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ACCT-111

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Match the following (they could come up more than once): (A) Cash (B) Bond Payable (C) Discount on Bond Payable (D) Premium on Bond Payable (E) Gain or Loss on Sale of Bond (F) Interest Expense (G) Interest Payable (X) No account is needed The journal entry to buy back a fully amortized bond will be The debit account would be: The credit account would be:

B A

The YTM indicates: a) The total interest earnings the bond purchaser would expect to earn b) The difference between the issuing price and the face value of the bond c) The total cash to be paid out every six months d) The net difference between the market rate and the coupon rate e) None of the above

The account, "Discount on Bond Payable" appears on which section of the balance sheet? a) Long-term Liabilities b) Shareholder's Equity c) Property, plant, and Equipment d) Current Assets e) None of the above

Unlimited Liability means: a) That each partner is jointly and individually liable for all partnership liabilities b) That partners have unlimited liability within their own practices but are unaffected by the liabilities of their partners c) That the partnerships are authorized to take on more debt than sole proprietorships d) Liabilities can be accrued under the name of the partnership but not by each individual e) None of the above

Jeffery Co. has just issued a bond with the following information: Face Value: $1,000 Coupon: 8% Market Rate: 9% Payments: Semi-annual Life of Bond: 4 years Issued Price: $967.02 The effective interest rate method is used For part 1 of this question, determine the first coupon payment: (assume that there is no year end accrual)

$40.00

Jeffery Co. has just issued a bond with the following information: Face Value: $1,000 Coupon: 8% Market Rate: 9% Payments: Semi-annual Life of Bond: 4 years Issued Price: $967.02 The effective interest rate method is used For part 2 of this question, determine the interest expense for the first six months of the bonds life: (assume that there is no year end accrual)

$43.52

Incorporating is attractive to many business owners because: a) Corporations are always more profitable b) Owners cannot be sued in corporations c) Ownership is more easily transferred d) The board of directors are the only people responsible for company liabilities e) All of the above

The number of shares available to earn income is affected by what (3 things)

1. Share dividends given 2. Share splits by company 3. Shares that are bought back or retired

If a company decides to redeem a bond before the maturity date: a) They must pay the carrying value of the bond according to the accounting books. b) They must pay the current market value of the bond regardless of what the carrying value of the bond is in the accounting books c) They must pay back the full face value of the bond d) They must pay back the full face value of the bond if the bond is currently trading at a discount but they will not be able to redeem the bond if the bond is trading at a premium e) They must convert the cash value of the bond and pay the equivalent dollar amount of common or preferred shares

The division of profits within a corporation is determined by: a) A complex profit sharing formula involving capital balances, salary, and a ratio b) An even distribution across all members of the board of directors c) The CEO's discretion d) The quantity and type of shares held by the investors/owners e) The years of seniority held by each owner

If a company has a proportionately large amount of debt: a) It has likely borrowed money in order to achieve a faster rate of growth b) The stock will likely have large fluctuations in price c) It's potential gains are higher yet it is considered to be greater risk d) The company will likely not be able to achieve an AAA bond rating e) All of the above

If a corporation declares a 200% share dividend: a) The EPS increases proportionately by 200% b) The EPS increases but typically by less than 200% c) The balance of the common share account increases and the preferred shares account decreases d) The owners overall percentage of ownership decreases e) None of the above

Match the following (they could come up more than once): (A) Cash (B) Bond Payable (C) Discount on Bond Payable (D) Premium on Bond Payable (E) Gain or Loss on Sale of Bond (F) Interest Expense (G) Interest Payable (X) No account is needed During a year end accrual entry for a bond that was issued at premium, the "premium on bond payable" account will be debited - what are the remaining parts of the Journal Entry? The debit account would be: The credit account would be:

F G

Investing (Withdrawal): Partner A wants to retire from the partnership. Partnership pays A $25,000 for A's Interest. Partnership Info: A 40% P/L ratio, $40,000 Beg. Capital B 40% P/L ratio, $80,000 Beg. Capital C 20% P/L ratio, $60,000 Beg. Capital What will the JE be?

-So A pays himself $25,000 of his own capital to retire: $40,000-$25,000 = $15,000 of bonus to be paid to Partners B and C -40%, 40%, 20% (out of 100%) turns into: 40% and 20% (out of 60%) (4/6, and 2/6) Dr A, Capital $40,000 Cr B, Capital (4/6 x 15,000) = $10,000 Cr C, Capital (2/6 x 15,000) = $5,000 Cr Cash = $25,000

0.554

What are the two (2) ways in which a new partner may be admitted or withdrawn from the financial statements?

1) Purchasing: One partner purchases the interest of an existing partner - Total capital doesn't change but it changes between the partners with the addition of the new partner and their new capital 2) Investing Assets: Increases capital (via investing assets into it) [many examples on "Purchasing" and "Investing"

On Jan 1, BCE issues $100,000 of its 6%, semi-annual, 3-year bonds when the market rate of interest is 6.2%. The bonds sell for $99,460. Payments made Jan 1 and Jul 1. 1) Use the simplistic amortization rate to do the JE 2) What is the problem with doing this method? What is the solution? 3) Do complete the JE using the solution to "simplistic amortization rate"

1) See slide 54 2) Problems with the "$90" amortization discount on bonds: a) Not compliant with tax laws b) It doesn't actually represent the ACTUAL interest that's being amortized. Solution is to use the *Effective Interest Rate Method* c) See slides 56-68

