Accounting Chapters 10-12

$135,000. The preferred stockholders will receive a total of $240,000 of dividends [dividends in arrears ($80,000 × 2 years) + current-year dividends ($80,000)]. If M-Bot wants to pay a total of $375,000 in 2019, then common stockholders will receive $135,000 ($375,000 − $240,000)

(LO 3) M-Bot Corporation has 10,000 shares of 8%, $100 par value, cumulative preferred stock outstanding at December 31, 2019. No dividends were declared in 2017 or 2018. If M-Bot wants to pay $375,000 of dividends in 2019, common stockholders will receive: (a) $0. (b) $295,000. (c) $215,000. (d) $135,000.

9.0%. - The return on common stockholder's equity is net income available to common stockholders divided by average common stockholder's equity. The net income available to common stockholders is net income less preferred stock dividends = $126,000 ($186,000- (10,000 x .06 x $100)). The company's return on common stockholders' equity for the year is 9% ($126,000/ ($1,200,000 +$1,600,000)/2)).

Katie Inc. reported net income of $186,000 for the current year and paid dividends of $26,000 on common stock. It also has 10,000 shares of 6%, $100 par value, noncumulative preferred stock outstanding. Common stockholders' equity was $1,200,000 on January 1 and $1,600,000 on December 31. The company's return on common stockholders' equity for the current year is 9.0%. 7.1%. 13.3%. 10.0%.

$3,540. Accrued interest at 12/31/19 is computed as the face value ($88,500) times the interest rate (12%) times the portion of the year the debt was outstanding (4 months out of 12), or $3,540 ($88,500×12%×4/12)

Maggie Sharrer Company borrows $88,500 on September 1, 2019, from Sandwich State Bank by signing an $88,500, 12%, one-year note. What is the accrued interest at December 31, 2019? (a) $2,655. (b) $3,540. (c) $4,425. (d) $10,620.

$136,000: Net cash provided by operating activities is $136,000 ($132,000 + $10,000 + $6,000 - $12,000).

Net income is $132,000, accounts payable increased $10,000 during the year, inventory decreased $6,000 during the year, and accounts receivable increased $12,000 during the year. Under the indirect method, what is net cash provided by operating activities? $102,000 $112,000 $136,000 $124,000

(c) credit to Discount on Bonds Payable $4,000. [$500,000 − (96% × $500,000)] = $20,000; $20,000 ÷ 5 = $4,000 of discount to amortize annually. As a result, the entry would involve a credit to Discount on Bonds Payable $4,000

On December 31, Hurley Corporation issues $500,000, 5-year, 12% bonds at 96 with interest payable on December 31, 2019. The entry on December 31, 2020, to record payment of bond interest and the amortization of bond discount using the straight-line method will include a: (a) debit to Interest Expense $30,000. (b) debit to Interest Expense $60,000. (c) credit to Discount on Bonds Payable $4,000. (d) credit to Discount on Bonds Payable $2,000.

(b) $57,591. The beginning balance of unamortized bond discount is $61,446 ($1,000,000 − $938,554). The discount amortization is $3,855, the difference between the cash interest payment of $90,000 ($1,000,000 × 9%) and the interest expense recorded of $93,855 ($938,554 × 10%). This discount amortization ($3,855) is then subtracted from the beginning balance of unamortized discount ($61,446), to arrive at a balance of $57,591 at the end of the first year,

On January 1, Besalius Inc. issued $1,000,000, 9% bonds for $938,554. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Besalius uses the effective-interest method of amortizing bond discount. At the end of the first year, Besalius should report unamortized bond discount of: (a) $54,900. (b) $57,591. (c) $51,610. (d) $51,000.

$57,100: The beginning balance of unamortized discount is $61,000 ($1,000,000 - $939,000). The discount amortization is $3,900, the difference between the cash interest payment of $90,000 ($1,000,000 x 9%) and the interest expense recorded of $93,900 ($939,000 x 10%). The discount amortization of $3,900 is subtracted from the beginning balance of unamortized discount of $61,000, to arrive at a balance of $57,100 at the end of the first year.

