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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 164 The following information is available for Richmond Hill Corporation: Beginning common stockholders' equity$700,000 Dividends paid to common stockholders50,000 Dividends paid to preferred stockholders30,000 Ending common stockholders' equity1,000,000 Net income200,000 Instructions Based on the preceding information, calculate return on common stockholders' equity. Ex. 165 In 2014, Spanish Fort Corporation had net.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 161 Tortola Company reported the following balances at December 31, 2013: common stock $500,000; paid-in capital in excess of par value $100,000; retained earnings $250,000. During 2014, the following transactions affected stockholders’ equity. 1.Issued preferred stock with a par value of $150,000 for.
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15 - 1 Long-Term Liabilities 49.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. 50.Investors who receive checks in their names for interest paid on bonds must hold a.registered bonds. b.coupon bonds. c.bearer bonds. d.direct bonds. 51.A bondholder that sends in a.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting COMPLETION STATEMENTS 172.Three important dates associated with dividends are the: (1)__________________, (2)__________________, and (3)__________________. 173.The entry to record the declaration of a stock dividend increases _______________, and decreases ________________. 174.Both a stock split and a stock dividend will _________________ the number of shares outstanding and.
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15 - 1 Long-Term Liabilities TRUE-FALSE STATEMENTS 1.Each bondholder may vote for the board of directors in proportion to the number of bonds held. 2.Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation. 3.Registered bonds are bonds that are delivered to owners by U.S. registered.
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15 - 1 Long-Term Liabilities 99.Which one of the following amounts increases each period when accounting for long-term notes payable? a.Cash payment b.Interest expense c.Principal balance d.Reduction of principal 100.In the balance sheet, mortgage notes payable are reported as a.a current liability only. b.a long-term liability only. c.both a current and a long-term liability. d.a current liability except for the reduction.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 156 On January 1, 2014, Triad Corporation had 60,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred: Mar.1Issued 25,000 shares of common stock for $550,000. June1Declared a cash dividend of $2.00 per share to stockholders.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting SHORT-ANSWER ESSAY QUESTIONS S-A E  183 The ultimate effect of incurring an expense is to reduce stockholders' equity. The declaration of a cash dividend also reduces stockholders' equity. Explain the difference between an expense and a cash dividend and explain why they have the.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting S-A E  188 A prior period adjustment is occasionally reported in company financial statements. What is a prior period adjustment, and how is it reported in the financial statements? S-A E  189(Ethics) Jason Gorni, the president and CEO of Better Earth, Inc., a waste management.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 111.Assume that all balance sheet amounts for Carolina Company represent average balance figures. Stockholders’ equity—common $360,000 Total stockholders’ equity800,000 Sales revenue400,000 Net income76,000 Number of shares of common stock40,000 Common stock dividends24,000 Preferred stock dividends4,000 What is the earnings per share for Carolina? a.$1.90 b.$1.80 c.$1.20 d.$2.00 112.A corporation differs from a proprietorship and.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 91.The following selected amounts are available for Vizio Company. Retained earnings (beginning)$1,600 Net loss300 Cash dividends declared200 Stock dividends declared200 What is its ending retained earnings balance? a.$1,300 b.$1,400 c.$900 d.$1,200 92.Kramer Co. had retained earnings of $30,000 on the balance sheet but disclosed in the footnotes that $6,000 of retained earnings.
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15 - 1 Long-Term Liabilities 109.Which of the following is not a condition which would require the recording of a lease contract as a capital lease? a.The lease transfers ownership of the property to the lessee. b.The lease contains a bargain purchase option. c.The lease term is less than 75% of the economic life of.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting BE 144 Identify which of the following items would be reported as additions (A) or deductions (D) in a Retained Earnings Statement. 1.Net Income 2.Net Loss 3.Cash Dividends 4. Stock Dividends 5. Prior period adjustments to correct for overstatement of prior years’ net income 6.Prior period adjustments to correct.