On January 2, ABC partnership incorporated into ABC Corporation and had its first share issuing on that date of 300,000 common shares and 60,000 preferred shares that have a $4.00 annual cumulative dividend. The common shares sold for $5.50 each and the preferred shares sold for $70 each. On March 1, common shares were trading at $6.60 and on March 1 the corporation issued 30,000 common shares in exchange for legal services that would have normally been billed for a total cost of $150,000. On September 10, ABC Corporation repurchased 50,000 common shares for $3.60 each from the market. On December 1, the company declared a dividend to its shareholders of $400,000. For Part 3 of this question, what amount will be debited on September 10? a) $ 180,000 b) $ 272,727 c) $ 330,000 d) $ 180,930 e) $ 275,000

272,727

A $300,000 bond was retired at 98 when the amortized cost (carrying value) of the bond was $298,000. The entry to record the retirement would include a: a) Gain on bond redemption of $4,000 b) Gain on bond redemption of $2,000 c) Loss on bond redemption of $2,000 d) Loss on bond redemption of $4,000 e) None of the above

A cash dividend: a) Effects both asset and equity totals on the balance sheet b) Effects asset totals only on the balance sheet c) Effects equity balance only on the balance sheet d) Has no lasting effect on equities e) Does not require a journal entry

Corporations: a) File their own separate T2 corporate tax return b) Do not pay taxes as all corporate earnings will be taxed under personal tax rates once the earnings are distributed to the owners c) Enable owners to claim personal expenses to reduce corporate income tax d) Require all owners to claim a percentage of the corporate net income under their own T1 tax return e) None of the above

DEF Co. earned income of $750,000 for the fiscal year ended Dec 31. At the beginning of that year DEF Co. had 40,000 $2.50 Preferred Shares (PS) outstanding and DEF started the year with 330,000 Common Shares (CS). During the year it sold an additional 90,000 CS on May 1, declared a 3:1 split on Jul 1, sold 6000 preferred shares on Sep 1, issued an additional 25,000 CS on Oct 1 and repurchased 360,000 shares on Dec 1. Calculate the EPS. For Part 1 of this question, define the basic EPS formula: a) (Net Income - P.S. Dividend) / Weighted Average Number of Common Shares b) (Net Income - P.S. Dividend) / Number of Common Shares c) Net Income / Weighted Average Number of Common Shares d) Weighted Average Number of Common Shares / (Net Income - P.S. Dividend) e) None of the above

@put together with other parts to this question and try to understand look at midterm exam (I think where it's from or the quiz) Jeffery Co. has just issued a bond with the following information: Face Value: $1,000 Coupon: 8% Market Rate: 9% Payments: Semi-annual Life of Bond: 4 years Issued Price: $967.02 The effective interest rate method is used For part 3 of this question, determine what will be the balance of the "discount on bond payable" account after the first interest payment has been made: (assume that there is no year end accrual)

$29.46

When a bond is fully matured (i.e. the very last day of it's life,) the company that issued the bond would write what journal entry? a) Dr. Bond Payable | Cr. Cash b) Dr. Bond Payable & Cash | Cr. Discount (or Premium) on Bond Payable c) Dr. Bond Payable & Discount (or Premium) on Bond Payable | Cr. Cash d) Dr. Cash | Cr. Bond Payable e) More Information is needed

A B

Use the following to place into appropriate spot (could be used more than once): (A) Partnership cash (B) Existing Partner's Capital Account (C) New Partner's Capital Account (D) Non-Cash Asset (E) Gain or Loss on Sale of Asset (F) Income Summary (G) Partner's Drawings (X) No account is needed A new partner invests cash into the partnership as part of an initial contribution to establish the business: The debit account would be: The credit account would be:

A C

Shan and Wayne's partnership agreement states that profits shall be split using the following formula:Shan will receive a salary of $100,000 and Wayne will receive $20,000. Interest on their beginning capital balances will be paid out at 7% of the beginning balance. The split for all remaining income is Shan 65% Wayne 35%.Shan's beginning capital was $14,000 and Wayne's was $80,000. The income for the year was $250,000. For part 2 of this question, determine what is the total that Wayne will receive in capital: Question 7 options: a) $ 68,797 b) $ 80,223 c) $ 43,197 d) $ 123,420 e) None of the above

A) $68,797

Of the three main sources of capital, most owners of companies will prefer some means of financing over others. Which of the below represents the typical preferences of an owner: a) Common shares (1st choice) -> Preferred share (2nd choice) -> Debt (3rd Choice) b) Common shares (1st choice) -> Debt(2nd choice) -> Preferred shares (3rd Choice) c) Preferred shares (1st choice) -> Common share (2nd choice) -> Debt (3rd Choice) d) Debt (1st choice) -> Common share (2nd choice) -> Preferred shares (3rd Choice) e) None of the above

On January 2, ABC partnership incorporated into ABC Corporation and had its first share issuing on that date of 300,000 common shares and 60,000 preferred shares that have a $4.00 annual cumulative dividend. The common shares sold for $5.50 each and the preferred shares sold for $70 each. On March 1, common shares were trading at $6.60 and on March 1 the corporation issued 30,000 common shares in exchange for legal services that would have normally been billed for a total cost of $150,000. On September 10, ABC Corporation repurchased 50,000 common shares for $3.60 each from the market. On December 1, the company declared a dividend to its shareholders of $400,000. For Part 1 of this question, which Journal entry describes the transaction that occurred on January 2? a) Dr. Cash; Owner's Capital b) Dr. Cash; Cr. Retained Earnings c) Dr. Cash; Cr. Common Shares & Preferred Shares d) Dr. Retained Earnings; Cr. Common Shares & Preferred Shares e) None of the Above

