Accounting II Final

Any unamortized premium should be reported on the balance sheet of the issuing corporation as

$17,000 loss

Those most responsible for the major policy decisions of a corporation are the

board of directors

A $300,000 bond was redeemed at 98 when the carrying value of the bond was $292,000. The entry to record the redemption would include a Loss on Bond Redemption = Redemption Value of Bonds - Carrying Value of Bond = ($300,000 × 0.98) - $292,000 = $2,000 The entry to record the redemption would include a loss on bond redemption of $2,000.

bond certificate

Accounts receivable resulting from sales to customers amounted to $40,000 and $31,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect method is Cash Flows from Operations = Net Income + Decrease in Accounts Receivable = $120,000 + ($40,000 - $31,000) = $129,000

$120,000

Davis and Thompson have earnings of $850 each. The social security tax rate is 6.0%, and the Medicare tax rate is 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer's total FICA tax for this payroll period? Earnings Subject to 6.0% Social Security Tax and 1.5% Medicare Tax = $850 × 2 = $1,700 Total FICA Tax = Social Security Tax + Medicare Tax Total FICA Tax = ($1,700 × 6.0%) + ($1,700 × 1.5%) = $102.00 + $25.50 = $127.50

$127.50

Freeman Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1 at 96. The journal entry to record the issuance will show a Cash Received on Issue of Bonds by Freeman Corporation = Face Value of Each Bond × Number of Bonds × Bond Quote = $1,000 × 2,000 × 0.96 = $1,920,000 The journal entry to record the issuance will show a debit to Cash for $1,920,000.

$13,110 loss

Kansas Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 per share. At what amount should the building be recorded by Kansas Company? Value of Building = Market Price of Shares × Number of Shares Exchanged = $15 × 12,000 = $180,000

$180,000

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2-per-share dividend is declared? Amount of Cash Dividends to Be Paid = Number of Shares Outstanding × Dividends per Share = (60,000 - 10,000) × $2 = 50,000 × $2 = $100,000

100,000 shares

In horizontal analysis, each item is expressed as a percentage of the

Base year amount

a. On January 1, 20X1, your firm issues a $15,000, 4-year, 5% bond with interest payable annually for $13,056. At the time of the issuance, market rates are 9%. Journalize the issuance of the bond. b. Journalize the first annual interest payment on December 31, 20X1. c. Journalize the amortization of the premium/discount on December 31, 20X1. (If necessary, round to the nearest dollar.) d. On January 1, 20X2, the bonds are called at 99. Journalize this transaction.

Calculation of Earnings per share per each planParticularsPlan 1Plan 2Plan 3Earnings before interest & taxes$750000$750000$750000Less- Interest00$3000000*10%= $300000Earnings before taxes$750000$750000$450000Less- Taxes @ 40%$300000$300000$180000Net income$450000$450000$270000Less- Preferred dividends0$2000000*1%= $20000$1000000*1%= $10000Earnings available for common shareholders (a)$450000$430000$260000Common shares @ $10 per share (b)500000 shares300000 shares100000 sharesEarnings per share (c= a/b)$0.90 per share$1.43 per share$2.60 per share

The state charter allows a corporation to issue only a certain number of shares of each class of stock. This amount of stock is called

Capital stock

The following information is available for Jase Company: Market price per share of common stock $25.00 Earnings per share on common stock $1.25 ​ Which of the following statements is correct? Price-Earnings (P/E) Ratio = Market Price per Share of Common Stock/Earnings per Share on Common Stock = $25.00/$1.25 = 20 In other words, a share of common stock of Jase Company was selling for 20 times earnings per share.

d. The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of the year.

XYZ Company declared a 2% stock dividend on common stock ($5 par). (Pretend there are 100,000 shares of common stock outstanding and that the current market value of a share of common stock on that date was $7.) Journalize this transaction. XYZ Company distributed the stock dividends from (h). Journalize this transaction.