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15 - 1 Long-Term Liabilities 21.The loss on bond redemption is the difference between the cash paid and the carrying value of the bonds. 22.If $500,000 par value bonds with a carrying value of $476,000 are redeemed at 97, a loss on redemption will be recorded. 23.Gains and losses are not recognized when convertible.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 154 The following information is available for Blowing Rock Corporation: Common Stock ($5 par)$1,600,000 Retained Earnings1,200,000 A 18% stock dividend is declared and paid when the market value was $16 per share. Instructions Compute each of the following after the stock dividend. (a)Total stockholders' equity. (b)Number of shares outstanding. Ex..
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 169 Santos Corporation gathered the following information for the fiscal year ended December 31, 2014: Sales$1,500,000 Operating expenses160,000 Cost of goods sold960,000 Loss on disposal of equipment40,000 Santos Corporation is subject to a 30% income tax rate. Instructions Prepare a partial income statement, beginning with income from operations. Ex. 170 At.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 167 The following information is available for Rubio Corporation for the year ended December 31, 2014: Sales $900,000; Other revenues and gains $72,000; Operating expenses $110,000; Cost of goods sold $520,000; Other expenses and losses $32,000; Preferred stock dividends $30,000. The company's.
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15 - 1 Long-Term Liabilities 159.Each payment on a mortgage note payable consists of a.interest on the original balance of the loan. b.reduction of loan principal only. c.interest on the original balance of the loan and reduction of loan principal. d.interest on the unpaid balance of the loan and reduction of loan principal. 160.Able Electronics Company issues.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting BRIEF Exercises BE 139 On November 27, the board of directors of Beth Company declared a $.60 per share dividend.  The dividend is payable to shareholders of record on December 7 on December 24. Beth has 25,500 shares of $1 par common stock outstanding.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 152 On November 1, 2014, Taxton Corporation's stockholders' equity section is as follows: Common stock, $10 par value$   600,000 Paid-in capital in excess of par205,000 Retained earnings    240,000 Total stockholders' equity$1,045,000 On November 1, Taxton declares and distributes a 15% stock dividend when the market value of.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 121.Each of the following statements is correct except that earnings per share is reported a.below net income. b.for both common and preferred stock. c.on the face of the income statement. d.based on the weighted-average number of common shares outstanding. 122.Blanco, Inc. has a net income of $300,000.
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15 - 1 Long-Term Liabilities 31.Bonds that mature at a single specified future date are called term bonds. 32.The terms of the bond issue are set forth in a formal legal document called a bond indenture. 33.The carrying value of bonds at maturity should be equal to the face value of the bonds. 34.Premium on.
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15 - 1 Long-Term Liabilities MULTIPLE CHOICE QUESTIONS 39.Each of the following is correct regarding bonds except they are a.a form of interest-bearing notes payable. b.attractive to many investors. c.issued by corporations and governmental agencies. d.sold in large denominations. 40.From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is.
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15 - 1 Long-Term Liabilities BE 174 On January 1, 2014, Moon Enterprises sold 8%, 20-year bonds with a face amount of $1,000,000 for $950,000.  Interest is payable semiannually on July 1 and January 1. Instructions Calculate the carrying value of the bond at December 31, 2014 and 2015. BE 175 King Company issued bonds with a.
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15 - 1 Long-Term Liabilities a 139.Presented here is a partial amortization schedule for Graceland Company who sold $200,000, six year 10% bonds on January 1, 2014 for $212,000 and uses annual straight-line amortization. BOND AMORTIZATION SCHEDULE Interest PeriodInterest PaidInterest ExpensePremium AmortizationUnamortized PremiumBond Carrying Value January 1, 2014$12,000$212,000 January 1, 2015(i)(ii)(iii)(iv)(v) Which of the following amounts should.
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15 - 1 Long-Term Liabilities 11.If $150,000 face value bonds are issued at 103, the proceeds received will be $103,000. 12.Discount on bonds is an additional cost of borrowing and should be recorded as interest expense over the life of the bonds. 13.If a corporation issued bonds at an amount less than face value,.