Owners of corporations achieve limited liability by: a) Contractually separating themselves from the liabilities of the company b) Defining the roles and limitation of all owners in the ownership agreement c) Being responsible for all of the liabilities of the corporation d) Only being liable for the amount of investment they have made into the common shares of the corporation e) Bankruptcy protection legislation that allows the owners to have limited personal losses in the event of the corporation becoming insolvent

Purchasing into a partnership: a) Requires no journal entries on the company books b) Requires cash to be paid to the partnership and a calculation of the bonus (or loss) to be paid to the existing owners c) Requires cash to be paid to the partnership with no change to the overall equity of the company d) Is a means to gain ownership in a partnership without changing the overall capital within the partnership e) None of the above

Shan and Wayne's partnership agreement states that profits shall be split using the following formula:Shan will receive a salary of $100,000 and Wayne will receive $20,000. Interest on their beginning capital balances will be paid out at 7% of the beginning balance. The split for all remaining income is Shan 65% Wayne 35%.Shan's beginning capital was $14,000 and Wayne's was $80,000. The income for the year was $250,000. For part 1 of this question, determine what is the total that Shan will receive in capital: a) $ 158,171 b) $ 94,223 c) $ 80,223 d) $ 181,203 e) None of the above

What is the journal entry for the following situation: Partner A pays $250,000 to acquire partner B's equity in the partnership. Partner A pays pays partner B directly. The book value of partner B's capital is $240,000 a) Dr. Partner B Capital $250,000; Cr. Partner A's Capital $250,000 b) Dr. Partner B Capital $240,000 & Dr Cash $10,000 ; Cr. Partner A's Capital $2500,000 c) Dr. Partner B Capital $250,000; Cr. Partner A's Capital $240,000 & Cr Cash $10,000 d) Dr. Partner B Capital $240,000; Cr. Partner A's Capital $240,000 e) None of the above

When issuing common shares in exchange for services, a company: a) May choose to use the book value of the common shares or the fair value of the services given up to record the transaction b) Will always have the fair value of the services given to use to record the transaction c) Must use the fair value of the common shares being exchanged instead of the fair value of the service given up to record the transaction d) Must use the fair value of the service being offered to record the transaction e) None of the above

Use the following to place into appropriate spot (could be used more than once): (A) Partnership cash (B) Existing Partner's Capital Account (C) New Partner's Capital Account (D) Non-Cash Asset (E) Gain or Loss on Sale of Asset (F) Income Summary (G) Partner's Drawings (X) No account is needed An existing partner invests their personal vehicle into the partnership: The debit account would be: The credit account would be:

D B

Purchasing (Withdrawal of Partner) Partner 'A' wants to retire from the partnership. 'A' sells her share to B for $50,000. Partnership Info: A 40% P/L ratio, $40,000 Beg. Capital B 40% P/L ratio, $80,000 Beg. Capital C 20% P/L ratio, $60,000 Beg. Capital What would the JE be?

Dr. A, Capital $40,000 Cr. B, Capital $40,000 So Partner B pays $50,000 cash to Partner A for all of their $40,000 in shares. The $50,000 is irrelevant because the cash transfer is not on the books. The only thing that would be on the books is the actual transfer of capital within the business.

Company issuing shares for cash: Write the JE for a company issuing 3,000 common shares at $4.00 per share

Dr. Cash 12,000 Cr. Common Shares 12,000

On January 2, ABC partnership incorporated into ABC Corporation and had its first share issuing on that date of 300,000 common shares and 60,000 preferred shares that have a $4.00 annual cumulative dividend. The common shares sold for $5.50 each and the preferred shares sold for $70 each. On March 1, common shares were trading at $6.60 and on March 1 the corporation issued 30,000 common shares in exchange for legal services that would have normally been billed for a total cost of $150,000. On September 10, ABC Corporation repurchased 50,000 common shares for $3.60 each from the market. On December 1, the company declared a dividend to its shareholders of $400,000. For Part 2 of this question, what debit will be made on March 1? a) Dr. Common Shares $198,000 b) Dr. Legal Expense $198,000 c) Dr. Common Shares $150,000 d) Dr. Legal Expense $150,000 e) None of the above

Dr. Legal Expense $150,000

Company issuing shares for non-cash: A company hires a lawyer to establish the corporation and gave her 2,000 shares in exchange for her services. She typically bills $6,500 for this type of service. The shares are trading at $3.00 per share at this time. -What would the journal entry look like to record this transaction? -What would be the journal entry if she didn't bill $6,500 on average and the "fair market price" for the type of services she performed was unknown?