Declaration of 2% Stock Dividend Retained Earning 14,000.00100,000*2%*$7 To Common Stock dividend to be distributable 10,000.00100,000*2%*$5 To Additional paid-in capital in excess of Par 4,000.00100,000*2%*$2 Being 2% Stock Dividend Declared Distribution of 2% Stock Dividend Common Stock dividend to be distributable 10,000.00 To Common Stock 10,000.00 Being 2% stock dividend distributed

Assuming a 360-day year, proceeds of $48,750 were received from discounting a $50,000, 90-day note at a bank. The discount rate used by the bank in computing the proceeds was Discount Amount = $50,000 - $48,750 = $1,250 Discount rate = ($1,250 ÷ $50,000) × (360 ÷ 90) = 10%

Discount amount = $50,000 - $48,750 = $1,250 Discount rate = (1250/50,000) x (360/90) = 10%

Dividend yield on common stock is calculated as

Dividend Yield = Cash Dividend per share / Market Price per share * 100.

XYZ Company has 30,000 shares of $3 par common stock outstanding, which are currently trading at $150 per share. If the company declares a 3-for-1 stock split, what is the new number of shares outstanding and the new market price?

Shares outstanding after split = 30,000*3 = 90,000 shares Market price after split = 150/3 =$50 per share.

A legal document that indicates the name of the issuer, the face value of the bond and such other data is called

debit to Cash for $1,920,000

The ability of a corporation to obtain capital is

enhanced because of limited liability and ease of share transferability.

Which of the following would appear as an unusual item on the income statement?

gain resulting from the disposal of a segment of the business

When using the spreadsheet (work sheet) for the statement of cash flows, under the indirect method, entries made on the spreadsheet are

not recorded in to the journal but are posted to the ledger.

The ability of a business to pay its debts as they come due and to earn a reasonable net income includes

solvency and profitability

Current liabilities are due

to be fulfilled during the current fiscal year (or operating cycle)

A current liability is a debt that is reasonably expected to be paid

within one year or the operating cycle, whichever is longer

A corporation issues for cash $9,000,000 of 8%, 30-year bonds, interest payable semiannually. The amount received for the bonds will be Semiannual Interest Payment = $9,000,000 × (8% ÷ 2) = $360,000 The amount received for the bonds will be present value of 60 semiannual interest payments of $360,000, plus present value of $9,000,000 to be repaid in 30 years

would be added to the related bonds payable on the balance sheet

XYZ Company issued 3,000 shares of $1 par common stock at $12 per share. Journalize this transaction. XYZ Company issued 200 shares of $50 preferred stock for $500,000. Journalize this transaction. XYZ Company issued at par 100 shares of $2 par common stock in exchange for land with a market value of $10,000. Journalize this transaction.

Journal Cash $ 36,000.00 Common stock $ 3,000.00 Paid In capital in excess of cash-Common stock$ 33,000.00 Journal Cash $ 500,000.00 Preferred stock $ 10,000.00 Paid In capital in excess of cash-Preferred stock $ 490,000.00 Journal Land $ 10,000.00 Common stock $ 200.00 Paid In capital in excess of cash-Common stock $ 9,800.00

Basil Corporation issues for cash $1,000,000 of 8%, 10-year bonds, interest payable annually, at a time when the market rate of interest is 7%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?

Redemption value=$300,000 x98%=$294,000 Carrying value=$292,000 As we paid excess amount =$294,000-$292,000 loss on bond redemption of $2,000.

The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?

Retained Earnings

When a limited liability company is formed,

all partners have limited liability

Each year, there is a ceiling for the amount that is subject to all of the following except

federal income tax

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 per share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend? Amount Transferred from Retained Earnings Account to Paid-In Capital Accounts = Number of Shares Issued as Stock Dividends × Market Price of Each Share at Time of Issue = 4% × 40,000 shares × $12 = $19,200

$22,000

A company had net income of $252,000. Depreciation expense was $26,000. During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method? Net income$252,000 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation expense 26,000 Loss on sale of equipment 3,000 Changes in current operating assets and liabilities: Increase in accounts receivable (15,000) Increase in inventory (40,000) Decrease in prepaid expenses 2,000 Decrease in accounts payable (4,000)Net cash flow used in operating activities$224,000 ​

$224,000

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 30,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding? Number of Shares Outstanding = Number of Shares Originally Issued - Number of Shares Reacquired = 30,000 - 5,000 = 25,000

$25,000

The net income reported on the income statement for the current year was $250,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000, and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts Receivable 112,000 108,000 Inventories 105,000 93,000 Prepaid Expenses 4,500 6,500 Accounts Payable (merchandise creditors) 75,000 89,000 ​ What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? Cash flows from operating activities: Net income$250,000 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 40,000 Amortization of patents 9,000 Changes in current operating assets and liabilities: Increase in accounts receivable (4,000) Increase in inventories (12,000) Decrease in prepaid expenses 2,000 Decrease in accounts payable (14,000)Net cash flow from operating activities$271,000

$271,000

Blast sells portable CD players, and each unit carries a one-year replacement warranty. The cost of repair defects under the warranty is estimated at 10% of the sales price. During May, Blast sells 650 portable CD players for $50 each. For what amount in May would Blast debit Product Warranty Expense? Product Warranty Expense = 10% × (Number of CD Players × Sale Price per CD Player) = 10% × (650 × $50) = $3,250

$3,250

A corporation has 50,000 shares of $25 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately New Market Value of Stock = Current Market Price of Stock/Ratio of Stock Split = $150/5 = $30

$30

Rogers Company reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000, and depreciation expense of $8,000 was recorded. Net cash provided by operating activities under the indirect method for the year is Cash flows from operating activities: Net income $35,000 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation expense 8,000 Changes in current operating assets and liabilities: Increase in accounts receivable (7,000) Decrease in accounts payable (3,000)Net cash flow from operating activities $33,000

$33,000

During its first year of operations, a company granted its employees vacation privileges and pension rights estimated at a cost of $21,500 and $15,000, respectively. The vacations are expected to be taken in the next year, and the pension rights are expected to be paid in the future 5-30 years. What is the total cost of vacation pay and pension rights to be recognized in the first year? Total Cost of Vacation Pay and Pension Rights to Be Recognized = Vacation Pay + Pension Expense = $21,500 + $15,000 = $36,500

$36,500

Chang Co. issued a $50,000, 120-day, discounted note to Guarantee Bank. The discount rate is 6%. Assuming a 360-day year, the cash proceeds to Chang Co. are Cash Proceeds = $50,000 - ($50,000 × 6% × 120 ÷ 360) = $49,000

$49,000

Assuming a 360-day year, when a $50,000, 90-day, 9% interest-bearing note payable matures, the total payment will be Total Payment = $50,000 + ($50,000 × 9% × 90 ÷ 360) = $51,125

$51,125

An employee receives an hourly wage rate of $15, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $110; cumulative earnings for the year prior to this week, $24,500; social security tax rate, 6.0%; Medicare tax rate, 1.5%; state unemployment compensation tax, 3.4% on the first $7,000; and federal unemployment compensation tax, 0.8% on the first $7,000. What is the net amount to be paid to the employee? Gross Pay = Earnings at Regular Rate + Earnings at Overtime Rate = ($15 × 40) + ($15 × 1.5 × 6) = $735 Net Pay = Gross Pay - (Federal Income Tax + Social Security Tax + Medicare Tax) = $735 - [$110 + ($735 × 6.0%) + ($735 × 1.5%)] = $569.88

$569.88

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1 $10,000 Year 2 45,000 Year 3 90,000 ​ Determine the dividends per share for preferred and common stock for the second year. Preferred Stock Dividend to Be Paid = 20,000 × $100 × 2% = $40,000 ​ Year 1 Year 2 Preferred stock dividend to be paid $ 40,000 $ 70,000($40,000 + $30,000) Preferred stock dividend paid (10,000) (45,000) Arrears $ 30,000 $ 25,000 ​ Dividends per share: Preferred Stock = $45,000/20,000 = $2.25 Common Stock = $0

3.25 and 0.25

Based on the following data, what is the quick ratio (rounded to one decimal point)? ​ Accounts payable $ 30,000 Accounts receivable 60,000 Accrued liabilities 5,000 Cash 30,000 Intangible assets 50,000 Inventory 69,000 Long-term investments 80,000 Long-term liabilities 100,000 Marketable securities 30,000 Fixed assets 670,000 Prepaid expenses 1,000 Quick Ratio = Quick Assets/Current Liabilities = (Accounts Receivable + Cash + Marketable Securities)/(Accounts Payable + Accrued Liabilities) = ($60,000 + $30,000 + $30,000)/($30,000 + $5,000) = $120,000/$35,000 = 3.4

3.4

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding? Number of Shares Outstanding = Number of Shares Originally Issued - Number of Shares Reacquired = 40,000 - 10,000 = 30,000