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15 - 1 Long-Term Liabilities 119.The 2014 financial statements of Barker Co. contain the following selected data (in millions). Current Assets$  75 Total Assets140 Current Liabilities40 Total Liabilities90 Cash8 The debt to assets ratio is a.64.3%. b.53.3%. c.28.6%. d.147.4%. a 120.The present value of a bond is also known as its a.face value. b.market price. c.future value. d.deferred value. a 121.$4 million, 8%, 10-year bonds are issued at.
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15 - 1 Long-Term Liabilities Ex. 188 Sergei Company issued $400,000 of bonds on January 1, 2014. Instructions (a)   Prepare the journal entry to record the redemption of the bonds at maturity, assuming the bonds were issued at 100. (b)   Prepare the journal entry to record the redemption of the bonds before maturity at 97. Assume.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 159 The following information is available for Grey Goose Inc.: Beginning retained earnings$600,000 Cash dividends declared60,000 Net income for 2014120,000 Stock dividend declared15,000 Understatement of last year's depreciation expense30,000 Instructions Based on the preceding information, prepare a retained earnings statement for 2014. Ex. 160 Wando Company reported retained earnings at December.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Exercises Ex. 148 The stockholders' equity section of Echota Corporation at December 31, 2013, included the following: 5% preferred stock, $100 par value, cumulative, 10,000 shares authorized, 8,000 shares issued and outstanding...$   800,000 Common stock, $10 par value, 250,000 shares authorized, 200,000 shares issued and outstanding ......................$2,000,000 Dividends.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 157 Record the following transactions for Tri-State Corporation on the dates indicated. 1.On March 31, 2014, Tri-State Corporation discovered that Depreciation Expense on equipment for the year ended December 31, 2013, had been recorded twice, for a total amount of $84,000 instead of.
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15 - 1 Long-Term Liabilities Ex. 186 On January 1, Focus Corporation issued $500,000, 6%, 5-year bonds at face value. Interest is payable semiannually on July 1 and January 1. Instructions Prepare journal entries to record the (a)Issuance of the bonds. (b)Payment of interest on July 1, assuming no previous accrual of interest. (c)Accrual of interest on December.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 131.Bedazzle Corporation had 440,000 shares of common stock outstanding during the year. Norman declared and paid cash dividends of $400,000 on the common stock and $320,000 on the preferred stock. Net income for the year was $1,760,000. What is Bedazzle’s earnings per.
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15 - 1 Long-Term Liabilities a 129.Cotton Company issued $500,000 of 7%, 10-year bonds on one of its interest dates for $431,850 to yield an effective annual rate of 9%. The effective-interest method of amortization is to be used. How much bond interest expense (to the nearest dollar) should be reported on the.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 149 Chetola Corporation has 120,000 shares of $5 par value common stock outstanding. It declared a 15% stock dividend on June 1 when the market price per share was $13. The shares were issued on June 30. Instructions Prepare the necessary entries for the.
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15 - 1 Long-Term Liabilities Ex. 184 Malay Corporation issued $2 million, 10-year, 6% bonds on January 1, 2014. Instructions Prepare the entry to record the sale of these bonds, assuming they were issued at (a)98. (b)103. Ex. 185 On January 1, 2014, Gunne Corporation issued $800,000, 8%, 10-year bonds at face value. Interest is payable semiannually on July.
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15 - 1 Long-Term Liabilities 79.In the balance sheet, the account, Premium on Bonds Payable, is a.added to bonds payable. b.deducted from bonds payable. c.classified as a stockholders' equity account. d.classified as a revenue account. 80.Four thousand bonds with a face value of $1,000 each, are sold at 105. The entry to record the issuance is a.Cash 4,200,000 Bonds.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 163 The following accounts appear in the ledger of Rowlands Inc. after the books are closed at December 31, 2014. Common Stock, $1 par value, 500,000 shares authorized, 400,000 shares   issued$400,000 Common Stock Dividends Distributable60,000 Paid-in Capital in Excess of Par—Common Stock650,000 Preferred Stock, $100 par.