Dr. Legal Expense 6,500 Cr. Common Shares 6,500 Dr. Legal Expense 6,000 Cr. Common Shares 6,000

A share dividend: a) Maintains the expectation that shareholders have of a dividend payout b) Reduces the retained earnings and increases the common shares capital c) Increases the contributed capital d) Reduces the overall market price per share e) All of the above

A share split: a) Effects both asset and equity totals on the balance sheet b) Effects asset totals only on the balance sheet c) Effects equity balances only on the balance sheet d) Has no lasting effect on equities e) Does not require a journal entry

If a corporation declares a 2:1 share split: a) The amount of contributed capitol doubles b) The balance of the common share account doubles c) The balance of the common share account and the prefers share account doubles d) The owners overall percentage of ownership increases e) Share price typically lowers in response

When sharing profits at the close of the year, under what circumstance could a partner realize a positive contribution to their capital account even if the net income of the partnership was a net loss? a) When the partnership decides to defer the losses until another year b) When the partnership is set up as a limited liability partnership c) When they have no salary or interest contribution as a part of their profit sharing equation d) When there is not enough cash flow within the company e) When the salary and interest components of their profit sharing equation are larger than their percentage of the negative profit

The Sunshine Partnership is to be liquidated when the ledger shows the following: Cash: $15,000 Noncash Assets: $80,000 Liabilities: $20,000 Sophia, Capital: $20,000 Isobel, Capital: $40,000 Juliet, Capital: $5,000 Sophia, Isobel, and Juliet's profit ratios are 6:3:1 respectively Required: a) Prepare the liquidation schedule of the partnership assuming that the noncash assets are sold for $50,000 in cash b) prepare separate journal entries to record the liquidation of the partnership

See Unit 1 - Partnership Notes (near end) for tables and Journal Entry

Purchasing (Addition of a Partner): A new investor "D" offers to pay each of the partners directly $12,500 for 1/4 of each partner's share. Partnership Info: •A 40% P/L ratio, $40,000 Beg. Capital •B 40% P/L ratio, $80,000 Beg. Capital •C 20% P/L ratio, $60,000 Beg. Capital -Calculate what D's Capital will be after the transaction -What do each of the % of ownership of each partner go from and to with the addition of this new partner D? -Produce the journal entry

See Unit 1 - Partnerships PP slides 49 & 50

On September 30, 2019 Quin Co. issued a $10,000, 5-year bond at 6% when the market rate was 5%. It was sold at 10,437.60, and they will account for interest on the bond using the effective interest calculation method. Interest payments are made on September 30 and March 31 of each year with Quin's year-end December 31. Show JEs for 2019 and the first JE for 2020

See slides 77 for how we got the amortization using the premium effective interest rate method

Investing into a partnership: a) Requires no journal entries on the company books b) Requires cash to be paid to the partnership and a calculation of the bonus (or loss) to be paid to the existing owners c) Requires cash to be paid to the partnership with no change to the overall equity of the company d) Is a means to gain ownership in a partnership without changing the overall capital within the partnership e) None of the above

Profits from an incorporated company are distributed: a) Only on an annual basis b) At the discretion of the board of directors c) Through the owners' drawings account d) Through the owners' withdrawals account e) Only after the closing entries have been done at the corporate year end

Shan and Wayne's partnership agreement states that profits shall be split using the following formula:Shan will receive a salary of $100,000 and Wayne will receive $20,000. Interest on their beginning capital balances will be paid out at 7% of the beginning balance. The split for all remaining income is Shan 65% Wayne 35%.Shan's beginning capital was $14,000 and Wayne's was $80,000. The income for the year was $250,000. For part 3 of this question, chose the option that best describes the journal entry needed to record the distribution of income: a) Dr. Shan Capital & Wayne Capital; Cr. Drawings b) Dr. Income Summary; Cr. Shan Capital & Wayne Capital c) Dr. Salary Expense; Cr. Shan Capital & Wayne Capital d) Dr. Shan Capital & Wayne Capital; Cr. Income Summary e) Dr. Shan Capital & Wayne Capital; Cr. Salary Expense

The account, "Common Share Dividend Distributable" appears on which section of the balance sheet? a) Short-term Liabilities b) Shareholder's Equity c) Property, plant, and Equipment d) Current Assets e) None of the above

The account, "Contributed Surplus" appears on which section of the balance sheet? a) Long-term Liabilities b) Shareholder's Equity c) Property, plant, and Equipment d) Current Assets e) None of the above

The partnership of Darryl, Rick and Amal divide profits by the ratio 7:8:2 respectively. Rick decides to withdraw from the partnership, what will be the new profit ratio for Darryl and Amal to use to allocate the bonus from the withdrawal? a) 72%/28% b) 78%/22% c) 67%/33% d) 75%/25% e) 70%/30%

Use the following to place into appropriate spot (could be used more than once): (A) Partnership cash (B) Existing Partner's Capital Account (C) New Partner's Capital Account (D) Non-Cash Asset (E) Gain or Loss on Sale of Asset (F) Income Summary (G) Partner's Drawings (X) No account is needed A new partner purchases a 25% ownership in an existing partnership: The debit account would be: The credit account would be:

B C

Use the following to place into appropriate spot (could be used more than once): (A) Partnership cash (B) Existing Partner's Capital Account (C) New Partner's Capital Account (D) Non-Cash Asset (E) Gain or Loss on Sale of Asset (F) Income Summary (G) Partner's Drawings (X) No account is needed The withdrawing of capital from a partner's account at the time of the closing entries: The debit account would be: The credit account would be:

B G

If a bond is issued at 105: a) It means that bond was issued for $1050 b) It means that bond was issued at 105% of its market value c) It means that bond was issued at 105% of its face value d) It means that the bond was issued at 1:05 in the afternoon e) None of the above

If a corporation purchases its own shares on the open market: a) It is considered insider trading b) The company becomes more liquid c) The remaining owners' percentage of ownership increases d) Share value typically drops in response e) None of the above