On January 1, Besalius Inc. issued $1,000,000, 9% bonds for $939,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Besalius uses the effective-interest method of amortizing bond discount. At the end of the first year, Besalius should report unamortized bond discount of $57,100. $51,610. $51,000. $54,900.

$257,303: Interest expense under the effective-interest method = the carrying value of the bonds times the effective interest rate = $2,144,192 X 12% = $257,303.

On January 1, Cleopatra Corporation issued $2,000,000, 14%, 5-year bonds with interest payable on December 31. The bonds sold for $2,144,192. The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for $240,000. $251,162. $280,000. $257,303.

$41,890: Interest paid is $1,000,000 x .10 x ½ = $50,000; Premium discount is $81,100 ÷ 10 periods = $8,110. Interest expense = $50,000 - $8,110 = $41,890.

On January 1, Dias Corporation issued $1,000,000, 10%, 5-year bonds with interest payable on July 1 and January 1. The bonds sold for $1,081,100. The market rate of interest for these bonds was 8%. On the first interest date, using the straight-line method, the debit entry to Interest Expense is for $63,780. $31,890. $83,780. $41,890.

credit to Discount on Bonds Payable, $4,000: $1,000,000 x 4% discount = $40,000. $40,000/10 periods = $4,000 of discount to amortize each 6 month period. The entry would involve a debit to Interest Expense for $64,000, a credit to Discount on Bonds Payable for $4,000, and a credit to Interest Payable for $60,000 ($1,000,000 x .12 x .5).

On January 1, Hurley Corporation issues $1,000,000, 5-year, 12% bonds at 96 with interest payable on July 1 and January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a credit to Discount on Bonds Payable, $8,000. debit to Interest Expense, $120,000. debit to Interest Expense, $60,000. credit to Discount on Bonds Payable, $4,000.

$480,000: 20,000 X .06 X $100 = $120,000 annual dividend requirement for the preferred stockholders. $120,000 X 4 years = $480,000 due to preferred stockholders before any distribution is made to common stockholders.

On January 2, 2014, Riley Corporation issued 20,000 shares of 6% cumulative preferred stock at $100 par value. On December 31, 2017, Riley Corporation declared and paid its first dividend. What dividends are the preferred stockholders entitled to receive in 2017 before any distribution is made to common stockholders? $0 $480,000 $360,000 $120,000

(d) $70,000. The ending balance in retained earnings is $70,000. It is computed by subtracting from the beginning balance of $100,000 the following items: net loss of $20,000, cash dividends of $3,000, and stock dividends of $7,000. Note that market value of the cash dividend should be used instead of its par value

Orlando Company has a beginning balance in retained earnings of $100,000. During the year, it had a net loss of $20,000, paid cash dividends of $3,000, and issued a small stock dividend that had a market value of $7,000 and a par value of $1,000. The ending balance in retained earnings is: (a) $120,000. (b) $80,000. (c) $79,000. (d) $70,000.

(d) voting.

Preferred stock may have priority over common stock except in: (a) dividends. (b) assets in the event of liquidation. (c) cumulative dividend features. (d) voting.

stock splits

Retained earnings can be decreased by all of the following except for stock splits. prior period adjustments. stock dividends. some disposals of treasury stock.

$4,500. The monthly premium is $1,500 or $18,000 divided by 12. Because Sensible has recognized 9 months of insurance revenue (April 1-December 31), 3 months' insurance premium is still unearned. The amount that Sensible should report as Unearned Service Revenue is therefore $4,500 (3 months × $1,500)

Sensible Insurance Company collected a premium of $18,000 for a 1-year insurance policy on April 1. What amount should Sensible report as a current liability for Unearned Service Revenue at December 31? (a) $0. (b) $4,500. (c) $13,500. (d) $18,000.

the board of directors.

Stockholders of a corporation directly elect the treasurer of the corporation. the president of the corporation. the board of directors. all of the employees of the corporation.

$21.30: Book value per share = $852,000 ÷ 40,000 shares = $21.30.

