Dividends And Financial Statements Test – Finance

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Dividends And Financial Statements Test – Accounting & Finance

The key terms in these Finance chapters include Bad Debt, Dividend, Cash Dividends And Dividends Payable, Cowboy Ice Cream, Financial Statements, Allowance Account, Test – Accounting & Finance


On January 1, Cowboy Ice Cream declared a $3,000 cash dividend to be paid on January 31 to shareholders of record on January 15.

What is the effect on Cowboy Ice Cream’s financial statements on January 1? (Select all that apply)

Cash decreases by $3,000

Retained Earnings decrease by $3,000

Dividends Payable increases by $3,000

Net Income decreases by $3,000

Dividends decrease by $3,000

No effect on the financial statements

Dividends Payable decreases by $3,000

Financing cash outflow of $3,000


On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $98,500; Allowance for Doubtful Accounts, credit balance of $1,091. What amount should be debited to Bad Debts Expense, assuming 4% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible?

$2,849. – Correct

$1,091.

$1,957.

$5,031.

$3,940.

Explanation
     
Desired balance in allowance account:$98,500 × 0.04 =$3,940credit
Current balance in allowance account:  −1,091credit
Required: amount of Bad Debts Expense: $2,849credit

On January 1, Cowboy Ice Cream declared a $3,000 cash dividend to be paid on January 31 to shareholders of record on January 15.

What is the effect on Cowboy Ice Cream’s financial statements on January 31? (Select all that apply)

No effect on the financial statements

Dividends decrease by $3,000

Retained Earnings decrease by $3,000

Financing cash outflow of $3,000

Dividends Payable increases by $3,000

Cash decreases by $3,000

Dividends Payable decreases by $3,000

Net Income decreases by $3,000


A company issued 30,000 shares of $10 par common stock for $16 per share.

By how much will the Common Stock account increase?

300,000


A company has $106,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 5% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is a(n) $960 credit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

$4,340 – Correct

$5,252

$5,348

$5,300

$6,260

Explanation
     
Desired balance in allowance account:$106,000 × 0.05 =$5,300credit
Current balance in allowance account:  -960credit
Adjustment to allowance: $4,340credit

From P8-23 in the packet, how much did Paid in Capital in Excess of Par increase from selling 6,000 shares of the $10 par common stock for $15 per share on January 5?

30,000


During the month of July, Clanton Industries issued a check in the amount of $856 to a supplier on account. The check did not clear the bank during July. In preparing the July 31 bank reconciliation, the company should:

Deduct the check amount from the book balance of cash.

Add the check amount to the book balance of cash.

Deduct the check amount from the bank balance. – Correct

Add the check amount to the bank balance.

Make a journal entry in the company records for an error.


Last summer you saved a substantial portion of your earnings and began this school year with $5,000 in the bank. On August 1, you deposited the funds in an account that earns 3% interest and plan to withdraw a portion of the account balance each month that school is in session. If you withdraw $500 each month from August – December, what will your account balance be on December 31? Assume all withdrawals and deposits of interest occur on the last day of each month. 

2,550.28


A company issued 30,000 shares of $10 par common stock for $16 per share.

By how much will the Common Stock account increase?

300,000

On January 1, Cowboy Ice Cream declared a $3,000 cash dividend to be paid on January 31 to shareholders of record on January 15.

What is the effect on Cowboy Ice Cream’s financial statements on January 31? (Select all that apply)

No effect on the financial statements

Dividends decrease by $3,000

Retained Earnings decrease by $3,000

Financing cash outflow of $3,000

Dividends Payable increases by $3,000

Cash decreases by $3,000

Dividends Payable decreases by $3,000

Net Income decreases by $3,000


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