If the market rate is greater than the coupon rate, then: a) The bond is issued at face value b) The bond is issued at a premium c) The bond is issued at a discount d) The coupon rate is adjusted to market e) None of the above

Mutual Agency means: a) A partnership is its own legal entity b) Partnerships are not taxed as a separate legal entity c) Partnership actions are binding on all other partners d) Profits are divided based on a predetermined formula e) None of the above

Palo, a 15% owning partner, decides to sell his ownership to a prospective partner named Lee. Lee will be paying Palo directly for the 15% ownership share and the cash that will be exchanged will be greater than 15% of the overall capital in the partnership. This will then require: a) a) A debit to all owner's capital accounts and a credit to cash b) b) A debit to Lee's capital account and a credit to Palo's capital account c) c) A debit to Palo's capital account and a credit to Lee's capital account d) d) A debit to cash and a credit to all owner's capital account e) e) None of the above

Match the following (they could come up more than once): (A) Cash (B) Bond Payable (C) Discount on Bond Payable (D) Premium on Bond Payable (E) Gain or Loss on Sale of Bond (F) Interest Expense (G) Interest Payable (X) No account is needed What is the transaction needed to issue a bond with a face value of $10,000. A debit of $9,000 has already been made to record the cash received from the issuing - what are the remaining parts of the Journal Entry? The debit account would be: The credit account would be:

C B

Partnership Liquidations (Part 3 of 3) A partnership group has decided to liquidate the business. The ownership group consists of three owners A, B, and C whose ownership and profit split is 7:5:3 respectively. The balance sheet is as follows: Cash $75,000 Non-cash Assets $400,000 Liabilities $100,000 A's, Capital $150,000 B's, Capital $40,000 C's, Capital $185,000 The non-cash assets were sold for $250,000. For part 3 of this problem, determine what the last journal entry would be to close (zero out) the capital accounts A, B, and C's partnership: Question 11 options: a) Dr. Cash & B's Capital; Cr. A's Capital & C's Capital b) Dr. Cash; Cr. A's Capital & B's Capital, & C's Capital c) Dr. A's Capital & C's Capital; Cr. Cash & B's Capital d) Dr. A's Capital & B's Capital, & C's Capital; Cr. Cash e) None of the above

What are the two (2) main differences between a "Share Dividend" and a "Share Split?"

Share Dividend (distributing shares already in existence that company owns into to market) • Distribution of shares (adds more shares to market because the company is giving shares to investors) • Journal entry needed: As we're moving money from retained earnings to common shares Share Splits (or Stock Splits) (creating shares out of thin air into the market) • A multiplication of existing shares (company just adds more shares to market i.e. you have 100 shares and company issues another 100 to the market for people to buy) • No journal entry needed

Investing (Withdrawal of Partner) Partner A wants to retire from the partnership. Partnership pays A $46,000 by selling interest to the partnership Partnership Info: A 40% P/L ratio, $40,000 Beg. Capital B 40% P/L ratio, $80,000 Beg. Capital C 20% P/L ratio, $60,000 Beg. Capital What will the JE be?

So B and C pay $46,000 cash to partner A for his $40,000 in Capital (So A will have 40,000 removed from the books and B and C will pay him an additional 6,000 bonus from their capital as a bonus) Dr. A, Capital $40,000 (removed from books) Dr. B, Capital (4/6 x 6,000) $4,000 Dr. C, Capital (2/6 x 6,000) $2,000 Cr. Cash $46,000

On December 31, 2020 Trell Corp. decides to redeem their bond payable that has a face value of $100,000. The carrying value of the bond on December 31, 2020 (after all the interest has been appropriately paid) is $99,000. Trell Corp. redeemed the bond for 101. Prepare the redemption journal entry.

So bond has retired before the maturity date and will not be fully amortized so it will need to be closed: Bond payable: $100,000 Carrying amount: $99,000 Discount would be: $1,000 "bond for 101" means for $101% of face value .. where if it were to say "bond for 99" means 99% of face value) See pic for Journal Entry

Why is the weighted average # of common shares calculated?

To recognize the portion of the year that the shares were available to earn income which prevents manipulation of the EPS number

If a corporation issues new shares on the open market: a) All shares become diluted b) The company becomes more profitable c) The initial owners' percentage of ownership increases d) Share value typically increases in response e) None of the above

If contributed surplus begins with a zero balance, what will the journal entry look like if shares are repurchased and the market price per share is now lower than the average book value per share? a) Dr to Common Shares | Cr to Cash, & Contributed Surplus b) Dr to Cash | Cr to Common Shares, Retained Earnings, & Contributed Surplus c) Dr to Common Shares, Retained Earnings, & Contributed Surplus | Cr to Cash d) Dr to Common Shares, & Retained Earnings | Cr to Cash e) Dr to Cash | Cr to Common Shares, & Retained Earnings

Reacquiring Shares: Delta issued its common shares at an average price of $12.00 per share. a) On May 1, Delta purchased and retired 1,000 shares at $12.00 per share: (i.e. @ Par) b) On Jun 1, Delta retired 500 shares paying $11.00 per share (i.e. below book value) c) On July 5, Delta retired 2,000 shares paying $15.00 per share (i.e. above book value) Record the JE's for the Reacquiring of these shares as well as the T-Accounts for the last 2

a) Dr. Common Shares 12,000 Cr. Cash 12,000 b) Dr. Common Shares 6,000 Cr. Cash 5,500 Cr. Contributed Surplus 500 c) Dr. Common Shares 24,000 Dr. Contributed Surplus 500 Dr Retained earnings 5,500 Cr. Cash 30,000

