Accounting exam 3

What is the total stockholders' equity based on the following account balances? Common Stock $950,000 Paid-In Capital in Excess of Par 50,000 Retained Earnings 175,000 Treasury Stock 25,000 $1,000,000. $975,000. $1,150,000. $800,000.

$1,150,000. Common stock + paid in excess of capital+ retained earnings - Treasury stock

On January 1, a machine with a useful life of five years and a salvage value of $25,000 was purchased for $125,000. What is the depreciation expense for year 2 under straight-line depreciation? $15,000 $75,000 $20,000 $60,000

$20,000

Makenna Company bought a machine on January 1, 2022. The machine cost $180,000 and had an expected salvage value of $10,000. The life of the machine was estimated to be 5 years. The depreciation expense using the double-declining balance method of depreciation for the third year is $25,920. $26,880. $34,000. $43,200. $44,800.

$25,920.

Bonds with a face value of $500,000 and a quoted price of 97¼ have a selling price of $486,250. $485,125. $485,013. $487,500.

$486,250.

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections: Total Assets Total Liabilities Total Stockholders' Equity a. Increase |Decrease |No change b. No change| Increase | Decrease c. Decrease| Increase | Decrease d. Decrease |No change | Increase

. No change| Increase | Decrease Declaring cashdividends has no effect on assets but increases liabilities and decreases stock holders equity

The following data is available for BOX Corporation at December 31, 2020: Common stock, par $10 (authorized 30,000 shares) $270,000 Treasury stock (at cost $15 per share) $ 1,200 Based on the data, how many shares of common stock are outstanding? 30,000. 27,000. 29,920. 26,920.

26,920.

plant asset was purchased on January 1 for $55,000 with an estimated salvage value of $5,000 at the end of its useful life. The current year's depreciation expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $25,000. The remaining useful life of the plant asset is 10 years. 11 years. 6 years. 5 years.

5 years.

Machinery was purchased for $340,000. Freight charges amounted to $14,000 and there was a cost of $40,000 for building a foundation and installing the machinery. It is estimated that the machinery will have a $60,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be $78,800. $66,800. $57,200. $56,000.

66,800.

corporation purchases 30,000 shares of its own $10 par common stock for $25 per share, recording it at cost. What will be the effect on total stockholders' equity? Increase by $300,000. Decrease by $750,000. Increase by $750,000. Decrease by $300,000.

Decrease by $750,000.

A corporation purchases 30,000 shares of its own $10 par common stock for $25 per share, recording it at cost. What will be the effect on total stockholders' equity? Increase by $300,000. Decrease by $750,000. Increase by $750,000. Decrease by $300,000.

Decrease by $750,000. Shares X Share cost, buying treasury stock decreases stockholders eq

If the market rate of interest is lower than the contractual interest rate, the bonds will sell at face value. a premium. a discount. an unknown amount.

a premium. If market rate is lower than face value it still sells higher.

Selling the bonds at a premium has the effect of causing the total cost of borrowing to be higher than the bond interest paid. causing the total cost of borrowing to be lower than the bond interest paid. raising the effective interest rate above the state interest rate. increasing the amount of cash paid for interest every 6 months.

causing the total cost of borrowing to be lower than the bond interest paid.

Tommy Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2020, at 103. The journal entry to record the issuance will show a debit to Cash of $5,000,000. debit to Premium on Bonds Payable for $150,000. credit to Bonds Payable for $5,000,000. credit to Cash for $5,150,000.

credit to Bonds Payable for $5,000,000. Debit to premium on bonds payable because its at 103

The net effects on the corporation of the declaration and payment of a cash dividend are to decrease liabilities and decrease stockholders' equity. increase stockholders' equity and decrease liabilities. decrease assets and decrease stockholders' equity. increase assets and increase stockholders' equity.

decrease assets and decrease stockholders' equity.

Over the term of the bonds, the balance in the Discount on Bonds Payable account will fluctuate up and down if the market is volatile. decrease. increase. be unaffected until the bonds mature.

decrease.

Treasury stock should be reported in the financial statements of a corporation as a(n) investment. liability. deduction from total paid-in capital. deduction from total paid-in capital and retained earnings.

deduction from total paid-in capital and retained earnings. Treasury stock is recorded as a deduction from total paid in capital and retained earnings

A $1,000,000 bond was retired at 98 when the carrying value of the bond was $985,000. The entry to record the retirement would include a gain on bond redemption of $15,000. loss on bond redemption of $5,000. loss on bond redemption of $15,000. gain on bond redemption of $5,000.

gain on bond redemption of $5,000. Solution: $985,000 − ($1,000,000 × .98) = $5,000 (Carry. val. - (face val. × 98%))

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount less than face value. equal to face value. greater than face value. that cannot be determined.

greater than face value.

The present value of a bond is also known as its face value. market price. future value. deferred value.

market price.