ACC 9-13 Study Qs

Nebraska Inc. issues 3,700 shares of common stock for $118,400. The stock has a stated value of $20 per share. The entry to journalize the stock issuance would include a credit to Common Stock for

$74,000

Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. Determine the second-year depreciation using the straight-line method.

$9,600

A legal document that indicates the name of the issuer, the face value of the bond, the interest rate, interest payment dates, and the maturity date is called

A bond indenture.

Bonds with a face amount of $1,000,000 are sold at 106. The entry to journalize the issuance is

Cash 1,060,000 Premium on Bonds Payable 60,000 Bonds Payable 1,000,000

Taylor Bank lends Guarantee Company $150,000 on January 1. Guarantee Company signs a $150,000, 8%, 9-month, interest-bearing note. The entry made by Guarantee Company on January 1 to journalize the proceeds and issuance of the note is

Cash 150,000 Notes Payable 150,000

If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is

Depreciation 100 Accumulated Depreciation 100

The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is the

Double-declining-balance

Which of the following taxes would be deducted in determining an employee's net pay?

FICA

If Dakota Company issues 1,500 shares of $6 par common stock for $75,000,

Paid-In Capital in Excess of Par will be credited for $66,000

The current portion of long-term debt should

be reclassified as a current liability

Those most responsible for the major policy decisions of a corporation are the

board of directors

The par value per share of common stock represents the

dollar amount assigned to each share.

The market interest rate related to a bond is also called the

effective interest rate

Stockholders' Equity

includes retained earnings and paid-in capital

Accumulated Depreciation

is a contra asset account.

If the market rate of interest is 7%, the price of 6% bonds paying interest semiannually with a face value of $500,000 will be

less than $500,000

If bonds are issue at a discount, it means that the

market interest rate is higher than the contract rate.

The excess of issue price over par of common stock is termed a(n)

premium

Characteristics of a corporation include

shareholders who have limited liability.

The depreciation method that does not use residual value in computing the first year's depreciation expense is the

straight-line method

Which of the following is not true of a corporation

the acts of its owners bing the corporation.

All of the following are needed for the computation of straight-line depreciation except

units produced

The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is

amortization

If $1,000,000 of 8% bonds are issued at 102 3/4, the amount of cash received from the sale is

$1,027,000

Assuming a 360-day year, the interest charged by the bank, at the rate of 6%, on a 90-day, discounted note payable of $100,000 is

$1,500

Eddie Industries issues $1,500,000 of 8% bonds at 105. The amount of cash received from the sale is

$1,575,000

If $2,000,000 of 10% bonds are issued at 97, the amount of cash received from the sale is

$1,940,000

The following information is available from the current period financial statements: Net income $175,000 Depreciation expense 28,000 Increase in accounts receivable 16,000 Decrease in accounts payable 21,000 The net cash flows from operating activities using the indirect method is

$166,000

Assuming a 360-day year, when a $20,000, 90-day, 5% interest-bearing note payable matures, the total payment will be

$20,250

On June 1, Michael Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years or 30,000 hours. Using straight-line depreciation, compute depreciation expense for the second year.

$30,000

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding?

$30,000

On July 8, Jones Inc. issued an $80,000, 6%, 120-day note payable to Miller Company. Assume that the fiscal year of Jones ends July 31. Using a 360-day year, what is the amount of interest expense recognized by Jones in the current fiscal year?

$307

The formula for depreciable cost is

Initial Cost − Residual Value

When the maturities of a bond issue are spread over several dates, the bonds are called

Serial Bonds

Which of the following are included in the employer's payroll taxes?

Social Security Taxes, SUTA, and FUTA. (all of these choices).

The liability for a dividend is recorded on the

date of declaration

The journal entry a company uses for the issuance of bonds when the contract rate is greater than the market rate would include a

debit to Cash and a credit to Premium on Bonds Payable and Bonds Payable

The following totals for the month of April were taken from the payroll register of Magnum Company: Salaries $10,000 FICA taxes withheld 750 Income taxes withheld 2,000 Medical insurance deductions 450 Unemployment taxes 420 The entry to journalize the accrual of employer's payroll taxes would include a

debit to Payroll Tax Expense for $1,170

The following totals for the month of April were taken from the payroll register of Magnum Company. Use this information to answer the question that follow. Salaries $12,000 FICA taxes withheld 900 Income taxes withheld 2,500 Medical insurance deductions 450 Federal unemployment taxes 32 State unemployment taxes 216 The entry to journalize the accrual of employer's payroll taxes would include a

debit to payroll tax expense for $1,148

The following totals for the month of June were taken from the payroll register of Arcon Company: Salaries expense $14,000 Social security and Medicare taxes withheld 1,050 Income taxes withheld 2,600 Retirement savings 1,000 The entry to journalize the payment of net pay would include a

debit to salaries payable for $9,350