Mhin, Brenda, and Lee's partnership agreement states that profits shall be split using the following formula: Mhin will receive a salary of $90,000, Brenda will receive $20,000, and Lee will receive $35,000. Interest on their beginning capital balances will be paid out at 8% of the beginning balance. The split for all remaining income is Mhin 22%, 44% Brenda, and 34% Lee. Mhin's beginning capital was $80,000, Brenda's was $15,000, and Lee's was $50,000. The income for the year was $400,000. a) What is the total amount of capital distributed to the partners in salaries and interest? b) How much will Mihn's capital balance increase once all profits are distributed? (Round to the nearest answer) c) How much will all three owners capital balances increase once the profit and loss calculation has been completed? d) If the partnership were to generate a negative income for the year, how much salary will be distributed to each partner? e) Assume now that after dividing all profits (and losses,) Mihn's capital allocation is positive (an increase to Mhin's capital balance) and Brenda's and Lee's allocation is negative (a decrease to their capital balances). What would the journal entry be to distribute the annual profits and losses?

a) $156,600 b) $149,950 c) $400,000 d) Mhin $90,000 | Brenda $20,000 | Lee $35,000 e) Not enough information is given to be certain

ABC Co had the following transactions: On January 2, 2020, ABC Co. Incorporated for its first year of business and its first action was to Issue 500,000 common shares for cash at $7.70 per share and they issued 90,000 preferred shares with a $5 dividend for an issue price of $55 each. On May 1, 2020, ABC Co. Issued 14,000 common shares to lawyers in payment of their bill of $120,000 for services rendered in helping the company to become incorporated. The share price on the day of issuing was $7.00 per share. On November 1, 2020, ABC Co. repurchased 100,000 common shares at $6.70 per share. On December 1, 2020, ABC Co. declared a dividend of $600,000 in total for all shareholders. The share price on that date was $8.00. The date of record was December 20 and the dividend was payable on December 31. The company maintains separate payable accounts (i.e. 'Dividend Payable - Preferred' and 'Dividend Payable - Common') for its common and preferred shareholders. a) What would the journal entry for January 2nd would be? b) On November 1, what would the common shares would be reduced by? c) On December 1, the dividend payable to common shareholders would be what? d)On December 31, retained earnings will be reduced by what?

a) Dr Cash | Cr Common Shares & Cr Preferred Shares b) None of the above c) $150,000 d) $600,000

When bonds are issued at a premium, the: a) Amortized cost of the bonds will increase with successive amortization b) Interest paid to bondholders will increase after each interest payment date c) Interest rate used to calculate interest expense would be the contractual rate d) Amount of premium amortized will get larger with each successive amortization e) None of the above

d) Amount of premium amortized will get larger with each successive amortization

On a balance sheet of Shareholders' Equity it is shown that there is: -$5 cumulative preferred shares: 50,000 authorized, 30,000 outstanding, $1,500,400 -Common shares, unlimited authorized: 400,000 outstanding, $3,575,000 Dividend declared of $1,000,000 a) What is the dividend per common share? B) Imagine that the Preferred Share dividends are one year in arrears (money that is owed and should have been paid earlier), what would the dividend per common share be?

A) Dividend declared (available): 1,000,000 -Given as preferred shares first: $5 x 30,000 = $150,000 (priority - gets taken off first) $1,000,000 - $150,000 = $850,000 left over -Common Shares: $850,000 / 400,000 = $2.125 dividend per common share B) Dividend declared (available): 1,000,000 -Given as preferred shares first: $5/share x 30,000 = $150,000 (last years that are cumulative) $5/share x 30,000 = $150,000 (this years )$1,000,000 - $300,000 = $700,000 left over -Common Shares: $700,000 / $400,000 = $1.75 dividend per common share

Partnership Liquidations (Part 2 of 3) A partnership group has decided to liquidate the business. The ownership group consists of three owners A, B, and C whose ownership and profit split is 7:5:3 respectively. The balance sheet is as follows: Cash $75,000 Non-cash Assets $400,000 Liabilities $100,000 A's, Capital $150,000 B's, Capital $40,000 C's, Capital $185,000 The non-cash assets were sold for $250,000. For part 2 of this problem, determine what was the final cash amounts paid to C? Question 10 options: a) $ 155,000 b) $ 80,000 c) $ 195,000 d) $ 150,000 e) None of the above

A) $155,000

$1,146,250

For companies reporting using IFRS, basic and diluted EPS are disclosed on what part(s) of the financial statements?

1. Income statement 2. Statement of comprehensive income

Jeffery Co. has just issued a bond with the following information: Face Value: $1,000 Coupon: 8% Market Rate: 9% Payments: Semi-annual Life of Bond: 4 years Issued Price: $967.02 The effective interest rate method is used For part 4 of this question, determine the carrying value of the bond after 12 months has elapsed:

$974.21

What is the difference between Long Term Liabilities and Current Liabilities?

*Long Term Liabilities:* Matures AFTER 12 months. They include: -Notes payable -Mortgages -Leases -Bonds *Current Liabilities*: Matures WITHIN 12 months These include: -GICs -Treasury Bills

What are four (4) advantages and three (3) disadvantages of "Partnerships"?