The balance sheet for Alma, Inc. shows paid-in capital and retained earnings $859,500, total stockholders' equity $852,000, common stock issued 45,000 shares and common stock outstanding 40,000. There is no preferred stock. The book value per share is: $19.10. $21.30. $21.49 $19.93.

declaration date

The date a cash dividend becomes a binding legal obligation to a corporation is the record date. earnings date. payment date. declaration date.

20 - 25 % of a corporation's issued stock.

The dividing line between a small stock dividend and a large stock dividend is 15 - 20% of a corporation's issued stock. 10 - 15% of a corporation's issued stock. 20 - 25 % of a corporation's issued stock. 25 - 30% of a corporation's issued stock.

True

The effective-interest method results in varying amounts of amortization and interest expense per period but a constant percentage rate. True False

face value.

The entry to record the issuance of an interest-bearing note includes a credit to Notes Payable for the note's cash realizable value. maturity value. market value. face value.

(c) total stockholders' equity divided by the number of shares of common stock outstanding. When a company has only one class of stock outstanding, Book value per share is Total stockholders' equity divided by Number of shares of common stock outstanding

The ledger of JFK, Inc. shows common stock, common treasury stock, and no preferred stock. For this company, the formula for computing book value per share is: (a) total paid-in capital and retained earnings divided by the number of shares of common stock issued. (b) common stock divided by the number of shares of common stock issued. (c) total stockholders' equity divided by the number of shares of common stock outstanding. (d) total stockholders' equity divided by the number of shares of common stock issued.

all of these answer choices are correct.

The market price of a bond is dependent on the payments amounts. the length of time until the amounts are paid. the interest rate. all of these answer choices are correct.

present value of its principal amount at maturity plus the present value of all future interest payments.

The market price of a bond is the principal amount plus the present value of all future interest payments. present value of its principal amount only. principal amount plus all future interest payments. present value of its principal amount at maturity plus the present value of all future interest payments.

debit to the Cash T-account and be shown in the investing section.

The sale of equipment would require a debit to the Cash T-account and be shown in the financing section. debit to the Cash T-account and be shown in the investing section. debit to the Cash T-account and be shown in the operating section. credit to the Cash T-account and be shown in the operating section.

earn net income

The statement of cash flows should not be used to evaluate an entity's ability to earn net income. generate future cash flows. pay dividends. meet obligations.

debenture bonds

The term used for bonds that are unsecured is: (a) callable bonds. (b) U.S. Treasury bonds. (c) debenture bonds. (d) convertible bonds.

longer

The time period for classifying a liability as current is one year or the operating cycle, whichever is: (a) longer. (b) shorter. (c) probable. (d) possible.

(a) or (b), whichever is longer.

To be classified as a current liability, a debt must be expected to be paid within: (a) one year. (b) the operating cycle. (c) 2 years. (d) (a) or (b), whichever is longer.

True

Under IFRS, companies will sometimes net current liabilities against current assets to show working capital on the face of the statement of financial position. True False

All equity accounts other than those arising from paid-in capital

Under IFRS, which of the following best describes the meaning of the term "reserves"? The number of shares outstanding All equity accounts other than those arising from paid-in capital Net income All equity accounts

Under IFRS, the statement of cash flows is optional

Under IFRS, which of the following is incorrect? Under IFRS, the statement of cash flows is optional. IFRS allows the use of either the direct or indirect method in preparing the statement of cash flows. Under IFRS, interest paid can be classified as either an operating or financing activity. Under IFRS, dividends received can be classified as either an operating or investing activity.

deducted from net income

Under the indirect method of preparing the statement of cash flows, an increase in accounts receivable is added to net sales. deducted from net sales. deducted from net income. added to net income.

Revalution of property, plant, and equipment occurs.

What causes the account, Revaluation Surplus, to exist under IFRS? Net income exceeds dividends declared. Shares of stock are sold for more than par value. Stock dividends are declared. Revalution of property, plant, and equipment occurs.

Preferred stock

What is the equivalent term under U.S. GAAP for share capital-preference under IFRS? Treasury stock Common stock Dividends paid Preferred stock

carrying value of the bonds.

