ACC 291 Week 4 Individual Study Guide Accounting Problems -
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DESCRIPTION FOR THIS STUDY GUIDE:
TUTORIAL: Includes solutions to accounting problems. Individual Assignment: Accounting Problems QUESTION 1
Indicate whether each of the following statements is true or false. • The corporation is an entity separate and distinct from its owners.
• The liability of stockholders is normally limited to their investment in the corporation.
• The relative lack of government regulation is an advantage of the corporate form of business.
• There is no journal entry to record the authorization of capital stock.
• No-par value stock is quite rare today. QUESTION 2
Before preparing financial statements for the current year, the chief accountant for Springer Company discovered the following errors in the accounts.
The declaration and payment of $50,000 cash dividend was recorded as a debit to Interest Expense $50,000 and a credit to Cash $50,000.
A 10% stock dividend (1,000 shares) was declared on the $10 par value stock when the market value per share was $16. The only entry made was: Retained Earnings (Dr.) $10,000 and Dividend Payable (Cr.) $10,000. The shares have not been issued.
A 4-for-1 stock split involving the issue of 400,000 shares of $5 par value common stock for 100,000 shares of $20 par value common stock was recorded as a debit to Retained Earnings $2,000,000 and a credit to Common Stock $2,000,000.
Prepare the correcting entries at December 31 QUESTION 3
The following stockholders’ equity accounts arranged alphabetically are in the ledger of McGrath Corporation at December 31, 2011. Common Stock ($10 stated value) $1,500,000
Paid-in Capital from Treasury Stock 6,000
Paid-in Capital in Excess of Stated
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DESCRIPTION FOR THIS STUDY GUIDE:
TUTORIAL: Includes solutions to accounting problems. Individual Assignment: Accounting Problems QUESTION 1
Indicate whether each of the following statements is true or false. • The corporation is an entity separate and distinct from its owners.
• The liability of stockholders is normally limited to their investment in the corporation.
• The relative lack of government regulation is an advantage of the corporate form of business.
• There is no journal entry to record the authorization of capital stock.
• No-par value stock is quite rare today. QUESTION 2
Before preparing financial statements for the current year, the chief accountant for Springer Company discovered the following errors in the accounts.
The declaration and payment of $50,000 cash dividend was recorded as a debit to Interest Expense $50,000 and a credit to Cash $50,000.
A 10% stock dividend (1,000 shares) was declared on the $10 par value stock when the market value per share was $16. The only entry made was: Retained Earnings (Dr.) $10,000 and Dividend Payable (Cr.) $10,000. The shares have not been issued.
A 4-for-1 stock split involving the issue of 400,000 shares of $5 par value common stock for 100,000 shares of $20 par value common stock was recorded as a debit to Retained Earnings $2,000,000 and a credit to Common Stock $2,000,000.
Prepare the correcting entries at December 31 QUESTION 3
The following stockholders’ equity accounts arranged alphabetically are in the ledger of McGrath Corporation at December 31, 2011. Common Stock ($10 stated value) $1,500,000
Paid-in Capital from Treasury Stock 6,000
Paid-in Capital in Excess of Stated