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Study Resources (Accounting)

*217.Larson Company issued $500,000 of 8%, 5-year bonds at 106. Assuming straight-line amortization and annual interest payments, what is the amount of the amortization at each interest payment point? a.$3,000 b.$6,000 c.$40,000 d.$34,000               *218.Parker Company issued ten-year, 9%, bonds payable in 2012 at a premium. During 2012, the company’s accountant failed to amortize any.
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117.Keller Company issued a five-year interest-bearing note payable for $100,000 on January 1, 2011. Each January the company is required to pay $20,000 on the note. How will this note be reported on the December 31, 2012, balance sheet? a.Long-term Debt, $100,000 b.Long-term Debt, $80,000 c.Long-term Debt, $60,000; Long-term Debt due within one.
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              11.When no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds.               12.As soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value of the.
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              87.Holden Packaging Corporation began business in 2012 by issuing 60,000 shares of $5 par common stock for $8 per share and 15,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2012 balance.
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207.In a recent year Hart Corporation had net income of $140,000, interest expense of $30,000, and tax expense of $40,000. What was Hart Corporation’s times interest earned ratio for the year? a.7.00. b.4.66. c.5.67. d.6.00. 208.In a recent year Ley Corporation had net income of $150,000, interest expense of $40,000, and a times interest earned.
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IFRS QUESTIONS               1.Wittebury Corporation retires its £5,000,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $5,187,250. The entry to record the redemption will include a.a credit of £62,750 to Gain on Bond Redemption. b.a debit.
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TRUE-FALSE STATEMENTS               1.A corporation is not an entity that is separate and distinct from its owners.               2.The liability of a stockholder is usually limited to the stockholder’s investment in the corporation.               3.The sale of shares in a corporation by one stockholder to another affects the total capital of the corporation.              .
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              77.The amount of stock that may be issued according to the corporation’s charter is referred to as the a.authorized stock. b.issued stock. c.unissued stock. d.outstanding stock.               78.If Norben Company issues 2,000 shares of $5 par value common stock for $140,000, the account a.Common Stock will be credited for $140,000. b.Paid-in Capital in Excess of Par.
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MULTIPLE CHOICE QUESTIONS               47.Under the corporate form of business organization a.a stockholder is personally liable for the debts of the corporation. b.stockholders’ acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. c.the corporation’s life is stipulated in its charter. d.stockholders wishing to sell their corporation.
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              21.The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders’ equity.               22.The journal entry to record the purchase of treasury stock will cause total stockholders’ equity to decrease by the amount of the cost of the treasury stock.               23.The number of.
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Ex. 263 On June 1, Huntley Company borrows $40,000 from the bank by signing a 60-day, 6%, interest-bearing note. Instructions Prepare the necessary entries below associated with the note payable on the books of Huntley Company. (a)Prepare the entry on June 1 when the note was issued. (b)Prepare any adjusting entries necessary on June 30.
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              97.A retail store credited the Sales account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales account amounted to $189,000, what is the amount of the sales taxes owed to the taxing agency? a.$180,000. b.$189,000. c.$9,450. d.$9,000.              .
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*187.Sparks Company received proceeds of $211,500 on 10-year, 8% bonds issued on January 1, 2011. The bonds had a face value of $200,000, pay interest annually on December 31st, and have a call price of 102. Sparks uses the straight-line method of amortization. What is the amount of interest expense.
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              67.If no-par stock is issued without a stated value, then a.the par value is automatically $1 per share. b.the entire proceeds are considered to be legal capital. c.there is no legal capital. d.the corporation is automatically in violation of its state charter.               68.If a stockholder cannot attend a stockholders’ meeting, he may delegate.
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Be. 259 Mintz Company issued $300,000, 10%, 10-year bonds on January 1, 2012, at 105. Interest is payable annually. Mintz uses the straight-line method of amortization and has a calendar year end. Instructions Prepare all journal entries made in 2012 related to the bond issue. *Be. 260 Frye Company issued $500,000, 10%, 10-year bonds on.
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              51.The classification of a liability as current or noncurrent is important because it may affect the evaluation of a company’s liquidity.               52.The debt to total assets ratio measures the percentage of the total assets provided by creditors.               53.The times interest earned ratio is computed by dividing net income by.
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              77.Moss County Bank agrees to lend the Sadowski Brick Company $400,000 on January 1. Sadowski Brick Company signs a $400,000, 6%, 9-month note. The entry made by Sadowski Brick Company on January 1 to record the proceeds and issuance of the note is a.Interest Expense              18,000 Cash.              382,000 Notes Payable                            400,000 b.Cash             .
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              87.The interest charged on a $200,000 note payable, at the rate of 6%, on a 60-day note would be a.$12,000. b.$6,000. c.$3,000. d.$2,000.               88.The interest charged on a $200,000 note payable, at the rate of 6%, for a year would be a.$12,000. b.$6,000. c.$3,000. d.$1,000.               89.The interest charged on a $50,000 note payable, at the rate of.