30,000

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Use this information to answer the questions that follow. ​ Assets Cash and short-term investments $ 30,000 Accounts receivable (net) 20,000 Inventory 15,000 Property, plant, and equipment 185,000 Total assets $250,000 Liabilities and Stockholders' Equity Current liabilities $ 45,000 Long-term liabilities 70,000 Stockholders' equity—Common 135,000 Total liabilities and stockholders' equity $250,000 Income Statement Sales $ 85,000 Cost of goods sold 45,000 Gross margin $ 40,000 Operating expenses (15,000) Interest expense (5,000) Net income $ 20,000 Number of shares of common stock outstanding 6,000 Market price of common stock $20 Total dividends paid $9,000 Cash provided by operations $30,000 Using the data provided for Diane Company, what are the dividends per common share? Dividends per Common Share = Dividends on Common Stock/Shares of Common Stock Outstanding = $9,000/6,000 shares = $1.50

6.0 Times

The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to

Common Stock

Which of the following statements concerning taxation is accurate?

Corporations pay federal and state income taxes

When Wisconsin Corporation was formed on January 1, the corporate charter provided for 100,000 shares of $10 par value common stock. During its first month of operation, the corporation issued 8,500 shares of stock at a price of $16 per share. ​ The entry to record the above transaction would include a Response Feedback:Rationale:Total Cash Raised through Issue of Shares = 8,500 × $16 = $136,000 Par Value of Shares = 8,500 × $10 = $85,000 Paid-In Capital in Excess of Par—Common Stock = $136,000 - $85,000 = $51,000 DebitCreditCash136,000 Common Stock85,000 Paid-In Capital in Excess of Par—Common Stock 51,000

Credit to Paid in Capital in Excess of Par for $51,000

Alma Corp. issues 1,000 shares of $10 par common stock at $14 per share. When the transaction is recorded, credits are made to Total Cash Raised through Issue of Shares = 1,000 × $14 = $14,000 Par Value of Common Stock Issued = Number of Shares Issued × Par Value of Each Share = 1,000 × $10 = $10,000 Paid-In Capital in Excess of Par—Common Stock = $14,000 - $10,000 = $4,000

Credits are made to Common stock for $10000 and Paid-in capital in excess of par for $4000

Bonds Payable has a balance of $900,000, and Premium on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption? Loss on Redemption = Redemption Value of Bonds - Balance of Bonds Payable - Balance of Premium on Bonds Payable = ($900,000 × 1.03) - $900,000 - $10,000 = $927,000 - $900,000 - $10,000 = $17,000

Given data, Bond Interest Rate = 6% Bond Amount = $1200000 Net Income before Income Tax = $320000 Bond Interest charges Earned = Bond Value * Interest Rate = $1200000 * 6% = $72000 Net Income before Interest = Net Income Income Before Interest + Interest = $320000 + $72000 = $392000 Number of times bond interest charges were earned = Net Income before Interest and taxes / Interest charges = 392000 / 72000 = 5.4444 Number of times bond interest charges were earned = 5.44

Which of the following would not be considered an advantage of the corporate form of organization?

Government regulation

XYZ Company purchased 10,000 of its own shares at $14 per share. Journalize this transaction. XYZ Company sold 8,500 shares of treasury stock (from (c)) at $18 per share. Journalize this transaction. XYZ Company sold 1,500 shares of treasury stock (from (c)) at $13 per share. Journalize this transaction.

Journal Treasury stock 140,000 Cash 140,000 (To record purchase of treasury stock) Journal Cash 153,000 Treasury stock 119,000 Paid in capital from treasury stock 34,000 (To record issue of 8,500 treasury stock) Journal Cash1 9,500 Paid in capital from treasury stock 1,500 Treasury stock 21,000 (To record issue of treasury shares)

XYZ Company declared a $.50 dividend on common stock. (Pretend there are 1,000 common shares outstanding. Journalize this transaction. XYZ Company paid the dividends declared above. Journalize this transaction.

