learning objective 2 5 questions 1 the goaling company declared a 3 500 cash dividen 4307322

learning objective 2 5 questions 1 the goaling company declared a 3 500 cash dividen 4307322

Learning Objective 2.5 Questions

1) The Goaling Company declared a $3,500 cash dividend on March 1, 2012 payable on April 2, 2012. The effect of the March 1st transaction on the Goaling Company would be to

A) decrease the balance in the cash account and decrease the balance in the retained earnings account by $3,500.

B) increase the balance in the dividend expense account and increase the balance in the dividend payable account by $3,500.

C) increase the balance in the dividend expense account and increase the balance in the retained earnings account by $3,500.

D) increase the balance in the dividend payable account and increase the balance in the prepaid dividend account by $3,500.

E) increase the balance in the dividend payable account and decrease the balance in the retained earnings account by $3,500.

2) On May 1, 2011, Chickla Corporation's balance sheet had the following information available:

Total Assets $500,000

Total Liabilities $400,000

Total Stockholders' Equity $100,000

During the month of May, Chickla Corporation earned revenues of $120,000 and incurred expenses of $30,000. Dividends declared during May were $20,000. The dividends will be paid in June. No other capital transactions occurred. What amount did Chickla Corporation's total stockholders' equity increase by in May?

A) $90,000

B) $120,000

C) $100,000

D) $70,000

E) $190,000

3) On September 12, 2012, Infinity Enterprises declared a $7,000 cash dividend payable on October 1, 2012. The effect of the October 1, 2012, transaction on Infinity Enterprises would be to

A) increase the balance in the cash account and decrease the balance in the prepaid dividend account by $7,000.

B) decrease the balance in the cash account and decrease the balance in the dividend payable account by $7,000.

C) decrease the balance in the cash account and increase the balance in the dividend expense account by $7,000.

D) decrease the balance in the cash account and increase the balance in the prepaid dividend account by $7,000.

E) decrease the balance in the cash account and decrease the balance in the retained earnings account by $7,000.

4) A liability for a cash dividend is recorded on the

A) stockholder appreciation date.

B) record date.

C) payment date.

D) declaration date.

E) dividends date.

5) Cash dividends

A) are distributions of cash to trade creditors.

B) are expenses like rent and depreciation.

C) should not be deducted from revenues on the income statement.

D) must be paid annually, regardless of the amount of cash in the bank.

E) cannot be paid if a net loss is incurred.

6) Solar Communications had the following balances in its stockholders' equity accounts as of December 31, 20X9:

Paid-in Capital $53,000

Retained Earnings $31,000

During the year ended December 31, 20X9, Solar Communications generated $36,000 in net income, and declared and paid $16,000 in dividends. The ending balance in the retained earnings account at December 31, 20X8, was

A) $11,000.

B) $26,000.

C) $13,000.

D) $67,000.

E) $40,000.

7) The Computing Company's balance sheet on September 30, 2012 follows:

Total Assets $75,000

Total liabilities $20,000

Paid-in-Capital $25,000

Retained Earnings $30,000

During the month of October, the Computing Company recognized revenues of $52,000, cost of goods sold of $39,000, depreciation expense of $3,000, the payment of November and December's rent totaling $2,000, and salary expense of $6,000. The retained earnings balance at October 31, 2012, will be

A) $33,000.

B) $54,000.

C) $32,000.

D) $56,000.

E) $36,000.

8) Carpenter and Sons' balance sheet on January 1, 2012, had total assets of $73,000, total liabilities of $20,000, paid-in capital of $30,000, and retained earnings of $23,000. During the month of January, Carpenter and Sons' recognized revenues of $73,000, cost of goods sold of $47,000, depreciation expense of $12,000, the payment of February and March's rent totaling $2,500, and salary expense of $8,000. The retained earnings balance at January 31, 2012, will be

A) $29,000.

B) $27,750.

C) $31,000.

D) $41,000.

E) $26,500.

9) Cash dividends are an expense, and therefore they appear on the income statement.

10) The date the board of directors declares a dividend is known as the record date.

11) Frequently, the statement of retained earnings is added to the bottom of the balance sheet.

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