When a company retires bonds before maturity, the gain or loss on redemption is the difference between the cash paid and the carrying value of the bonds. original selling price of the bonds. maturity value of the bonds. face value of the bonds.

Paid-in Capital from Treasury Stock.

When a company sells treasury stock below its cost, it usually debits the excess of cost over selling price to Retained Earnings. Loss on Sale of Treasury Stock. Paid-in Capital from Treasury Stock. Paid-in Capital in Excess of Par.

True

When a stockholders' equity statement is presented, a retained earnings statement is not necessary. True False

decreases in inventory and increases in accrued liabilities are added.

When converting net income to net cash provided (used) by operating activities under the indirect method decreases in accounts receivable and increases in prepaid expenses are added. decreases in accounts payable and decreases in inventory are deducted. increases in accounts receivable and increases in accrued liabilities are deducted. decreases in inventory and increases in accrued liabilities are added.

with accounts that have credit balances.

When listing accounts in the statement of cash flows worksheet, the Accumulated Depreciation account is shown as a debit under the reconciling items. with accounts that have credit balances. with accounts that have debit balances. as a credit under the reconciling items.

True

When no-par stock does not have a stated value, the corporation credits the entire proceeds to Common Stock. True False

payroll deductions are recorded as liabilities.

When recording payroll: (a) gross earnings are recorded as salaries and wages payable. (b) net pay is recorded as salaries and wages expense. (c) payroll deductions are recorded as liabilities. (d) More than one of the above.

fair value of the stock.

When stock is issued for legal services incurred to incorporate a business, the transaction is recorded by debiting Organization Expense for the fair value of the stock. book value of the stock. par value of the stock. stated value of the stock.

Receipt of cash from the sale of equipment.

Which is an example of a cash flow from an investing activity? Payment of cash to suppliers for inventory. Receipt of cash from the issuance of bonds payable. Receipt of cash from the sale of equipment. Payment of cash to repurchase outstanding capital stock.

Government regulations

Which of the following is not a major advantage of a corporation? Transferable ownership rights Separate legal existence Continuous life Government regulations

Federal unemployment taxes

Which of the following is not a payroll deduction? Federal unemployment taxes. FICA taxes. Federal income tax. State income tax.

(b) Common stock. Common stock is reported in the capital stock section of paid-in capital, not in the additional paid-in capital section.

Which of the following is not reported under additional paid-in capital? (a) Paid-in capital in excess of par. (b) Common stock. (c) Paid-in capital in excess of stated value. (d) Paid-in capital from treasury stock.

It will have no effect on total stockholders' equity.

Which of the following statements about a 3-for-1 stock split is true? It will triple the market price of the stock. It will triple the amount of total stockholders' equity. It requires the company to distribute cash. It will have no effect on total stockholders' equity.

(c) Market price per share should be assigned to the dividend shares.

Which of the following statements about small stock dividends is true? (a) A debit to Retained Earnings for the par value of the shares issued should be made. (b) A small stock dividend decreases total stockholders' equity. (c) Market price per share should be assigned to the dividend shares. (d) A small stock dividend ordinarily will have an effect on par value per share of stock.

Current liabilities include prepaid expenses.

Which of the following statements concerning current liabilities is incorrect? Current liabilities include prepaid expenses. Current liabilities include salaries and wages payable. Current liabilities include unearned revenue. A company that has more current liabilities than current assets is usually the subject of some concern.

(d) Par value and market price of a company's stock are always the same. Par value has no relationship with market price, and many states today do not require a par value.

Which of the following statements is false? (a) Ownership of common stock gives the owner a voting right. (b) The stockholders' equity section begins with a paid-in capital section. (c) The authorization of capital stock does not result in a formal accounting entry. (d) Par value and market price of a company's stock are always the same.

The net change in plant assets during the year.

Which of the following will not be reported in the statement of cash flows? Cash receipts from sales of plant assets during the year. Cash payments for plant assets during the year. How acquisitions of plant assets during the year were financed. The net change in plant assets during the year.

Net Income

Which of the following would not be a column in a statement of stockholders' equity? Net Income. Paid-In Capital In Excess of Par - Preferred Stock. Common Stock. Treasury Stock.

Reduction of principal

Which one of the following amounts increases each period when accounting for long-term mortgage payable? Principal balance. Interest expense. Reduction of principal. Cash payment.

(a) $492,000. The carrying value of bonds increases by the amount of the periodic discount amortization. Discount amortization using the straight-line method is $4,000 each period. Total discount amortization for three periods is $12,000 ($4,000 × 3 periods) which is added to the initial carrying value ($480,000) to arrive at $492,000, the carrying value at the end of the third interest period

For the bonds issued in Question 17, what is the carrying value of the bonds at the end of the third interest period? (a) $492,000. (b) $488,000. (c) $486,000. (d) $464,000.

False

IFRS, like GAAP, uses premium and discount accounts when a bond sells for a price that differs from face value. True False

(a) total paid-in capital and retained earnings

In the stockholders' equity section, the cost of treasury stock is deducted from: (a) total paid-in capital and retained earnings. (b) retained earnings. (c) total stockholders' equity. (d) common stock in paid-in capital.

(c) credit to Bonds Payable for $200,000. The issuance entry for the bonds includes a debit to Cash for $200,000 and a credit to Bonds Payable for $200,000

On January 1, 2019, Kelly Corp. issues $200,000, 5-year, 7% bonds at face value. The entry to record the issuance of the bonds would include a: (a) debit to Cash for $14,000. (b) debit to Bonds Payable for $200,000. (c) credit to Bonds Payable for $200,000. (d) credit to Interest Expense of $14,000.

interest must be paid and the principal must be repaid.

The major disadvantages resulting from the use of bonds are that interest is not tax deductible and the principal must be repaid. neither interest nor principal is tax deductible. interest must be paid and the principal must be repaid. the principal is tax deductible and interest must be paid.

False

The market interest rate is the rate used to determine the amount of cash interest the borrower pays. True False

(a) retained earnings statement. When a stockholders' equity statement is presented, a retained earnings statement is unnecessary as the information would be redundant.

When a stockholders' equity statement is presented, it is not necessary to prepare a (an): (a) retained earnings statement. (b) balance sheet. (c) income statement. (d) None of the above.

False

When the financial statements are prepared, changes in the separate accounts comprising stockholders' equity do not have to be disclosed. True False

(a) Treasury Stock $1,000 and Paid-in Capital from Treasury Stock $300. Treasury Stock should be credited for $1,000 (100 shares × $10, the acquisition price). Paid-in Capital from Treasury Stock should be credited for the difference between the $1,000 and the cash received of $1,300 (100 shares × $13), or $300.

XYZ, Inc. sells 100 shares of $5 par value treasury stock at $13 per share. If the cost of acquiring the shares was $10 per share, the entry for the sale should include credits to: (a) Treasury Stock $1,000 and Paid-in Capital from Treasury Stock $300. (b) Treasury Stock $500 and Paid-in Capital from Treasury Stock $800. (c) Treasury Stock $1,000 and Retained Earnings $300. (d) Treasury Stock $500 and Paid-in Capital in Excess of Par $800.

(a) the contractual interest rate exceeds the market interest rate.

(LO 3) Karson Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a premium, this indicates that: (a) the contractual interest rate exceeds the market interest rate. (b) the market interest rate exceeds the contractual interest rate. (c) the contractual interest rate and the market interest rate are the same. (d) no relationship exists between the two rates.

(d) credit to Interest Payable. Since the interest has been accrued but not yet paid, it has to be recognized as an increase in expenses and liabilities. The entry would be a debit to Interest Expense and a credit to Interest Payable

(LO 3) Prescher Corporation issued bonds that pay interest every July 1 and January 1. The entry to accrue bond interest at December 31 includes a: (a) debit to Interest Payable. (b) credit to Cash. (c) credit to Interest Expense. (d) credit to Interest Payable.

(c) part current and part long-term liability.

(LO 4) Howard Corporation issued a 20-year mortgage note payable on January 1, 2019. At December 31, 2019, the unpaid principal balance will be reported as: (a) a current liability. (b) a long-term liability. (c) part current and part long-term liability. (d) interest payable.

