Question

In: Accounting

Christmas Corporation issued a 20% stock dividend on 40,000 outstanding shares of $10 par value common...

  1. Christmas Corporation issued a 20% stock dividend on 40,000 outstanding shares of $10 par value common stock. The distribution was made at the time the market value of the stock was $32 a share. How did this transaction affect the company's total stockholders' equity?


A. The total balances in equity accounts increased by $80,000.
B. The sum of the balances in equity accounts increased by $256,000.
C. The sum of the balances in equity accounts decreased by $256,000.
D. Total stockholders' equity was not affected by this transaction.

  1. During the year, Timberdale Company sold a truck at a loss of $20,000. On the Statement of Cash Flows,

  1. the loss from the sale of truck is added to net income in the cash flow from financing activities.
  2. the loss from the sale of truck is deducted from net income in the cash flow from operating activities.
  3. the loss from the sale of truck is deducted from net income in the cash flow from investing activities
  4. the loss from the sale of truck is added to net income in the cash flow from operating activities.
  1. Regarding the Statement of Cash Flows, which one of the following is false?

  1. If accounts receivable decreases, cash increases.
  2. If accounts payable decreases, cash increases.
  3. If inventory decreases, cash increases.
  4. If accounts payable decreases, cash decreases.

Solutions

Expert Solution

Part 1)D. Total stockholders' equity was not affected by this transaction.

Explanation:

Stock Dividends do not affect total stockholders' equity. The reason behind this is that, on declaring stock dividends retained earnings (which also form part of stockholders' equity)are essentialy converted into stock and additional paid in capital (both which forms part of stockholders' equity).

Part 2)D. the loss from the sale of truck is added to net income in the cash flow from operating activities.

Explanation:

Proceeds received from sale of an asset is recorded under Investing Activities in cash flow statement and any Gain is deducted from net income under Operating Activities and conversely Loss is added to net income under Operating Activities.

Part 3)B.If accounts payable decreases, cash increases.

Explanation:

If accounts payable decreases then cash will get reduced due to payment to creditors.

If helpful, Thumbs UP please:)

ekkarill92 answered 3 months ago
Next > < Previous

Related Solutions

Wilson Corporation issued and has outstanding 134,400 shares of $10 par-value common stock and 2,800 shares...
Wilson Corporation issued and has outstanding 134,400 shares of $10 par-value common stock and 2,800 shares of $70 par-value 20 percent preferred stock. The board of directors votes to distribute $4,200 as dividends in 2016, $7,000 in 2017, and $308,000 in 2018. Compute the total dividend and the dividend for each share paid to preferred stockholders and common stockholders each year under the following assumed situations.    Case A: The preferred stock is nonparticipating and noncumulative. (Round your per share...
Parvin Corporation issues 40,000 shares of its own $10 par common stock for all the outstanding...
Parvin Corporation issues 40,000 shares of its own $10 par common stock for all the outstanding stock of Sacks Corporation in merger consummated on October 1, 2012 (Sacks Corporation dissolved). On this date, Parvin Corporation paid $10,000 for direct cost, and $3,000 for indirect cost of business combination as well as $5,000 for cost of printing and issuing new shares. Summary balance sheet data for the two companies at October 1, 2012, just before combination, are as follow:                                                             Parvin   ...
Pronghorn Corporation issued 392 shares of $10 par value common stock and 128 shares of $50...
Pronghorn Corporation issued 392 shares of $10 par value common stock and 128 shares of $50 par value preferred stock for a lump sum of $17,424. The common stock has a market price of $20 per share, and the preferred stock has a market price of $90 per share. Prepare the journal entry to record the issuance.
On December​ 1, 2017,​ Arthur, Inc. had​ 40,000 shares of​ $10 par value common stock issued...
On December​ 1, 2017,​ Arthur, Inc. had​ 40,000 shares of​ $10 par value common stock issued and outstanding. The next day it declared a​ 50% stock dividend. The market value of the stock on that date was​ $9 per share. Which of the following is the correct journal entry to record this​ transaction? A.debit Stock Dividends​ $200,000 and credit Common Stock Dividend Distributable​ $200,000 B.debit Common Stock​ $200,000 and credit Cash​ $200,000 C.debit Stock Dividends​ $360,000 and credit Cash​ $360,000...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $1,100,000 Paid-in capital in...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $1,100,000 Paid-in capital in excess of par value, common stock 70,000 Retained earnings 430,000 Total stockholders' equity $1,600,000 In year 2017, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 4,500 shares of its own stock at $25 cash per share. Jan. 5 Directors declared a $6 per share cash dividend payable on February 28 to the February 5 stockholders of record. Feb. 28 Paid the...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 1,100,000 Paid-in capital...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 1,100,000 Paid-in capital in excess of par value, common stock 60,000 Retained earnings 460,000 Total stockholders' equity $ 1,620,000 In year 2017, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 5,500 shares of its own stock at $25 cash per share. Jan. 5 Directors declared a $4 per share cash dividend payable on February 28 to the February 5 stockholders of record. Feb. 28...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 1,100,000 Paid-in capital...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 1,100,000 Paid-in capital in excess of par value, common stock 70,000 Retained earnings 400,000 Total stockholders' equity $ 1,570,000 In year 2017, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 5,000 shares of its own stock at $20 cash per share. Jan. 5 Directors declared a $4 per share cash dividend payable on February 28 to the February 5 stockholders of record. Feb. 28...
Flounder Corporation has outstanding 517,000 shares of $10 par value common stock. The corporation declares a...
Flounder Corporation has outstanding 517,000 shares of $10 par value common stock. The corporation declares a 5% stock dividend when the fair value of the stock is $62 per share. Prepare the journal entries for Flounder Corporation for both the date of declaration and the date of distribution. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)...
Tamarisk Corporation has outstanding 125,000 shares of $10 par value common stock. The corporation declares the...
Tamarisk Corporation has outstanding 125,000 shares of $10 par value common stock. The corporation declares the following stock dividends when the fair value of the stock is $65 per share. Prepare the journal entries for Tamarisk Corporation for both the date of declaration and the date of distribution. Stock dividend is 15% Stock dividend is 70%
Green Day Corporation has outstanding 400,000 shares of $10 par value common stock.
Green Day Corporation has outstanding 400,000 shares of $10 par value common stock. The corporation declares a 5% stock dividend when the fair value of the stock is $65 per share. Prepare the journal entries for Green Day Corporation for both the date of declaration and the date of distribution.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT