accounting exam4 today

what are the different types of stock

preferred - has preferences common- if only one type issued only common shareholders can vote

what is the journal entry for closing an expense account?

Income Summary 71,600 Interest Expense 71,600

On the first day of the fiscal year, a company issues a $1,200,000, 9%, five-year bond that pays semiannual interest of 54,000 (1,200,00 x 9% x 1/2) receiving cash of $1,153,670. journalize the first interest payment and the amortization of the related bond discount. (Round to the nearest dollar.)

Interest Expense 58,633 Discount on Bonds Payable 4,633 Cash 54,000 1200000 - 1153670 = 46,330 / 10 payments = 4633 add this number to the interest expense and then subtract it because of the discount to get the semiannual interest of 54,000

If the bonds payable account has a balance of $900,000 and the discount on bonds payable account has a balance of $72,000, what is the carrying amount of the bonds? Answer $828,000 $900,000 $972,000 $580,000

The bond carrying amount is the face amount plus any unamortized premium or less any unamortized discount. For this question, the carrying amount is $900,000 less $72,000, or $828,000 (answer A).

Which of the following is the entry to amortize a discount on bonds? Debit Discount on Bonds Payable; credit Interest Expense Debit Bonds Payable; credit Discount on Bonds Payable Debit Interest Expense; credit Discount on Bonds Payable Debit Premium on Bonds Payable; credit Interest Expense

The entry to amortize a discount on bonds payable debits Interest Expense and credits Discount on Bonds Payable (answer C). The entry to amortize a premium on bonds payable debits Premium on Bonds Payable and credits Interest Expense (answer D).

what does par value mean

a dollar amount assigned to each share of stock

what are the advantages and disadvantages of a corporation

advantages separate legal existence continuous life easier to raise capital easy to transfer ownership rights limited liability - shareholders only liable to their investment disadvantages of a corporation owner is separate from management double taxation of dividends regulatory costs

how to calculate a dividend

all dividends reduce retained earnings formula beginning retained earing add current period inome less current period less less dividends

how is the bond reported on financial statements

balance sheet long-term liabilities bonds payable total liabilities stockholders equity total liabilities and stockholders equity

what are the important dates associated with a dividend

date of declaration date of record date of payment

when a bond is redeemed for less than its face value, the journal entry includes a debit to _____________ and a debit to _____________ and a credit to _________

debit bonds payable debit loss on redemption of bond credit cash

On the first day of the fiscal year, a company issues a $2,000,000, 8%, five-year bond that pays semiannual interest of (2 million x 8% x ½) , receiving cash of $2,170,604. journalize the first interest payment and the amortization of the related bond premium. (Round to the nearest dollar.)

interest expense 62, 940 premium on bonds payable 17060 cash 80,000

what are the characteristic of a corporation

legal separate entity acquite own or dispose of property in its on name sell shares of ownership may also incur liabilities and enter into contract cna sell stock

outstanding stock =

stock issued - treasury stock

what is treasury stock

stock that a corporation has issued and then reaquired. a corp may purhase its own stock for a vaeriety of reasons to provide shares for resale to employees to reissue as bonuses to employees to support the market price of the stock is a contra-equity account

how to do a stock journal entry

treasury stock x cash x cash x treasury stock x paid-in capital from sale of treasury stock cash paid-in capital from sale of treasury stock treasury stock

When a corporation redeems bonds before they mature, _______________ is debited for the face amount of the bonds, ___________ (____________) __________ is ____________ (__________) for its unamortized balance, ______is credited, and any gain or loss on the redemption is recorded.

Bonds Payable Premium , (Discount ) on Bonds Payable debited (credited) cash

On January 1, the first day of the fiscal year, Designer Fabric Inc. issues a $1,000,000, 7%, 10-year bond that pays semiannual interest of $35,000 ($1,000,000 × 7% × ½ year), receiving cash of $1,000,000.

(b) Journalize the entry to record the first interest payment on June 30. Interest Expense 35,000 Cash 35,000

On the first day of the fiscal year, a company issues a $1,200,000, 9%, five-year bond that pays semiannual interest of 54,000 (1,200,00 x 9% x 1/2) receiving cash of $1,153,670. Journalize the bond issuance.

Cash 1,153,670 Discount on Bonds Payable 46,330 Bonds Payable 1,200,000

On January 1, the first day of the fiscal year, a company issues a $500,000, 5%, 10-year bond that pays semiannual interest of $12,500 ($500,000 × 5% × ½ year), receiving cash of $500,000. Journalize the entries to record (A) the issuance of the bonds, (B) the first interest payment on June 30, and (C) the payment of the principal on the maturity date.

Cash 500,000 Bonds Payable 500,000 Interest Expense 12,500 Cash 12,500 Bonds Payable 500,000 Cash 500,000

The balance in the discount on bonds payable account would usually be reported on the balance sheet in the: Current assets section. Current liabilities section. Long-term liabilities section. Investments section.

Long-term liabilities section.

why are bonds even used

bonds are an interest bearing liability, with regular payments and a maturity date

A $1,500,000 bond issue on which there is an unamortized discount of $70,100 is redeemed for $1,455,000. Journalize the redemption of the bonds.

bonds payable 1,500,000 loss on redemption of bonds 70, 100 cash 1455000

On the first day of the fiscal year, a company issues a $2,000,000, 8%, five-year bond that pays semiannual interest of 80,000 (2 million x 8% x ½) , receiving cash of $2,170,604. Journalize the bond issuance.

cash 2,170,604 premium on bonds payable 170, 604 bonds payable 2,000,000

what is a stock dividend and the journal entries

cash x prefferd stock par x common stock par x cash preferred stock-par additional paid in capital preferred any amount above par is additional paid in capital cash dividend debit dividend payable credit dividend payable cash

The journal entry for issuing bonds payable debits______ and credits ________

cash, bonds payable

what are the important features of a bond

contract rate of interest- the interest rate to be paid on the face amount of the bond discount - when bonds sell for LESS than their face value face amount= the amount due at the maturity date market rate of interest=the interest rate determined from sales and purchases of similar bonds premium- when bonds sell for MORE than their face value face value interest rate (what the market pays at the time)

If the contract rate of interest equals the market rate of interest, the bonds will sell at their face amount. If the contract rate of interest is less than the market rate of interest, the bonds will sell at a ____________ If the contract rate of interest is more than the market rate of interest, the bonds will sell at a _________

discount, premium

b. Explain why the company was able to issue the bonds for $22,282,220 rather than for the face amount of $21,300,000. The bonds sell for_______ than their face amount because the market rate of interest is____________Correct the contract rate of interest. Investors _________ (are, are not) Correct willing to pay more for bonds that pay a higher rate of interest (contract rate) than the rate they could earn on similar bonds (market rate).

more less than are

what are the 3 "cool" stock terms in my notes and what do they mean

shares authorized - the most you sell issued- the number of shares sold outstanding - the number of shares in shareholder hands