,000 $410,000
Net Income $ 24,000 $ 28,750
At December 31, 2013, the company’s total assets and total stockholders’ equity were
$325,000 and $287,500, respectively.
On a bank reconciliation, outstanding checks are added to the cash balance per the bank
statement.
Every adjustment involves at least one income statement and one balance sheet account.
The practices of delaying payments to suppliers, speeding up collection from
customers, and earning the greatest possible return on any excess cash are known as
____________________ principles.
The operating cash flow ratio is computed by dividing cash flows from operating
activities by ____________.
Measures of ____________________ evaluate how efficiently a company uses its
assets, that is, the average length of time required for assets to be consumed or replaced.
Every month, Glacier Distributors orders shipping supplies from a particular vendor. On
February 13, 2013, the company orders supplies amounting to $21,000 on account,
payable on March 15, 2013. Due to an unexpected decline in business, the company is
unable to pay its vendor on March 15th, and so asked for a payment extension. The
vendor granted the extension but requires the company to sign a note that specifies
7.5% interest beginning March 15, 2013, with a due date of July 15, 2013. The
company pays the amount in full on July 15, 2013.
Prepare the necessary journal entries for Glacier Distributors on February 13th, March
15th, and July 15th.