CH 13.2 In Class NAME BE 155 Identify (by letter) each of the following characte
ID: 2397348 • Letter: C
Question
CH 13.2 In Class NAME BE 155 Identify (by letter) each of the following characteristics as being an advantage, a disadvantage, DATE: or not applicable to the corporate form of business organization. A = Advantage D Disadvantage N Not Applicable Characteristics 1. Separate legal entity 2. Taxable entity resulting in additional taxes 3. Continuous life 4. Unlimited liability of owners 5. Government regulation 6. Separation of ownership and management 7. Ability to acquire capital 8. Ease of transfer of ownership BE 156 On July 6, Clayton Corporation issued 2,000 shares of its $1.50 par common stock. The market price of the stock on that date was $18 per share. Journalize the issuance of the stock. BE 157 Domaine Corporation is authorized to issue 1,000,000 shares of $1 par value common stock During 2012, the company has the following stock transactions. Jan. 15 Issued 400,000 shares of stock at $7 per share. Sept. 5 Purchased 30,000 shares of common stock for the treasury at $9 per share. Instructions Journalize the transactions for Domaine Corporation.Explanation / Answer
BE155:
1.SEPARATE LEGAL ENTITY:ADVANTAGE - A CORPORATION IS AN ARTIFICAL PERSON HAVING AN IDENTITY OF ITS OWN UNDER ITS COMMON SEAL
2.TAXABLE ENTITY RESULTING IN ADDITIONAL TAXES:DISADVANTAGE:MORE THE TAXES LESS IS THE CASH LEFT WITH THE COMPANY
3.CONTINUOUS LIFE:ADVANTAGE:COMPANY RUNS PERPETUALLY AND THIS IS ALSO A UNOQUE FEATURE IN ITSELF , WHOSOEVER IN THE COMAPNY COMES AND GOES , THE COMPANY REMAINS
4.UNLIMITED LIABILITY OF OWNERS:NOT APPLICABLE:THERE IS ALWAYS A CLUSE THAT IF THE COMPANY IS NOT ABLE TO PAY ITS DUES , THE OWNERS PERSONALLY HAVE TO PAY FOR IT SO IT IS DISADVANTAGE FOR THE OWNERS AND NOT FOR COMPANY
5.GOVERNMENT REGULATION:DISADVANTAGE:GOVERNMENT REGULATIONS MAY EFFECT OPERATIONS OF THE COMPANY HENCE THE COMPANY IS IN DISADVANTAGE
6.SEPARATION OF OWNERSHIP AND MANAGEMENT:DISADVANTAGE:GENERALLY THE OWNERSHIP AND MANAGEMENT IS SEPARATE. THE OWNERSHIP IS MOSTLY WITH SHAREHOLDERS WHO APPOINT THE MANAGEMENT OF THE COMAPNY TO RUN IT , SO THERE MAY BE DIFFERENCE IN GOALS BETWEEN THE TWO
7.ABILITY TO ACQUIRE CAPITAL:ADVANTAGE:BEING A SEPARATE LEGAL ENTITY , A COMAPNY CAN ACQUIRE CAPITAL IN ITS OWN NAME , A COMPANY WITH STRONG FINANCIALS CAN EASILY ACQUIRE CAPITAL
8.EASE OF TRANSFER OF OWNERSHIP:ADVANTAGE:THE COMPANY'S SHARES ARE TRANSFERRABLE EASILY
BE156:
July 6 Cash (2,000 × $18) 36,000
Common Stock(2000*1.50) 3,000
Paid in Capital in Excess of Par 33,000
BE157:
Jan. 15 Cash(400,000*$7)............Dr.............. 2,800,000
Common Stock(400,000*$1)...............................Cr. 400,000
Paid-in Capital in Excess of Par..............................Cr. 2,400,000
Sept. 5 Treasury Stock ....................Dr.270,000
Cash...................................................Cr. 270,000
BE158:
July 1 Cash ....................Dr.180,000
Common Stock ...........cr.150,000
Paid-in Capital in Excess of Par ........cr.30,000
Sept. 1 Treasury Stock .......dr.40,000
Cash .......................cr.40,000
BE159:
Sept. 5 Treasury Stock (2,500 × $23)...........cr. 57,500
Cash .............................................dr.57,500
Oct. 15 Cash (1,000 × $25)....................dr. 25,000
Treasury Stock (1,000 × $23) ...................................cr23,000
Paid-in Capital from Treasury Stock............................cr. 2,000
B160:
1. Cash ..........................dr.130,000
Common Stock ...................................cr.50,000
Paid-in Capital in Excess of Stated Value—Common Stock....cr 80,000
2. Cash .........................dr.216,000
Preferred Stock cr. 200,000
Paid-in Capital in Excess of Par—Preferred Stock .....cr.16,000
B161:
Feb. 1 Cash ............dr.130,000
Preferred Stock (5,000*20)................cr. 100,000
Paid-in Capital in Excess of Par—Preferred Stock .........cr.30,000
(Issued 5,000 shares at $26 per share)
BE 162:
Stockholders’ equity
Paid-in capital
Capital stock
Common stock, $10 par value, 7,000 shares
issued and 6,500 shares outstanding $70,000
Additional paid-in capital
In excess of par—common stock 10,000
Total paid-in capital 80,000
Retained earnings 45,000
Total paid-in capital and retained earnings 125,000
Less: Treasury stock (500 shares) (10,000)
Total stockholders’ equity $115,000
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