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10.1    Objective 10-1 1) A corporation is not an entity that is separate from its owners. 2) A corporation acts under its own name and not the name of its stockholders. 3) If a corporation pays taxes on its income, then the stockholders will not have to pay taxes on the dividends received.
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45) The Allowance to Adjust Investments to Market account has a current credit balance of $1,150 after adjustment. Available-for-sale investments have a current market value of $20,000. The carrying value of the investments is: A) $20,000. B) $21,150. C) $18,850. D) unknown. The carrying value cannot be computed without knowing the cost of the.
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28) On a worksheet for a consolidated entity balance sheet, the elimination entry requires: A) a credit to stockholders' equity accounts of the subsidiary. B) a credit to the Cash account of the subsidiary. C) a credit to Investment in Subsidiary. D) a debit to Investment in Subsidiary. 29) Big Time Company owns all of.
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11) Employee compensation is a major expense for most service companies. 12) Unearned revenue will be zero when a company has earned all of the revenue it had collected in advance. 13) The exact amount of warranty expense cannot be determined, so businesses must rely on estimates. 14) The current portion of a.
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21) Wilson Corporation had the following transactions: 1.Issued 7,000 shares of common stock with a stated value of $15 for $155,000. 2.Issued 3,000 shares of $100 par value preferred stock at $117 for cash. Required:  Prepare the journal entries for the above transactions. 22) During the month of February, B & B Builders, Inc..
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37) Milton Company owns 30% interest in the stock of Darcy Corporation. During the year, Darcy pays $20,000 in dividends to Milton, and reports $100,000 in net income. Milton Company's investment in Darcy will increase Milton's net income by: A) $15,000. B) $30,000. C) $24,000. D) $6,000. 38) Nantucket Company owns a 30% interest in.
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61) Sage Company issued $600,000, 8%, 5-year bonds for 106, with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year? A) $636,000 B) $600,000 C) $628,800 D) $648,000 62) The journal entry to record payment of bond payable at maturity will include a: A) debit to bonds payable,.
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10.2   Learning Objective 10-2 1) Corporations may sell stock directly to the stockholders. 2) A Loss on Issue of Common Stock indicates that the stock was sold for less than its par value. 3) A company can sell stock only for cash. 4) Assets, other than cash, should be recorded at the stockholders' cost.
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10.4   Learning Objective 10-4 1) A debit balance in Retained Earnings indicates that a company's lifetime earnings exceeded its lifetime losses and dividends issued. 2) The retained earnings account is not a reservoir of cash for paying dividends to the stockholders. 3) A debit balance in the Retained Earnings account indicates a deficit. 4).
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9.3   Learning Objective 9-3 1) Earnings per share is the amount of a company's net income divided by the par value of its stock. 2) Earnings per share is a standard measure of operating performance that applies to companies of different sizes and from different industries. 3) The times-interest-earned ratio is calculated by.
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71) ABC Corporation issued $600,000, 10%, 5-year bonds on January 1, 2012 for $612,000 when the market interest rate was 8%. Interest is paid semiannually on January 1 and July 1. The corporation uses the effective-interest method to amortize bond premium. The amount of bond interest expense recognized on July.
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41) Current liabilities fall into two categories which are referred to as: A) contingent liabilities and contra-liabilities. B) contingent liabilities and noncontingent liabilities. C) unearned liabilities and contra-liabilities. D) liabilities of a known amount and estimated liabilities. 42) The current portion of long-term debt should: A) be reclassified as a current liability. B) be paid immediately. C) be.
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105) On January 1, 2012, Henderson Company issued 8%, 20-year bonds with a face amount of $3,000,000 at 101. Interest is payable semiannually on June 30 and December 31. Prepare the journal entries to record the issuance of the bonds and the first semiannual interest payment. Henderson uses the straight-line.
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10.3   Learning Objective 10-3 1) The purchase of treasury stock by a corporation increases total assets and stockholders' equity. 2) The purchase of treasury stock has the same effect of issuing stock. 3) Treasury stock is a contra-stockholders' equity account. 4) Treasury stock increases the number of shares outstanding. 5) Treasury stock belongs in the.
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11) The chairperson of the board of directors has the title of: A) Chief Financial Officer (CFO). B) President. C) Chief Executive Officer (CEO). D) Chief Operating Officer (COO). 12) The authority structure of a corporation would show the: A) board of directors delegating to the stockholders. B) president delegating to the board of directors. C) chief financial.
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9.1   Learning Objective 9-1 1) Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer. 2) A current liability must be paid out of current profits. 3) Purchasing merchandise inventory on account results in a liability. 4) Notes payable usually require the borrower to accrue interest expense.
