accounting chapter 21-22
bonds that are payable over a period of years are called:
b. serial bonds
where does the corporate income tax appear in the income statement
income tax expense is usually shown as a deduction at the bottom of the income statement, after net income before tax, but is sometimes shown as an operating expense to emphasize that taxes are a cost of doing business
retained earnings
the cumulative profits and losses of the corp not distributed as dividends
declaration date
the date on which the board of directors officially declares a dividend
if bonds are issued for price below their face value, the bond discount is:
b. amortized over the life of the bond issue
the balance of an appropriated retained earnings account is reduced:
c. a board resolution is necessary to reduce appropriated retained earnings
the entry to record retirement of a bond includes a debit to:
c. bonds payable
the entry to record income earned by a bond sinking fund investment include a credit to:
c. income from sinking fund investment
the entry to record the issuance of bonds includes a:
d. credit to Bonds Payable
bonds backed only by the general credit of the corporation are called:
d. debentures
which of the following would not be found on the statement of retained earnings
d. the cash payment made when the corporation completes construction of a building for which an appropriation of retained earnings had been made
explain each of the three dates related to a cash dividend declaration and issue
date of declaration: date the board of directors formally announces the dividend date of record: date on which owners of stock are determined and to whom dividends will be paid date of payment: date on which payment is to be made
how are bond discounts shown on the balance sheet
discount on bonds payable is shown on the balance sheet as a deduction from the face value of the bonds
stock dividend
distribution of the corp's own stock on a pro rata basis that results in conversion of a portion of the firm's retained earning to permanent capital
does an appropriation of retained earnings include a transfer of cash to a restricted account
no cash is involved in an appropriation of retained earnings. cash is involved only if a separate fund is established to pay for the object of the appropriation
which of the following will decrease total stockholders' equity
of these actions, only a cash dividend (c) will result in a decrease in stockholder's equity
what does the account retained earnings represent
retained earnings represent the cumulative;ative profits and losses of the corporation that have not been distributed as dividends or transferred to Paid-in capital through cash dividends, stock dividends, or stock splits
book value
the total equity applicable to a class of stock divided by the number of shares outstanding
the balance for retained earnings on December 1 is 300000 during December dividends of 15,000 on common stock and 10,000 on preferred stock were declared. neither dividend was paid in December. an appropriation for building expansion account with a balance of 100,000 was closed and the balance transferred back to retained earnings. net income after taxes id 90,000. what is the balance of unappropriated retained earnings on December 31
$465,000
ten-year bonds, dated January 1, 2019, with a face value of $100,000 are issued at 101 on January 1, 2019. how much premium will be amortized on the interest payment due July 1, 2019
$50 (1,000/10=$100yr or $50 payment date)
on April 20, the board of directors of Auto Corporation declared a 15 percent stock dividend payable on June 1 to stockholders of record on May 15. the stock expected to trade at $35 per share. on the declaration date there are 4000 shares outstanding. the par value of the shares is $30. what amount is credited to the paid-in-capital in excess of par value common stock account
(600x$5)=3,000
a small corporation is considering a bond issue. the amount of stock-holder's equity is $25,000. the corp projects income before bond interest and taxes of $60,000. the corporate income tax rate is 20 percent. if $125,000 of bonds is issued at 10 percent, what is the rate of profit on stockholder's equity
15.2% (38,000/250,000)
a corporation's taxable income for 2019 was 250,00. using the corporate tax rates shown under "federal income tax rates" compute the total federal income tax expense for the year
80,750
paid-in capital
Capital acquired from capital stock transactions (also known as contributed capital)
what is a convertible bond
a bond that may be converted into common stock, under specified conditions, at the option of the owner
treasury stock
a corporation's own capital stock that had been issued and reacquired; the stock must have been previously paid in full and issued to a stockholder
what is a bond sinking fund investment
a fund used to accumulate assets to pay off bonds when they mature
treasury stock is shown on the balance sheet as:
a. a deduction from the sum of all other items in the stockholders' equity section
