Q-1

(a) (i) State two reasons for differences between cash account and bank statement balances, and four general steps for preparing a bank reconciliation

(ii) Differentiate between the expression par value, book value, and market value as these terms relate to shares of stock.

(b) At June 15, the record of the Flyer Corporation provided the following information.

$100 par value common shares issued 100,000

Common shares subscribed 18,000

Treasury stock shares 6,000

Preferred shares issued 10,000

Total shareholders equity $31,860,000

Preferred shareholder equity $1,200,000

Market value per common share $420

Required:

1. Calculate the book value per common share at June 15.
2. Assume that the common stock in split 4 for 1 on June 16. Calculate the par value, book value, and probable market value per share immediately after the stock split.
3. Can you think of any practical reason for splitting the stock?