Accounting Exam #4 (Practice Problems)

On March 1, Young Co. borrowed $1,000 cash from Superior Bank by signing a 120-day, 6% interest-bearing note. On June 29, Young pays the amount due in full. This entry would be recorded by Young with a credit to Blank______ in the amount of Blank______.

$100 x .06 x (120/360) = $20. Cash will be Credited, $1000 + 20 = $1020. Cash; $1020

Buffet Company was organized in January 2021 and has 1,000 shares of $200 par value, 10 percent, noncumulative preferred stock outstanding and 3,000 shares of $1 par value common stock outstanding. Dividends declared and paid each year are $10,000 in 2021, $15,000 in 2022, and $75,000 in 2023. During 2023, the dividends that must be paid to the preferred and common stockholders, respectively, total _____. - $35,000 and $40,000 - $75,000 and $0 - $20,000 and $55,000 - $100,000 and $0

$20,000 and $55,000

Calculating Basic earnings per share Cameron Company had 10,000 shares of common stock authorized and 9,500 shares issued and outstanding at the beginning of the year. There were no stock transactions during the year. During the year, the company reported net income of $30,000. Cameron Company has no preferred stock authorized. The company's basic earnings per share (rounded to two decimal points) is _____. - $3.75 - $3.00 - $3.16 - $3.33

$3.16

Winn Co. signs a 60 day note payable for a $15,000 copy machine with an interest rate of 8%. Winn will record total interest expense of

($15,000 x .08 x (60/360)) = $200

Kenesha Co. reported income before interest expense and income taxes of $30,000; interest expense of $3,000; and income taxes of $4,000. Calculate the times interest earned ratio.

(30,000/3000) = 10

Boyd's Bicycle Sales and Repairs Co. offers a 6-month warranty on all new bicycle purchases. Based on history, Boyd determines that warranty repairs are equal to approximately 2% of sales. During the month, Boyd sales total $20,000. Boyd will record Warranty Expense in the amount of Blank______ for the month.

2% x 20000 = $400

Calculating Dividend yield The following information is available for Payton Incorporated. At the end of the year, the market price of its common stock is $550 per share. Earnings per share totaled $100 and dividends per share in the amount of $15 were paid during the year. The dividend yield is _____. - 550.0% - 20.0% - 2.7% - 15.0%

2.7%

Darby, Inc. has 25,000 shares of stock issued and outstanding. All the shares of stock have the same rights and characteristics; therefore, the stock is called __________ stock.

Common Stock

Niren, Inc.'s charter authorizes 1,000,000 shares of stock at a par value of $1 per share. Niren sells 100 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include a (debit/credit)_________ to Common Stock, $1 par for $___________

Credit; 100

On June 1, Sawyer Co. borrowed $5,000 cash from Crystal Bank by signing a 45-day, 12% interest-bearing note. On July 16, Sawyer pays the amount due in full. Sawyer would record this payment with a (debit/credit) Blank______ to Interest Expense in the amount of Blank______.

Debit; $75

On January 1, Avers Co. borrowed $10,000 cash from Main St. Bank by signing a 60-day, 8% interest-bearing note. On March 1, Avers pays the amount due in full. The March 1 entry would be recorded by Avers with a debit to (Accounts Payable/Notes Payable/Cash)Blank______ in the amount of Blank______.

Notes Payable; $10,000

Unlike a stock dividend, a stock split _____. - is always recorded at market value - does not change total stockholders' equity - reduces the par value of the stock - increases the total number of shares outstanding

reduces the par value of the stock.

Employers often withhold amounts from employees' earnings which arise from employee requests, contracts, unions, or other agreements. These withholdings are called employee Blank______ and include items such as medical premiums.

voluntary deductions