Advantages: 1) Skills and Resource: The different partners can combine their skills and resources into one business 2) Very little government regulations 3) Easily formed (think just forming it easily with friends) 4) Easy for partners to come to a decision - as opposed to say a massive corporation with stockholders Disadvantages: 1. Mutual Agency: One partner makes a really bad decision with company funds - everyone suffers (however at the same time one partner could do really good decisions too... but this he just put in the disadvantage category) 2. Limited life: New partnership agreements have to constantly be redone as people quit, or retire, or new partners are added 3. Liability: You can be liable for the actions of your partner (i.e. your entire business including yourself can be sued)

A partnership liquidation: a) Is a promotional event where sales prices are discounted b) Refers to the amount of cash flow that the partnership will have over the next 12 months c) Must always take place after all of the closing entries have been completed d) Occurs annually as a means to distribute profits e) None of the above

A group of partner decides to sell their ownership to a prospective partner named O'Connor. O'Connor will be investing into the partnership to gain the 25% ownership and the cash that will be exchanged will be greater than 25% of the overall capital in the partnership. This will then require: a) A debit to all owner's capital accounts and a credit to cash b) A debit to cash and all of the old owners capital account and a credit to O'Connor's capital c) A debit to cash and O'Connor's capital and a credit to all of the old owners d) A debit to cash and a credit to all owner's capital account e) None of the above

Bonds issued at premium: a) Are typically more lucrative for investors than bonds issued at par b) Are typically less lucrative for investors than bonds issued at par c) Have the equal monetary reward as as a bond issued at par d) Are more expensive for corporations to issue e) None of the above

@put together with all others and try to understand more On January 2, ABC partnership incorporated into ABC Corporation and had its first share issuing on that date of 300,000 common shares and 60,000 preferred shares that have a $4.00 annual cumulative dividend. The common shares sold for $5.50 each and the preferred shares sold for $70 each. On March 1, common shares were trading at $6.60 and on March 1 the corporation issued 30,000 common shares in exchange for legal services that would have normally been billed for a total cost of $150,000. On September 10, ABC Corporation repurchased 50,000 common shares for $3.60 each from the market. On December 1, the company declared a dividend to its shareholders of $400,000. For Part 4 of this question, what will the journal entry be on December 1? a) Dr. Dividends Payable - Preferred Shares $200,000 & Dividends Payable - Common Shares $200,000; Cr. Cash b) Dr. Dividends Payable - Preferred Shares $240,000 & Dividends Payable - Common Shares $160,000; Cr. Cash c) Dr. Retained Earnings $400,000; Cr. Dividends Payable - Preferred Shares $240,000 & Dividends Payable - Common Shares $160,000 d) Dr. Retained Earnings $400,000; Cr. Dividends Payable - Preferred Shares $200,000 & Dividends Payable - Common Shares $200,000 e) None of the above

If contributed surplus begins with a zero balance, what will the journal entry look like if shares are repurchased and the market price per share is now higher than the average book value per share? a) Dr to Common Shares | Cr to Cash, & Contributed Surplus b) Dr to Cash | Cr to Common Shares, Retained Earnings, & Contributed Surplus c) Dr to Common Shares, Retained Earnings, & Contributed Surplus | Cr to Cash d) Dr to Common Shares, & Retained Earnings | Cr to Cash e) Dr to Cash | Cr to Common Shares, & Retained Earnings

For corporation transactions. What effect does paying out cash dividends vs. non-cash dividends have on the balance sheet?

Cash dividend: DECREASES ASSETS (Cash) and DECREASES EQUITY (Retained Earnings) Share Dividend: Increases Equity (Common Shares more people get more shares) and Decreases Equity (Retained Earnings) = No Net Difference

A partnership liquidation: a) Is a promotional event where sales prices are discounted b) Refers to the amount of cash flow that the partnership will have over the next 12 months c) Occurs annually as a means to distribute profits d) Must always take place after all of the closing entries have been completed e) None of the above

Use the following to place into appropriate spot (could be used more than once): (A) Partnership cash (B) Existing Partner's Capital Account (C) New Partner's Capital Account (D) Non-Cash Asset (E) Gain or Loss on Sale of Asset (F) Income Summary (G) Partner's Drawings (X) No account is needed The distribution of profit in a partnership: The debit account would be: The credit account would be:

F B

Match the following (they could come up more than once): (A) Cash (B) Bond Payable (C) Discount on Bond Payable (D) Premium on Bond Payable (E) Gain or Loss on Sale of Bond (F) Interest Expense (G) Interest Payable (X) No account is needed A bond that was previously issued at a discount is paying it's first coupon payment in cash. In addition to a credit to cash, what are the remaining parts of the Journal Entry? The debit account would be: The credit account would be:

F C

On Jan. 25, 20XX, the board of Directors declares a share dividend of $1,000,000 on shares of record date Feb. 15, payment date Feb. 25. Record the journal entries

Jan 15: Dr. Retained earnings: 1,000,000 Cr. Common share div. distributable: 1,000,000 Feb 25: Dr. Common share div. distributable: 1,000,000 Cr. Common shares: 1,000,000 [Note: Feb 15 doesn't require a JE]

Cash Dividends: On Jan. 25, 20XX, the board of Directors declares a dividend of $1,000,000 on shares of record date Feb. 15, payment date Feb. 25. Record the journal entries.