Journal Entry For Declaration of Dividend Retained Earnings 50,000 Dividend Payable 50,000 Journal Entry for Payment of Dividend Dividend Payable 50,000 Cash 50,000

The numerator of the return on common stockholders' equity is

Net Income

The following information is available from the current period financial statements: Net income $165,000 Depreciation expense 28,000 Increase in accounts receivable 16,000 Decrease in accounts payable 21,000 ​ The net cash flow from operating activities using the indirect method is Cash flows from operating activities: Net income$165,000 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation expense 28,000 Changes in current operating assets and liabilities: Increase in accounts receivable (16,000) Decrease in accounts payable (21,000) Net cash flow from operating activities$156,000 ​

Net cash from operating activities: Net Income$ 165,000.00Add: Non cash itemsDepreciation$ 28,000.00Changes in working capital:Increase in accounts receivable$ (16,000.00)Decrease in accounts payable$ (21,000.00)Net cash inflow from Operating activities$ 156,000.00

Changes in current assets and current liabilities are reported on the statement of cash flows, using the indirect method, in the

Operation Activities

If common stock is issued for an amount greater than par value, the excess should be credited to

Paid-in Capital in Excess of Par Value

If Dakota Company issues 1,500 shares of $6 par common stock for $75,000, Total Cash Raised through Issue of Shares = $75,000 Par Value of Common Stock Issued = 1,500 shares × $6 = $9,000 Paid-In Capital in Excess of Par = $75,000 - $9,000 = $66,000

Paid-in Capital in excess of Par Value will be credited for $30,600. Total cash raised through the issue of shares = $51,000 Par value of common stock issued = 3,400 shares × $6 = $20,400 Paid-In Capital in Excess of Par = $51,000 - $20,400 = $30,600

XYZ Company has 50,000 shares of cumulative, 2%, $20 par preferred stock and 100,000 shares of $2 par common stock. XYZ Company declared total dividends of $15,000, $30,000, and $50,000 in 20X1, 20X2, and 20X3 respectively. What is the dividend per share for preferred stock and common stock for each year?

Preferred Stock 20x1 0.30 20x2 0.50 20x3 0.40 Common Stock Dividend per share 20x1 0.00 20x2 0.05 20x3 0.30

Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

Ratio of fixed assets to long-term liabilities

XYZ Company is processing payroll for the week ending January 9th. Employee earnings total $5,000. Federal income tax withheld from employee paychecks totaled $1,100. The social security tax rate is 6%, the Medicare tax rate is 1.5%, the state unemployment tax rate is 5.4% and the federal unemployment tax rate is .8%. a) Journalize the payroll entry for the week. b) Journalize the payroll tax entry for the week.

Solution: Journal EntriesDateParticularsDebitCredit1-Jan-20X1Cash Dr$13,056.00Discount on issue of bond Dr$1,944.00To Bond Payable$15,000.00(To record issue of bond at discount)30-Jun-20X1Interest expense Dr ($13,056*9%*6/12)$588.00To Discount on issue of bond$213.00To Cash ($15,000*5%*6/12)$375.00(To record interest expense and discount amortization)31-Dec-20X1Interest expense Dr [($13,056+$213)*9%*6/12)$597.00To Discount on issue of bond$222.00To Cash ($15,000*5%*6/12)$375.00(To record interest expense and discount amortization)1-Jan-20X2Bond Payable Dr$15,000.00Loss on retirement of bond Dr$1,359.00To Discount on issue of bond$1,509.00To Cash ($15,000*99%)$14,850.00(To record early retirement of bond)

ABC Corporation currently has $20,000 in cash, $30,000 in noncash assets, and liabilities of $35,000. The partners, Adrian, Batch, and Crenshaw, had capital balances of $5,000, $8,000, and $2,000, respectively. The partners share a profit and loss ratio of 1:1:3. The noncash assets were sold for $20,000. Any capital deficiencies are resolved by a cash contribution by the deficient partner. Complete the liquidation chart below.

Statement of Partnership Liquidation Cash Balances before realization 20,000 Sales of assets and division of loss or gain 60,000 Balances after realization 80,000 Payment of liabilities -35,000 Balances after payment of liabilities 45,000 Receipt of deficiency Balances Cash distributed to partners -45,000 Final Balances 0 Noncash Assets Balances before realization Sales of assets and division of loss or gain Balances after realization Payment of liabilities Balances after payment of liabilities Receipt of deficiency Balances Cash distributed to partners Final Balances Liabilities Balances before realization Sales of assets and division of loss or gain Balances after realization Payment of liabilities Balances after payment of liabilities Receipt of deficiency Balances Cash distributed to partners Final Balances Capital Balances before realization Sales of assets and division of loss or gain Balances after realization Payment of liabilities Balances after payment of liabilities Receipt of deficiency Balances Cash distributed to partners Final Balances Adrian Balances before realization Sales of assets and division of loss or gain Balances after realization Payment of liabilities Balances after payment of liabilities Receipt of deficiency Balances Cash distributed to partners Final Balances Batch Balances before realization Sales of assets and division of loss or gain Balances after realization Payment of liabilities Balances after payment of liabilities Receipt of deficiency Balances Cash distributed to partners Final Balances Crenshaw Balances before realization Sales of assets and division of loss or gain Balances after realization Payment of liabilities Balances after payment of liabilities Receipt of deficiency Balances Cash distributed to partners Final Balances Gain on sale of non cash assets = Sale price - Book value = 60,000-30,000 = $30,000 Gain to Adrian = 30,000 x 1/5 = $6,000 Gain to Batch = 30,000 x 1/5 = $6,000 Gain to Crenshaw = 30,000 x 3/5 = $18,000