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15 - 1 Long-Term Liabilities BRIEF EXERCISES BE 170 Dayton Inc. is considering two alternatives to finance its construction of a new $5 million plant. (a)Issuance of 500,000 shares of common stock at the market price of $10 per share. (b)Issuance of $5 million, 9% bonds at par. Instructions Complete the following table.               Issue StockIssue Bonds Income before interest.
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15 - 1 Long-Term Liabilities BE 178 On January 1, 2014, Trapp Enterprises issued 9%, 10-year bonds with a face amount of $900,000 at 96. Interest is payable semiannually on June 30 and December 31.  The bonds were issued for an effective interest rate of 10%. Instructions Prepare the entries to record the issuance of.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting 101.Retained earnings is increased by each of the following except a.net income. b.prior period adjustments. c.some disposals of treasury stock. d.All of these increase retained earnings. 102.A prior period adjustment for understatement of net income will a.be credited to the Retained Earnings account. b.be debited to the Retained Earnings.
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15 - 1 Long-Term Liabilities 59.A bond trustee does not a.issue the bonds. b.keep a record of each bondholder. c.hold conditional title to pledged property. d.maintain custody of unsold bonds. 60.The contractual interest rate is always stated as a(n) a.monthly rate. b.daily rate. c.semiannual rate. d.annual rate. 61.When authorizing bonds to be issued, the board of directors does not specify the a.total number.
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15 - 1 Long-Term Liabilities EXERCISES Ex. 180 Loren Company is considering two alternatives to finance its purchase of a new $4,000,000 office building. (a)Issue 400,000 shares of common stock at $10 per share. (b)Issue 7%, 10-year bonds at par ($4,000,000). Income before interest and taxes is expected to be $3,500,000. The company has a 30% tax.
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15 - 1 Long-Term Liabilities a 149.On January 1, 2014, $3,000,000, 5-year, 10% bonds, were issued for $2,916,000. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is a.$14,000. b.$16,800. c.$700. d.$1,400. a 150.A corporation issues $500,000, 8%,.
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15 - 1 Long-Term Liabilities 69.The total cost of borrowing is increased only if the a.bonds were issued at a premium. b.bonds were issued at a discount. c.bonds were sold at face value. d.market interest rate is less than the contractual interest rate on that date. 70.If the market interest rate is 5%, a $10,000, 6%, 10-year.
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15 - 1 Long-Term Liabilities Ex. 182 Zohan Health is considering two alternatives for the financing of some high technology medical equipment. These two alternatives are: 1.Issue 60,000 shares of $10 par value common stock at $50 per share. 2.Issue $3,000,000, 8%, 10-year bonds at par. It is estimated that the company will earn $900,000 before.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting MATCHING 182.Match the items below by entering the appropriate code letter in the space provided. A.Deficit F.Return on common stockholders’ equity B.Prior period adjustment G.Cash dividend C.Liquidating dividend H.Declaration date D.Retained earnings restrictions I.Stock dividend E.Earnings per share J.Stock split ____              1.A dividend declared out of paid-in capital. ____              2.Retained.
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14 - 1 Corporations: Dividends, Retained Earnings, and Income Reporting Ex. 151 Timber Ridge Corporation was organized on January 1, 2013. During its first year, the corporation issued 40,000 shares of $5 par value preferred stock and 400,000 shares of $1 par value common stock. At December 31, the company declared the following.
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15 - 1 Long-Term Liabilities 89.Robin Corporation retires its $800,000 face value bonds at 104 on January 1, following the payment of annual interest.  The carrying value of the bonds at the redemption date is $829,960.  The entry to record the redemption will include a a.credit of $2,040 to Loss on Bond Redemption. b.debit.
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15 - 1 Long-Term Liabilities Ex. 190 Presented below are three independent situations: (a)Ball Corporation purchased $380,000 of its bonds on June 30, 2014, at 102 and immediately retired them. The carrying value of the bonds on the retirement date was $371,500. The bonds pay semiannual interest and the interest payment due on June.
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