Jan 25: Dr. Retained earnings 1,000,000 Cr. Dividend payable 1,000,000 Feb 25: Dr. Dividend payable 1,000,000 Cr. Cash 1,000,000 [Note: Feb 15 doesn't require a JE] [Note the "Dividends payable" can often be split into two accounts - common shares, preferred shares if we're being super specific"

On January 2, ABC partnership incorporated into ABC Corporation and had its first share issuing on that date of 300,000 common shares and 60,000 preferred shares that have a $4.00 annual cumulative dividend. The common shares sold for $5.50 each and the preferred shares sold for $70 each. On March 1, common shares were trading at $6.60 and on March 1 the corporation issued 30,000 common shares in exchange for legal services that would have normally been billed for a total cost of $150,000. On September 10, ABC Corporation repurchased 50,000 common shares for $3.60 each from the market. On December 1, the company declared a dividend to its shareholders of $400,000. For Part 5 of this question, what is the balance of the contributed surplus account on December 31? a) $ 180,000 b) $ 0 c) $ 180,775 d) $ 150,000 e) None of the above

None of the above

Partnership Liquidations (Part 1 of 3) A partnership group has decided to liquidate the business. The ownership group consists of three owners A, B, and C whose ownership and profit split is 7:5:3 respectively. The balance sheet is as follows: Cash $75,000 Non-cash Assets $400,000 Liabilities $100,000 A's, Capital $150,000 B's, Capital $40,000 C's, Capital $185,000 The non-cash assets were sold for $250,000. For part 1 of this problem, determine what was the final cash amounts paid to A? Question 9 options: a) $ 150,000 b) $ 155,000 c) $ 15,000 d) $ 90,000 e) None of the above

None of the above Should be $80,000

Issuing a bond at Premium example: On Jan. 1, 2011 we issued a 5 year, coupon of 5%, $100,000 bond. Interest will be paid semi-annually on July 1 and Jan. 1. Assume Dec.31 year-end. We received cash of $103,000 for the bond (103% of face value). Produce the JE's for the first 12 months of the bond.

Note we recognize the $3,000 as a BONUS the company will have between the $103,000 issuing price and the $100,000 redemption price. And every 6 months is a $300 extra expense $3,000 / 5 years / 2 (semi annually) = $300 extra expense every 6 months

Issuing a bond at Discount On Jan. 1, 2011 we issued a 5 year, coupon of 5%, $100,000 bond. Interest will be paid semi-annually on July 1 and Jan. 1. Assume Dec.31 year-end. We received $96,000 for the bond. Produce the JE's for the first 12 months of the bond.

Note we recognize the $4,000 as a LOSS that the company will have which we recognize every 6 months. And every 6 months is a $400 extra expense: $4,000 /5 years / 2 (semi annually) = $400 extra expense every 6 months

Investing (Addition of partner): A, B and C agree to sell D a 20% interest in the partnership if D pays $40,000 into the partnership. Partnership Info: A 40% P/L ratio, $40,000 Beg. Capital B 40% P/L ratio, $80,000 Beg. Capital C 20% P/L ratio, $60,000 Beg. Capital Calculate what D's Capital will be after the transaction and produce the Journal Entry.

Step 1 - Calculate total equity: 180,000 + 40,000 = 220,000 Step 2 - Calculate new partner share: 20% x 220,000 = 44,000 Step 3 - Calculate bonus (amount new partner buys in for minus what's left over after he gets his share in step 2): 40,000 - 44,000 = 4,000 *loss* to old partners Step 4: Allocate bonus A gets 40% of 4,000 = 1,600 (loss) B gets 40% of 4,000 = 1,600 (loss) C gets 20% of 4,000 = 800 (loss) Journal entry: Dr. Cash 40,000 Dr. A's Capital: 1,600 Dr B's Capital: 1,600 Dr. C's Capital: 800 Cr D's capital: 44,000

Investing (Addition of a Partner): A, B and C agree to sell D a 20% interest in the partnership if D pays $80,000 into the partnership. Partnership Info: A 40% P/L ratio, $40,000 Beg. Capital B 40% P/L ratio, $80,000 Beg. Capital C 20% P/L ratio, $60,000 Beg. Capital -Calculate what D's Capital will be after the transaction and produce the Journal Entry. -What do each of the % of ownership of each partner go from and to with the addition of this new partner D?

Step 1: Calculate total equity: $180,000 (ABC) + $80,000 = $260,000 Step 2: Calculate new partner share: $260,000 x 20% = *$52,000* Step 3: Calculate bonus (amount new partner buys in for minus what's left over after he gets his share in step 2): $80,000-52,000 = $28,000 this is left over amount that goes directly to the bonus of the partners ABC based on their P/L ratio Step 4: Partner A: 28,000 x 40% = *$11,200* Partner B: 28,000 x 40% = *$11,200* Partner C: 28,000 x 40% = *$5,600* Journal: Dr Cash 80,000 Cr A's Capital 11,200 Cr B's Capital 11,200 Cr C's Capital 5,600 Cr D's Capital 52,000 And there's *NO* cash that trades hands off the books (with purchasing YES - but not with Investing addition) Partner A goes from 40%->32% Partner B goes from 40%->32% Partner C goes from 20%->16% Partner D goes from 0%->20% Partner A & B: 40% - (40% x 20%) = 32% Partner C: 20% - (20% x 20%) = 16% Partner D: 0%->20%

ACCT-111

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