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              57.Which of the following statements reflects the transferability of ownership rights in a corporation? a.If a stockholder decides to transfer ownership, he must transfer all of his shares. b.A stockholder may dispose of part or all of his shares. c.A stockholder must obtain permission of the board of directors before selling shares. d.A.
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197.A $600,000 bond was retired at 103 when the carrying value of the bond was $622,000. The entry to record the retirement would include a a.gain on bond redemption of $18,000. b.loss on bond redemption of $4,000. c.loss on bond redemption of $18,000. d.gain on bond redemption of $4,000. 198.A $700,000 bond was retired at.
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Ex. 266 During the month of March, Preston Company's employees earned wages of $60,000. Withholdings related to these wages were $4,590 for Social Security (FICA), $9,500 for federal income tax, $4,100 for state income tax, and $400 for union dues. The company incurred no cost related to these earnings for federal.
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              31.A $150,000 bond with a quoted priced of 102 ¼ is sold for $153,375.               32.If a bond has a stated value of $1,000 and a contractual interest rate of 6 percent, then the interest paid annually will be $60.               33.The current market value of a bond is equal to.
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227.The following partial amortization schedule is available for Courtney Company who sold $300,000, five-year, 10% bonds on January 1, 2012 for $312,000 and uses annual straight-line amortization. BOND AMORTIZATION SCHEDULE Interest Periods Interest to be paid Interest expense Premium Amortization Unamortized Premium Bond Carrying Value January 1, 2012 $12,000 $312,000 January 1, 2013 (i) (ii) (iii) (iv) (v) Which of the following amounts should be shown in cell.
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              41.If bonds sell at a premium, the interest expense recognized each year will be greater than the bond interest paid.               42.If the market rate of interest at the date of issuance of a bond is greater than the stated interest rate, the bond will be issued at a premium.              .
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SHORT-ANSWER ESSAY QUESTIONS S-A E 296 (a)Identify three taxes commonly paid by employers on employees' salaries and wages. (b)Where in the financial statements does the employer report taxes withheld from employees' pay? S-A E 297 (a)What is a convertible bond? (b)Discuss the advantages of a convertible bond from the standpoint of the bondholders and of the.
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157.If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount a.less than face value. b.equal to face value. c.greater than face value. d.that cannot be determined. 158.On January 1, 2012, $1,000,000, 5-year, 10% bonds, were issued for $1,060,000. Interest is paid annually on.
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              11.With an interest-bearing note, the amount of cash received upon issuance of the note generally exceeds the note's face value.               12.Interest expense on a note payable is only recorded at maturity.               13.Current maturities of long-term debt refers to the amount of interest on a note payable that must be.
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147.A bond with a face value of $100,000 and a quoted price of 104¼ has a selling price of a.$104,250 b.$104,025. c.$100,425. d.$104,000. 148.A bond with a face value of $200,000 and a quoted price of 98½ has a selling price of a.$196,500. b.$196,100. c.$196,010. d.$197,000. 149.The present value of a bond is also known as its a.face value. b.market price. c.future value. d.deferred.
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BRIEF Exercises Be. 251 Steiner Sales Company has the following selected accounts after posting adjusting entries: Accounts Payable$  57,000 Notes Payable, 3-month50,000 Accumulated Depreciation—Equipment14,000 Notes Payable, 5-year, 6%80,000 Payroll Tax Expense4,000 Interest Payable3,000 Mortgage Payable120,000 Sales Tax Payable38,000 Instructions Prepare the current liability section of Steiner Sales Company's balance sheet, assuming $15,000 of the mortgage is payable next year. Be. 252 On April 1,.
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Exercises Ex. 261 Brewer Company has the following selected accounts after posting adjusting entries: Accounts Payable$  65,000 Notes Payable, 3-month90,000 Accumulated Depreciation—Equipment14,000 Notes Payable, 5-year, 8%75,000 Payroll Tax Expense6,000 Interest Payable5,000 Mortgage Payable180,000 Sales Tax Payable23,000 Instructions (a)Prepare the current liability section of Brewer Company's balance sheet, assuming $12,000 of the mortgage is payable next year. (b)Comment on Brewer’s liquidity, assuming total current.
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127.Julie Lambert has a large consulting practice. New clients are required to pay one-half of the consulting fees up front. The balance is paid at the conclusion of the consultation. How does Lambert account for the cash received at the end of the engagement? a.Cash Unearned Consulting Revenue b.Cash Unearned Consulting Revenue Earned Consulting Revenue c.Prepaid.
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S-A E 303 Maria Gomez is discussing the advantages of the effective-interest method of bond amortization with her accounting staff. What do you think Maria is saying? S-A E 304(Ethics) Wishbone Company maintains two separate accounts payable computer systems. One is known to all the users, and is used to process payments to.
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              41.The Common Stock Distributable account is classified as a current liability.               42.Return on common stockholders’ equity is computed by dividing net income by ending stockholders’ equity.               43.The payout ratio is computed by dividing total cash dividends paid on common stock by retained earnings.               *44.A liability arises when the board.
