Accounting 1 Exam 5

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10,000

company issued $10,000,000 of bonds. Assuming the most common denomination of bonds, the number of bonds sold was

Maximum number of shares that can be issued for each class of stock

Authorized stock represents the:

Market rate of interest is less than the stated interest rate at the time of issue

Bonds sell at a premium when the:

The issuing company is likely to retire the bonds before maturity if the bonds are paying 8% interest while the market rate is 4%

If a company's bonds are callable:

Arbitrary amount that establishes a minimum price for the stock when it is first issued

Par value represents the:

$6,000

A corporation issued $150,000 of 10-year bonds at the stated rate of 8%, with interest payable semiannually. How much cash will the bond investors receive at the end of the first interest period?

No entry is necessary

After a corporation declares a cash dividend, what takes place on the date of record?

The number of outstanding shares is twice the number that were previously outstanding before the split

If a corporation declares a 2-for-1 stock split, which of the following is true?

Less than $500,000 because the 7% yield rate of interest was higher than the stated rate

Kiss Greetings planned to raise $500,000 by issuing bonds. The bond certificates were printed bearing a stated interest rate of 6%, which was equal to the yield rate of interest. However, before the bonds could be issued, economic conditions forced the yield rate up to 7%. If the life of the bonds is 10 years and interest is paid annually on December 31, how much will the company receive from the sale of the bonds?

Number of previously issued shares that have been repurchased by the corporation

Treasury shares represent the:

$100,000

What will be the increase in the Paid-in capital in excess of par account if a corporation issues 20,000 shares of $1.00 par common stock for $6 per share?

The cost of treasury stock is a reduction in stockholder's equity

Which of the following statements is true regarding a corporation's purchase of treasury stock?

If the corporation pays a per share dividend in excess of 7% of the preferred stock's par value and there are no dividends in arrears, the preferred shares will receive a share of the amounts available for distribution as dividends to other classes of stock

Which of the following statements is true with regard to 7% cumulative, participating preferred stock?

Amortization of a premium continues over the life of the bond until the balance in the account is reduced to zero

Which of the following statements regarding the amortization is true?

$170,000

On January 1, 2012, a company issued 10,000 shares of 10%, $10 par value cumulative preferred stock. No dividends were declared in 2012 or 2013. In 2014, the company declared a dividend of $200,000. How much of the 2014 dividend should be paid to common stockholders?

$160,000

On January 1, 2013, Kaiser Permanente issued $2,000,000 of 8% bonds at par. These bonds are due in 10 years with interest payable semi-annually on June 30 and December 31. What is the amount of the interest expense in 2013 assuming the use of the effective interest amortization method?

Number of shares that are currently held by stockholders

Outstanding shares represent the:

1,000

What is the most common denomination of bonds?

Increase in assets and an increase in liabilities

When bonds are issued by a company, the accounting entry shows an:

At the date of declaration

When is a liability for dividends created?

Borrower has the right to pay off the bonds prior to due date

Which of the following would describe a callable bond?

Preferred Stock: $0.67 Common Stock: $0.00

A company plans to distribute $134,000 in dividends. It has outstanding 200,000 shares of 7%, $10 par preferred stock (non-cumulative and non-participating) and 60,000 shares of $2 par common stock. How much will be distributed per share on preferred and common stock?

$800,000

A graphics design company issued bonds in the amount of $1,000,000 with a stated interest rate of 8%. If the interest is paid semiannually and the bonds are due in 10 years, what would be the total amount of interest paid over the life of the bonds?

Number of shares that the corporation has sold

Issued shares represent the:

The relative cost of issuing debt is often lower than the cost of issuing equity

Bonds are a popular source of financing because:

Common Stock: 20,000 Preferred Stock: 40,000

Refer to Lanthier's Heating and Air. What is the maximum amount that can be reported on the balance sheet for common stock and preferred stock, respectively, if all of the stock is issued?

A contra-liability account that reduces the bond to market value at the issue date

The Discount on Bonds Payable account is shown on the balance sheet as:

Accumulated earnings that have not been distributed to stockholders

The balance in the retained earnings account represents:

95,000

Total stockholder's equity includes $50,000 of common stock with a stated value of $0.50, and 5,000 shares of treasury stock with a total cost of $25,000. How many total shares are outstanding?


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