1. Question: Select the best term for each definition below.

a. Shareholders can lose no more than the amount they invest in the company.

b. Corporate earnings are taxed twice—at the corporate level and individual shareholder level.

c. Like an S corporation, but there are no limitations on the number of owners as in an S corporation.

d. Traces the line of authority within the corporation.

e. Allows for legal treatment as a corporation, but tax treatment as a partnership.

f. Has stock traded on a stock exchange such as the New York Stock Exchange (NYSE).

g. The first time a corporation issues stock to the public.

h. Describes (a) the nature of the firm’s business activities, (b) the shares to be issued, and (c) the composition of the initial board of directors.

2. Question: Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2021. Power Drive has the following transactions affecting stockholders' equity in 2021.

March 1 Issues 47,000 additional shares of $1 par value common stock for $44 per share. May 10

Purchases 4,200 shares of treasury stock for $47 per share.

June 1 Declares a cash dividend of $1.10 per share to all stockholders of record on June 15. ( Hint: Dividends are not paid on treasury stock.)

July 1 Pays the cash dividend declared on June 1.

October 21 Resells 2,100 shares of treasury stock purchased on May 10 for $52 per share.

Required:

Record each of these transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

3. Question: The financial statements of Friendly Fashions include the following selected data (in millions):

Required:

Calculate the following ratios for Friendly Fashions in 2021. (Enter your Dividend yield and Price-earning ratio values to 2 decimal places. Enter your answers in millions (i.e. 5,500,000 should be entered as 5.5).)

4. Question: The income statement, balance sheets, and additional information for Video Phones, Inc., are provided.

Additional Information for 2021:

1. Purchase investment in bonds for $104,000.
2. Sell land costing $29,000 for only $21,100, resulting in a $7,900 loss on sale of land.
3. Purchase $59,000 in equipment by issuing a $59,000 long-term note payable to the seller. No cash is exchanged in the transaction.
4. Declare and pay a cash dividend of $24,500.

Required:

Prepare the statement of cash flows usingintdhierecmt ethod. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.)

Required:

Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. (List casg outflows and any decrease in cash as negative amounts).

VIDEO PHONES, INC.

Statement of Cash Flows

For the Year Ended December 31, 2021

Cash Flows from Operating Activities: