Accounting Expert Answers & Study Resources : Page 155

20.2   Learning Objective 20-2 1) If a bond is issued at a premium, the effective interest rate is most likely ________ the contract interest rate. A) higher than B) lower than C) the same as D) Cannot be determined based on information given. 2) The entry to record the semiannual payment and amortization of the discount.

11) The entry to record the payment of a cash dividend would include a: A) debit to Dividends Payable; credit to Cash. B) debit to Retained Earnings; credit to Cash. C) credit to Dividends Declared, debit to Cash. D) debit to Cash, credit to Retained Earnings. 12) On the date of record, the journal entry.

31) The Accounts Payable balance has decreased during the year. How would this event affect the statement of cash flows operations section—indirect method? A) It is already included in the net income. B) It would affect the operations section positively. C) It would affect the operations section negatively. D) Does not affect the cash.

32) Prepare a statement of retained earnings in proper form for White Corporation for the year ended December 31, 20xx, from the following: Retained Earnings, January 1, 20xx$2,000 Dividends paid during the year800 Net income for the year3,000 Correction of prior year error. Purchase of land recorded as rent expense1,000 33) Prepare a statement of retained.

21) A stock-split journal entry would include a: A) debit to Retained Earnings and a credit to Common Stock. B) debit to Common Stock and a credit to Cash. C) debit to Common Stock Dividend Distributable and a credit Common Stock. D) memorandum notation only. 22) The retained earnings section after a two-for-one stock split.

20.3   Learning Objective 20-3 1) Bonds are issued for $10,000 at 8% on October 1. What is the adjusting entry on December 31? A) Bond Interest Expense 800 Bond Interest Payable 800 B) Bond Interest Expense 200 Bond Interest Payable 200 C) Bond Interest Payable 200 Bond Interest Expense 200 D) Bond Interest Payable 800 Bond Interest Expense 800 2) Bonds are issued for $80,000 at 12%.

18.4   Learning Objective 18-4 1) The journal entry for the receipt of a cash payment on common stock subscriptions would include: A) debiting Subscriptions Receivable-Common Stock ; crediting Common Stock. B) debiting Common Stock; crediting Subscriptions Receivable-Common Stock. C) debiting Cash; crediting Subscriptions Receivable-Common Stock. D) debiting Cash; crediting Common Stock Subscribed. 2) The Bean Counter.

18.2   Learning Objective 18-2 1) The entry to record MidIowa.net selling 800 shares of $6.00 par value common stock at $8.00 would be to: A) debit Cash $6,400; credit Common Stock $4,800; credit Paid-in Capital in Excess of Par Value-Common $1,600. B) debit Cash $4,800; credit Common Stock $4,800. C) debit Cash $6,400; debit.

Using the following accounts: [1]Cash [2]Subscription receivable common stock [3]Machinery [4]Building [5]Land [6]Organization costs [7]Preferred stock [8]Common stock [9]Paid in capital in excess of par preferred stock [10]Paid in capital in excess of par common stock [11]Common stock subscribed [12]Discount on common stock [13]Amortization expense organization costs Indicate the account(s) to be debited and credited to record the following transactions. 34) Sold common stock at.

21.4   Learning Objective 21-4 1) Which of the following is not a cash flow from investing activities? A) Loaning cash to borrowers B) Payment of cash dividends C) Sale or purchase of land D) Cash received from the sales of stock 2) If $12,000 was generated from operations, $6,000 was used for investing activities, and $4,000.

31) Allan Corporation issued 300, 8%, 10-year, $1,000 bonds on July 1. The annual bond interest date is June 30, and the bonds were issued at face value. The amount of interest expense reported for the current year is: A) $0. B) $24,000. C) $12,000. D) None of the above are correct. 32) On October.

47) Prepare the following journal entries for Complex Company. March 15 Declared the stated dividend on 5,000 shares of $10 par, 5% preferred stock. April 15 Paid the dividend. 48) Prepare the following stock dividend journal entries for Tamera, Inc. June 19 Declared a 7% stock dividend to common stockholders. The stock has a.

19.1   Learning Objective 19-1 1) The price a corporation pays when it reserves the right to retire or redeem stock at a specific price is the: A) redemption value. B) book value per share. C) dividend per share. D) market value. 2) The price at which shares are bought and sold on the open market is.

31) Declaration of a cash dividend was recorded by debiting Operations Expense and crediting Cash. This error would cause: A) the period end assets to be overstated. B) the period end liabilities to be overstated. C) the period end stockholders' equity to be understated. D) None of the above are correct. 32) The declaration of.

20.4   Learning Objective 20-4 1) Assume the following account balances immediately after an interest payment date: Bonds Payable $100,000 Premium on Bonds Payable 5,000 If the bonds are retired immediately at a total cost of $104,000, the journal entry to record this event is: A) Cash 104,000 Loss on Bond Retirement     1,000 Premium on Bonds Payable 5,000 Bonds Payable 100,000 B) Bonds Payable 100,000 Premium on.

21.2   Learning Objective 21-2 1) When preparing the statement of cash flows by the indirect method, if current assets have increased the difference is: A) added to net income. B) added to investments. C) deducted from net income. D) subtracted from investments. 2) Using the indirect method for cash flows, depreciation expense is added to net.

20.1   Learning Objective 20-1 1) A special type of long-term interest-bearing note payable issued by a corporation to raise capital is called a: A) short-term note payable. B) bond payable. C) stock issue. D) treasury stock issue. 2) The contract rate for a bond is: A) the annual interest rate based on selling price. B) the annual interest.

16) Washington Corporation issued 4,000 shares of its $20 par value common stock for $23 per share. The entry to record the issuance would include a: A) debit to Cash for $80,000. B) credit to Common Stock for $12,000. C) credit to Common Stock for $80,000. D) debit to Paid-in Capital in Excess of.

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities,.

11) Journalize the transactions for the stock subscription plan for Nick Company. On February 1, Nick received subscriptions for 80 shares of $10 par value common stock at $12 per share. The buyer will pay two equal installments on March 1 and June 1. Assume all payments are made as.

16) Alpha-Omega Industries has 30,000 shares of $12 par common stock and 15,000 shares of $50 par, 5% preferred stock outstanding. Total dividends available are $162,000. Compute the dividends to be distributed to preferred and common stockholders under the following condition. The preferred stock is participating and non-cumulative with no dividends.

41) A company would rarely sell its stock for below par value. 42) A corporation is not required to pay dividends. 43) Shares of outstanding stock always equal the number of shares of authorized stock. 44) A common shareholder's right to purchase an equivalent percentage of new stock is his preemptive right. 45) A.

51) What is the difference between a secured bond and a debenture bond? 52) A bond that has a face value of $250,000 with an annual interest rate of 9% paid semiannually and sold at par would have an interest payment of ________ semiannually. 53) The formal written agreement for issuing bonds.

11) Bond Interest Payable is reported as a: A) current liability on the balance sheet. B) current liability on the income statement. C) contra-liability on the balance sheet. D) contra-liability on the income statement. 12) The carrying value of bonds is calculated by: A) subtracting the Premium on Bonds Payable account balance from the Bonds Payable.

11) The purpose of a cash flow statement is to show the inflows and outflows of cash. 12) The income statement shows the results of the operations of the business. 13) If a company issues a comparative balance sheet showing the change in the cash balance, a statement of cash flows is.

12) Jane Kathryn has 30,000 shares outstanding of $10 par value, 10% preferred stock and 100,000 shares outstanding $5 par value common stock. In the first 3 years of operations, the company paid dividends in Year 1, $0; Year 2, $40,000; Year 3, $100,000. Calculate the dividend paid to preferred.

11) When treasury stock is reissued for more than cost: A) debit Cash; credit Treasury Stock and Paid-in Capital from Treasury Stock. B) debit Cash; credit Common Stock and Paid-in Capital from Common Stock. C) debit Cash; credit Treasury Stock. D) debit Cash; credit Treasury Stock and Retained Earnings. 12) Farm and Supply reissued 100.

21.3   Learning Objective 21-3 1) The method of reporting cash flows from operating activities under which revenues and expenses on the income statement are adjusted to reflect the amount of cash received or expended for each item is the: A) direct method. B) indirect method. C) combination method. D) adjustment method. 2) Many accountants prefer which.

19.4   Learning Objective 19-4 1) Providing services to a credit customer was recorded with a debit to Cash and a credit to Retained Earnings. This error would cause: A) the period's net income to be understated. B) the period end liabilities to be understated. C) the total period end stockholders' equity to be understated. D).

11) Interest earned on the sinking fund will be subtracted from the Sinking Fund account. 12) On January 1, Auctions Online issued $300,000, 9%, 10-year bonds to lenders at the contract rate. Interest is to be paid semiannually on July 1 and January 1. Journalize the following entries: a. Issued the bonds. b..

41) The interest paid to bondholders is determined by: A) multiplying the bond's annual rate of interest by the face value. B) multiplying the market rate of interest by the face value. C) dividing the bond's annual rate of interest by the face value. D) dividing the face value by the bond's annual rate.

15) Rick's Internet Corporation balance in Retained Earnings is $30,000. The board of directors directs that $15,000 be appropriated for future business expansion. This will cause total retained earnings to: A) remain at $30,000. B) increase by $15,000. C) decrease by $15,000. D) increase or decrease $5,000, as determined by the board. 16) Changes in.

18.3   Learning Objective 18-3 1) If preferred dividends are limited to the stated rate of dividend, the preferred stock is: A) non-cumulative. B) cumulative. C) participating. D) nonparticipating. 2) Preferred stock that is given a right to share with the common stock in dividends in excess of a stated preferred dividend rate is called: A) nonparticipating. B) participating. C).

21) The records of Ashley Boutique showed Net Loss, $25,000; Depreciation Expense, $35,000; and increase in Supplies on Hand, $8,000. The amount of Net Cash Flow from Operating Activities using the indirect method is: A) $18,000. B) $ 2,000. C) ($18,000). D) ($2,000). 22) Accounts Receivable amounted to $215,000 at the beginning of the year.

16) If a redemption value is not stated, market value is used instead. 17) When treasury stock is sold, the Paid-in Capital in Excess of Par is returned. 18) From the following, determine the book value per share for preferred and common stocks; no dividends are in arrears on the preferred stock. Stockholders'.

17) Describe bond refunding and explain why it might be advantageous for a company. Using the following accounts: [1]Cash [2]Sinking fund [3]Equipment [4]Building [5]Land [6]Accounts payable [7]Notes payable [8]Bond payable [9]Bond interest expense payable [10]Premium on bonds payable [11]Discount on bonds payable [12]Common stock [13]Retained earnings [14]Sinking fund earned [15]Bond interest expense [16]Gain on retirement [17]Loss on retirement Indicate the account(s) to be debited and credited to record the.

21.1   Learning Objective 21-1 1) A statement of cash flows: A) has three main sections: net cash flow from operating, investing, and financing activities. B) may be computed directly or indirectly. C) is a statement used to better understand the financing and investing activities. D) All of the above are correct. 2) The cash flow statement.

30) Carmen Corporation issued 200 shares of its $10 par value stock to an attorney. The shares are in full settlement for $8,000 of legal services to help set up the company. Prepare the journal entry for the stock issuance. 31) R. Red formed a corporation with an authorization of 20,000.

11) Authorized capital stock is: A) shares listed in the charter. B) shares issued to the corporation's officers. C) shares sold and in stockholder possession. D) shares that pay dividends. 12) Which of the following would normally not appear in the Stockholders' Equity section of the balance sheet? A) Cash B) Paid-in Capital C) Common Stock D) Preferred Stock 13).

19.3   Learning Objective 19-3 1) Treasury stock was purchased and recorded as an asset. This error would cause: A) the period end assets to be understated. B) the period end liabilities to be overstated. C) the period end stockholders' equity to be overstated. D) None of the above is correct. 2) When treasury stock was sold.

21) Hefley Corporation issued a 10%, $500,000, 8-year bond at 105. The entry to record the issuance transaction is to: A) debit Cash $500,000; credit Bonds Payable $500,000. B) debit Cash $525,000; credit Bonds Payable $525,000. C) debit Cash $525,000; credit Bonds Payable $500,000; credit Premium on Bonds Payable $25,000. D) debit Cash $500,000;.

19.2   Learning Objective 19-2 1) What are the annual dividends on preferred stock, $20 par, 2,000 shares authorized, 700 shares issued, and a dividend rate of 5%? A) $200 B) $20 C) $700 D) $70 2) What are the annual dividends on preferred stock, $20 par, 500 authorized, 250 shares issued, and a dividend rate of.

11) When comparing net cash provided by operating activities using the indirect versus direct method: A) net cash is higher using the indirect method B) net cash is lower using indirect method C) there is no difference between the two methods D) depreciation expense is used in the direct method. 12) Rick Corporation's Accounts Receivable.

31) The financial loss that each stockholder in a corporation can incur is limited to the amount invested by the stockholder. 32) A change in ownership terminates the corporation. 33) The stockholders of a corporation have mutual agency. 34) The Articles of Incorporation are submitted to the Secretary of State. 35) A stock certificate.

11) Bonds payable issued with collateral are called: A) debenture bonds. B) serial bonds. C) callable bonds. D) secured bonds. 12) Bonds that may be redeemed at a certain price level are known as: A) callable bonds. B) debenture bonds. C) serial bonds. D) convertible bonds. 13) Dividends paid to stockholders are: A) taxable to the recipient stockholder. B) taxable to the.

41) A stock split will not affect total stockholders' equity or the number of shares of stock issued. 42) A stock dividend may be distributed even if the company is short of cash. 43) Quinn Corporation has 2,000 shares of common stock issued and outstanding. The board of directors declared a $1.00.

31) At maturity, the Premium on Bonds will have a balance equal to the original premium. 32) The straight-line method amortizes an equal amount of discount to Bonds Interest Expense each period. 33) When a bond is sold at a discount, the person buying the bond receives less interest than if the.

39) On July 1, Carly Corporation issued 10-year 9%, $600,000 bonds for $640,771, a price to yield 8% market rate. Interest dates are June 30 and December 31. Record the following journal entries: a. Issuance of the bonds. b. The semiannual interest payment and amortization of the premium on December 31 using.

21) Dividends in arrears occur when the company does not pay dividends to: A) cumulative preferred stockholders. B) non-cumulative preferred stockholders. C) participating preferred stockholders. D) non-participating common stockholders. 22) Par value is equal to: A) market value of the stock. B) the amount stated in the charter or legal capital. C) retained earnings. D) the initial price at.

21) The primary difference between secured bonds and debenture bonds is: A) debenture bonds are paid on the same maturity date while secured bonds are paid on multiple dates. B) secured bonds are backed with specific assets while debenture bonds are not. C) secured bonds are registered with the issuing company while debenture.