$9,000: The most clearly determinable value in this noncash transaction is the fair value of the consideration given up of $9,000 ($9 per share X 1,000). As defined in the chapter, cost is either the fair value of the consideration given up, or the fair value of the consideration received, whichever is more clearly determinable.

A-Team Corporation issued 1,000 shares of $5 par value stock for land. The stock is actively traded at $9 per share. The land was advertised for sale at $10,500. The land should be recorded at $9,000. $5,000. $10,500. $4,000.

Common Stock $10,000 and Paid-in Capital in Excess of Par-Common Stock $2,000.

ABC Corporation issues 1,000 shares of $10 par value common stock at $12 per share. In recording the transaction, credits are made to Common Stock $12,000. Common Stock $10,000 and Retained Earnings $2,000. Common Stock $10,000 and Paid-in Capital in Excess of Par-Common Stock $2,000. Common Stock $10,000 and Paid-in Capital in Excess of Stated Value-Common Stock $2,000.

(c) Common Stock $10,000 and Paid-in Capital in Excess of Par $2,000. Common Stock should be credited for $10,000 and Paid-in Capital in Excess of Par should be credited for $2,000. The stock is par value stock, not stated value stock, and this excess is contributed, not earned, capital.

ABC Corporation issues 1,000 shares of $10 par value common stock at $12 per share. In recording the transaction, credits are made to: (a) Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $2,000. (b) Common Stock $12,000. (c) Common Stock $10,000 and Paid-in Capital in Excess of Par $2,000. (d) Common Stock $10,000 and Retained Earnings $2,000.

is reduced to $2.50 per share: The par value will decrease to 25% of the original par, 25% of $10 = $2.50.

Abbot Corporation splits its common stock 4 for 1, when the market price is $40 per share. Prior to the split, Abbott had 50,000 shares of $10 par value common stock issued and outstanding. After the split, the par value of the stock is reduced to $10 per share. remains the same. is reduced to $2 per share. is reduced to $2.50 per share.

sales revenue

All but one of the following is reported in a retained earnings statement. The exception is sales revenue. prior period adjustments. net income and net loss. cash and stock dividends.

higher net income.

All of the following are advantages of bond financing over common stock except tax savings. stockholder control is not affected. higher net income. possibly higher earnings per share.

all of these answer choices are current liabilities.

All of the following are current liabilities except sales taxes payable. unearned rental revenue. current maturities of long-term debt. all of these answer choices are current liabilities.

$34,670: In the first year, Andrews will recognize $49,700 of interest expense ($497,000 X 10%). After the first payment is made, the amount remaining on the note will be $346,700 [$497,000 principal - ($200,000 payment - $49,700 interest)]. The remaining balance ($346,700) is multiplied by the interest rate (10%) to compute the interest expense to be recognized for the second year--$34,670 ($346,700 X 10%).

Andrews Inc. issues a $497,000, 10% 3-year mortgage note on January 1. The note will be paid in three annual installments of $200,000, each payable at the end of the year. What is the amount of interest expense that should be recognized by Andrews Inc. in the second year? $347,600. $16,567. $49,740. $34,670.

(c) $34,670. In the first year, Andrews will recognize $49,700 of interest expense ($497,000 × 10%). After the first payment is made, the amount remaining on the note will be $346,700 [$497,000 principal − ($200,000 payment − $49,700 interest)]. The remaining balance ($346,700) is multiplied by the interest rate (10%) to compute the interest expense to be recognized for the second year, $34,670 ($346,700 × 10%)

Andrews Inc. issues a $497,000, 10% 3-year mortgage note on January 1. The note will be paid in three annual installments of $200,000, each payable at the end of the year. What is the amount of interest expense that should be recognized by Andrews Inc. in the second year? (a) $16,567. (b) $49,700. (c) $34,670. (d) $346,700.

$12,000

Blackstone Company has the following information available: Net income, $20,000; Cash provided by operating activities, $30,000; Cash sales, $75,000; Capital expenditures, $12,000; and Cash dividends, $6,000. What is Blackstone's free cash flow? $12,000 $48,000 $2,000 $27,000

True - Book value is based on recorded costs and market price is based on investors' judgments of future earnings and dividends.

