Dividend distribution: power Corporation has the following shares outstanding: 15,000 shares of $50 per value, 8% preferred stock and 50,000 shares of $5 par value common stock.  During its first three years in business, the firm declared no dividends in the first year, $280,000 of dividends in the second year, and $60,000 of dividends in the third year.

  1. If the preferred stock is cumulative, determine the total amount of dividends paid to each class of stock in each of the three years.
  2. If the preferred stock is noncumulative, determine the total amount of dividends paid to each class of stock in each of the three years.


Cash and non-cash share issuances: Chavoy Corporation was organized on July 1. The company’s charter authorizes 100,000 shares of $10 par value common stock. On August 1, the attorney who helped organize the corporation accepted 800 shares of Chavoy common stock in settlement for the services provided (the services were valued at $9600). On August 15, Chavoy issued 5000 common shares for $75,000 cash. On October 15, Chavoy issued 3000 common shares to acquire a vacant land site appraised at $48,000. Prepare the journal entries to record the stock issuances on August 1, August 15, and October 15.



stockholders equity: transactions and balance sheet presentation: tunic corporation was organized on April 1, with an authorization of 25,000 shares of its 6%, $50 par value preferred stock and 200,000 shares of $5 par value common stock. During April, the following transactions affecting stockholders equity occurred.

Apr         1  – Issued 80,000 shares of common stock at $15 cash per share

3 – Issued 2000 shares of common stock to attorneys and promoters in exchange for their services and organizing the corporation. The services were valued at $31,000.

8 – Issued 3000 shares of common stock in exchange for equipment with fair rocket value of $48,000.

20 – Issued 6000 shares of preferred stock for cash and $55 per share.


  1. Prepare journal entries to record the above transactions.
  2. Prepare the stockholders equity section of the balance sheet at April 30. Assume that the net income for April is $49,000.




Cash flow from operating activities (indirect method): Cairo Company had a $21,000 net loss from operations. Depreciation expense for the year was $8600 and a dividend of $6000 was declared and paid. The balances of the current asset and current liability account at the beginning and end of the year are as follows:

End                        beginning

Cash                                                      $3500                    $7000

Accounts Receivable                       $16,000                 $25,000

Inventory                                            $50,000                 $53,000

Prepaid expenses                            $6000                    $9000

Accounts payable                             $12,000                 $8000

A cured liabilities                              $5000                    $7600


Did Cairo companies operating activities provide or use cash? Use the indirect method to determine your answer.



Statement of cash flows (indirect method): The Wolf Company’s income statement and comparative balance sheets at December 31 of 2013 in 2012 are shown below:

Wolf Company

Income statement

For the year ended December 31, 2013

Sales revenue                                                                                   $635,000

cost of goods sold                                            $430,000

wages expense                                                 $86,000

insurance expense                                          $8000

depreciation expense                                    $17,000

interest expense                                              $9000

income tax expense                                       $29,000                $579,000


Net income                                                                                         $56,000


Wolf Company

balance sheet

assets                                                                                   December 31, 2013         December 31, 2012


Cash                                                                                      $11,000                                 $5000

Accounts Receivable                                                       $41,000                                 $32,000

Inventory                                                                            $90,000                                 $60,000

prepaid insurance                                                            $5000                                    $7000

plan assets                                                                          $250,000                              $195,000

accumulated depreciation                                            ($68,000)                             ($51,000)


Total assets                                                                        $329,000                              $248,000


Liabilities and stockholders equity

Accounts Payable                                                             $7000                                    $10,000

wages payable                                                                  $9000                                    $6000

income tax payable                                                         $7000                                    $8000

bonds payable                                                                   $130,000                              $75,000

common stock                                                                   $90,000                                 $90,000

retained earnings                                                             $86,000                                 $59,000


Total liabilities and stockholders’ equity                               $329,000                              $248,000


Cash dividends of $29,000 were declared and paid joint 2013. Plant assets, were purchased for cash and bonds payable were issued for cash. Bond interest is paid semiannually on June 30 and December 31. Accounts Payable relate to merchandise purchases.


  1. calculate the change in cash that occurred during 2013
  2. prepare a statement of cash flows using the indirect method
  3. compute the cash flow
  4. compute the operating cash flow to current liabilities ratio
  5. compute the operating cash flow to capital expenditures ratio