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ACC 291 Week 4 Individual Study Guide Accounting Problems – PaperScholar Study Aids
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ACC 291 Week 4 Individual Study Guide Accounting Problems –

ACC 291 Week 4 Individual Study Guide Accounting Problems –

 

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 Value-Common Stock 690,000

Paid-in Capital in Excess of Par Value-Preferred Stock 288,400

Preferred Stock (8%, $100 par, noncumulative) 400,000

Retained Earnings 776,000

Treasury Stock-Common (8,000 shares) 88,000

Complete the stockholders’ equity section at December 31, 2011.