When a stock dividend is declared, which of the following accounts is credited?

Stock Dividends Distributable

A reduction of par or stated value of stock results from a

Stock Split

In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported?

Stockholder's Equity on balance sheet

A $300,000 bond was redeemed at 104 when the carrying value of the bond was $316,000. The entry to record the redemption would include a Gain on Bond Redemption = Carrying Value of Bond - Redemption Value of Bonds = $316,000 - ($300,000 × 1.04) = $4,000 The entry to record the redemption would include a gain on bond redemption of $4,000.

The carrying amount decreases from its amount at issuance date to $1,000,000 at maturity.

Which of the following measures a company's ability to pay its current liabilities?

The current ratio

The liability for a dividend is recorded on which of the following dates?

The date of declaration

An aid in internal control over payrolls that indicates employee attendance is the

Timecard

Assuming a 360-day year, when a $20,000, 90-day, 5% interest-bearing note payable matures, total payment will be Total Payment = $20,000 + ($20,000 × 5% × 90 ÷ 360) = $20,250

Total payment = [$20,000 + ($20,000 × 5% × 90 / 360)] = $20,250

Balance sheet and income statement data indicate the following: Bonds payable, 6% (due in 15 years) $1,200,000 Preferred 8% stock, $100 par (no change during the year) 200,000 Common stock, $50 par (no change during the year) 1,000,000 Income before income tax for year 320,000 Income tax for year 80,000 Common dividends paid 60,000 Preferred dividends paid 16,000 ​ Based on the data presented above, what is the times interest earned ratio (round to two decimal places)? Times Interest Earned = (Income Before Income Tax + Interest Expense)/Interest Expense = [$320,000 + ($1,200,000 × 6%)]/($1,200,000 × 6%) = 5.44

XYZ Company Account TitlesDebitCreditSalaries Expense$ 5,000Federal Income tax Payable$ 1,100Social Security tax Payable$ 300=5000*6%Medicare tax Payable$ 75=5000*1.5%Salaries Payable$ 3,525=5000-1100-300-75(To record Payroll entry)Payroll Tax Expense$ 685=300+75+270+40Social Security tax Payable$ 300=5000*6%Medicare tax Payable$ 75=5000*1.5%State Unemployment Tax Payable$ 270=5000*5.4%Federal Unemployment Tax Payable$ 40=5000*0.8%(To record Payroll tax expense)

Which of the following is not a characteristic of a corporation?

a corporations's resources are limited to their individual stockholder's resources

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

a decrease in accounts receivable

Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 97.5, what is the amount of gain or loss on redemption? Gain on Redemption of Bonds = Balance of Bonds Payable - Redemption Value of Bonds - Balance of Discount on Bonds Payable = $1,000,000 - ($1,000,000 × 0.975) - $10,000 = $1,000,000 - $975,000 - $10,000 = $15,000

a liability

On the statement of cash flows prepared by the indirect method, the Cash flows from operating activities section would include

amortisation of premium on bonds payable.

A building with a book value of $54,000 is sold for $63,000 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as an increase of Gain on Sale of Building = $63,000 - $54,000 = $9,000 ​

an increase of $63,000 from investing activities and a deduction from net income of $9,000.

Hsu Company reported the following on its income statement: ​ Income before income taxes $420,000 Income tax expense 120,000 Net income $300,000 ​ Interest expense was $80,000. Hsu Company's times interest earned ratio is Times Interest Earned = (Income Before Income Tax + Interest Expense)/Interest Expense = ($420,000 + $80,000)/$80,000 = 6.25 times

b. 6.25 Times