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177.Bond discount should be amortized to comply with a.the historical cost principle. b.the matching principle. c.the revenue recognition principle. d.conservatism. 178.Three thousand bonds with a face value of $1,000 each, are sold at 102. The entry to record the issuance is a.Cash              3,060,000 Bonds Payable                            3,060,000 b.Cash              3,000,000 Premium on Bonds Payable              60,000 Bonds Payable                            3,060,000 c.Cash              3,060,000 Premium on.
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137.Bonds that may be exchanged for common stock at the option of the bondholders are called a.options. b.stock bonds. c.convertible bonds. d.callable bonds. 138.Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called a.callable bonds. b.early retirement bonds. c.options. d.debentures. 139.Bonds that are issued against the general credit.
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*Ex. 274 Garrison Company issued $1,000,000, 7%, 20-year bonds on January 1, 2012, at 105. Interest is payable annually on January 1. Garrison uses straight-line amortization for bond premium or discount. Instructions Prepare the journal entries to record the following events. (a)The issuance of the bonds. (b)The accrual of interest and the premium amortization on.
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COMPLETION STATEMENTS               279.A current liability is a debt that can be expected to be paid within ____________ year(s) or the ______________, whichever is longer.               280.Liabilities are classified on the balance sheet as being _______________ liabilities or ______________ liabilities.               281.Obligations in written form are called ______________ and usually require the borrower.
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              21.Metropolitan Symphony sells 200 season tickets for $40,000 that includes a five-concert season. The amount of Unearned Ticket Revenue after the third concert is $24,000.               22.The contractual interest rate is always equal to the market rate of interest on the date that bonds are issued.               23.Each bondholder may vote.
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107.A cash register tape shows cash sales of $2,000 and sales taxes of $160. The journal entry to record this information is a.Cash              2,160 Sales                            2,160 b.Cash              2,160 Sales Tax Payable                            160 Sales                            2,000 c.Cash              2,000 Sales Tax Expense              160 Sales                            2,160 d.Cash              2,160 Sales                            2,000 Sales Taxes Revenue                            160               108.Al’s Bookstore has collected $750.
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Ex. 269 Hensley, Inc. reports the following liabilities (in thousands) on its January 31, 2012, balance sheet and notes to the financial statements. Accounts payable$3,963.9 Accrued pension liability1,215.2 Accrued liabilities1,158.1 Bonds payable1,961.2 Current portion of long-term debt1,992.2 Income taxes payable235.2 Notes payable—long-term$9,546.7 Operating leases1,641.7 Loans payable—long-term435.6 Payroll-related liabilities558.1 Short-term borrowings2,563.6 Unused operating line of credit3,337.6 Warranty liability— current1,617.3 Instructions Prepare the liabilities section of Hensley's balance.
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              289.If bonds are issued at face value (par), it indicates that the ________________ rate of interest must be equal to the ________________ rate of interest.               290.If a $1 million, 10%, 10-year bond issue was sold at 97, the cash proceeds from the issuance of the bonds amounted to $________________.              .
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              *61.The effective-interest method produces a constant dollar amount of interest expense to be reported each interest period.               *62.When there are material differences between the results of using the straight-line method and using the effective-interest method of amortization, the effective-interest method should be used.               *63.In a monthly mortgage payment, the.
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*Ex. 277 Moon Company issued $300,000, 10%, 5-year bonds on January 1, 2012, at 106. Interest is payable annually on January 1. Moon uses the effective-interest method of amortization and has a calendar year end and the bonds were issued for an effective interest rate of 8%. Instructions Prepare all journal entries made.
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MATCHING 295.Match the items below by entering the appropriate code letter in the space provided.               A.Serial bondsF.Current ratio               B.Debenture bondsG.Straight-line method of amortization               C.Bond indentureH.Times interest earned ratio               D.Market interest rate I.Callable bonds               E.Discount on bonds payableJ.Maturity date ____              1.Bonds subject to retirement at a stated dollar amount prior to maturity. ____              2.A.
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              31.A stock dividend does not affect the total amount of stockholders’ equity.               32.A stock split results in a transfer at market value from retained earnings to paid-in capital.               33.A 3-for-1 common stock split will increase total stockholders’ equity but reduce the par or stated value per share of common.
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167.The market rate of interest is often called the a.stated rate. b.effective rate. c.coupon rate. d.contractual rate.               168.If bonds are issued at a discount, it means that the a.financial strength of the issuer is suspect. b.market interest rate is higher than the contractual interest rate. c.market interest rate is lower than the contractual interest rate. d.bondholder will receive.
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Be. 256 The board of directors of Lauber Corporation are considering two plans for financing the purchase of new plant equipment. Plan #1 would require the issuance of $5,000,000, 7%, 20-year bonds at face value. Plan #2 would require the issuance of 200,000 shares of $5 par value common stock that.
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MULTIPLE CHOICE QUESTIONS               67.Liabilities are classified on the balance sheet as current or a.deferred. b.unearned. c.long-term. d.accrued.               68.Most companies pay current liabilities a.out of current assets. b.by issuing interest-bearing notes payable. c.by issuing stock. d.by creating long-term liabilities.               69.A current liability is a debt that can reasonably be expected to be paid a.within one year, or the operating cycle,.
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