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11) A 2-for-1 stock split will increase total stockholders' equity. 12) If a company has a deficit in retained earnings: A) then retained earnings has a credit balance. B) the deficit is subtracted to determine total stockholders' equity. C) the deficit is added to determine total stockholders' equity. D) then the corporation's lifetime earnings exceed.
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3) Details about a company's liabilities should be included in the notes to the financial statements. 4) A company must include all of the following about its liabilities in the notes to the financial statementsA) maturity dates of the debt. B) interest rates on the debt. C) interest expense paid for the year. D).
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62) Lansing Company's general ledger shows the following balances for the selected accounts after posting adjusting entries: Accounts Payable$155,000 Notes Payable, 3-month180,000 Accumulated Depreciation-Equipment114,000 Salaries Payable127,000 Notes Payable, 5-year, 8%130,000 Estimated Warranty Liability134,000 Payroll Tax Expense16,000 Interest Payable13,000 Sales Tax Payable 22,000 Required: Prepare the current liability section of Lansing Company's balance sheet, assuming that the current portion of the 5-year.
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11) The debt to total assets ratio is computed by dividing: A) total assets by long-term liabilities. B) total assets by total debt. C) total debt by total assets. D) long-term liabilities by total assets. 12) If a company wants to maximize earnings per share it would issue: A) stock or bonds, depending on the tax.
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51) Hoover Company has a long-term note payable for $300,000 on January 1, 2012. Each month the company is required to pay $75,000 on the note. How will this note be reported on January 31, 2012? A) Long-term liability, $300,000 B) Long-term liability, $225,000 C) Current liability, $75,000; long-term liability, $225,000 D) Current liability,.
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18) Consolidated financial statements are prepared when a company owns ________ of the common stock of another company. A) less than 20% B) between 20% and 50% C) less than 50% D) more than 50% 19) A company that owns more than 50% of the common stock of another company is known as the: A) parent.
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35) Receiving a cash dividend from an available-for-sale investment requires the following journal entry: A) a debit to Cash and a credit to Dividend Revenue. B) a debit to Cash and a credit to Unrealized Gain on Investments. C) a debit to Unrealized Gain on Investment and a credit to Dividend Revenue. D) no.
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51) The normal balance of the discount on the bonds payable account and the premium on the bonds payable account are respectively: A) debit, credit. B) credit, credit. C) debit, debit. D) credit, debit. 52) In the balance sheet, the account, Discount on Bonds Payable, is: A) added to bonds payable. B) deducted from bonds payable. C) classified.
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11) Which of the following statements regarding leases is correct? A) Capital leases are favored over operating leases. B) A debit balance in the Leased Asset account on the balance sheet indicates an operating lease. C) Title is transferred to the lessee at the end of an operating lease term. D) Operating leases require.
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31) Estimated warranty payable are reported on the balance sheet as: A) administrative expenses. B) a long-term liability. C) a current liability. D) part of cost of goods sold. 32) The accounting principle requiring that a company record the warranty expense in the same period that it records sales revenue is the: A) going concern principle. B).
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59) Davies Accessories Company entered into the following transactions relating to notes payable: August 1Purchased inventory costing $42,000 by signing an 8-month, 5% note payable. October 1Purchased inventory costing $15,000 by signing a 1-year, 6% note payable. a.Prepare journal entries to record the above transactions. b.Assuming Davies Accessories Company has a December 31 year-end,.
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11) Green Corporation purchases 40,000 shares of its own $10 par value common stock for $25 per share. What will be the effect on stockholders' equity? A) Increase $400,000 B) Increase $1,000,000 C) Decrease $400,000 D) Decrease $1,000,000 12) If treasury stock is sold at a price greater than its reacquisition costs, the difference is: A).
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31) The stated interest rate is always declared as a(n): A) monthly rate. B) daily rate. C) semiannual rate. D) annual rate. 32) The organization that purchases the bonds from an issuing corporation and resells them to its clients or sells the bonds for a commission is the: A) underwriter. B) bank. C) stockholders. D) bondholders. 33) Bonds in a.
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6) On the statement of cash flows, the cash received from selling available-for-sale investments is shown as a(n): A) increase in financing activities. B) decrease in financing activities. C) increase in investing activities. D) decrease in investing activities. 7) On the statement of cash flows, the cash paid to purchase available-for-sale investments is shown as.
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9.2   Learning Objective 9-2 1) Corporations borrow large amounts of money by issuing (selling) bonds to the public. 2) If bonds are issued at a premium, the carrying value of the bonds will be greater than the face value of the bonds for all periods prior to the bond maturity date. 3) If.
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