Book value per share and market price per share may not be the same amount. True False

False

Book value per share is a required disclosure on the income statement. True False

the same amount of interest expense being recognized over the term of the bonds.

Both the straight-line method and the effective-interest method of amortization will always result in more interest expense being recognized than if premium or discounts were not amortized. the same amount of interest expense being recognized over the term of the bonds. the same carrying value each year during the term of the bonds. the same amount of interest expense being recognized each year.

$2,200 gain: The carrying value of the bonds is $500,000 + $7,200 = $507,200. The cash used to retire the bonds is $505,000 or ($500,000 x 1.01). Therefore, the gain is $507,200 - $505,000 = $2,200.

Bryce Company has $500,000 of bonds outstanding. The unamortized premium is $7,200. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption? $2,200 gain. $5,000 gain. $2,200 loss. $5,000 loss.

(c) $128,652. The debit to Interest Expense = $1,072,096 (initial carrying value of bond) × 12% (market rate) = $128,652

Dias Corporation issued $1,000,000, 14%, 5-year bonds with interest payable annually on December 31. The bonds sold for $1,072,096. The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for: (a) $120,000. (b) $125,581. (c) $128,652. (d) $140,000.

is a contra account.

Discount on Bonds Payable is added to bonds payable on the balance sheet. is a contra account. has a credit balance. increases over the term of the bonds.

federal income taxes

Employer payroll taxes do not include: (a) federal unemployment taxes. (b) state unemployment taxes. (c) federal income taxes. (d) FICA taxes.

$38,000 - The preferred stockholders will receive a total of $42,000 in dividends (3,000 x .07 x $100 x 2 years). The common stockholders will receive $38,000 ($80,000 - $42,000).

Encore Inc. declared an $80,000 cash dividend. It currently has 3,000 shares of 7%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash dividends will Encore distribute to the common stockholders? $38,000 $42,000 $59,000 None of these answer choices are correct

(a) declaration date and the payment date

Entries for cash dividends are required on the: (a) declaration date and the payment date. (b) record date and the payment date. (c) declaration date, record date, and payment date. (d) declaration date and the record date.

Foley's total stockholders' equity decreased $69,000

Foley Manufacturing Corporation purchased 3,000 shares of its own previously issued $10 par common stock for $69,000. As a result of this event, Foley's Common Stock account decreased $30,000. Foley's total stockholders' equity decreased $69,000. Foley's assets decreased $30,000. Foley's Paid-in Capital in Excess of Par-Common Stock account decreased $39,000.

(d) 11 times. Times interest earned = Net income + Interest expense + Income tax expense ($300,000 + $40,000 + $100,000 = $440,000) divided by Interest expense ($40,000), which equals 11 times

For 2019, Corn Flake Corporation reported net income of $300,000. Interest expense was $40,000 and income taxes were $100,000. The times interest earned was: (a) 3 times. (b) 4.4 times. (c) 7.5 times. (d) 11 times.

retained earnings.

For a cash dividend to occur, a corporation must have all of the following except net income. a declaration of dividends. adequate cash. retained earnings.

(b) debit of $3,745 to Premium on Bonds Payable. The entry to record the retirement of bonds will include a debit to Bonds Payable of $100,000, a debit to Premium on Bonds Payable of $3,745 ($103,745 − $100,000), a credit to Cash of $105,000 ($100,000 × 1.05) and a debit to Loss on Bond Redemption of $1,255 ($105,000 − $103,745)

Gester Corporation redeems its $100,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $103,745. The entry to record the redemption will include a: (a) credit of $3,745 to Loss on Bond Redemption. (b) debit of $3,745 to Premium on Bonds Payable. (c) credit of $1,255 to Gain on Bond Redemption. (d) debit of $5,000 to Premium on Bonds Payable.

part current and part long-term liability - Howard Corporation reports the reduction in principle for the next year as a current liability, and it classifies the remaining unpaid principal balance as a long-term liability.

Howard Corporation issued a 20-year mortgage note payable on January 1. On December 31, the unpaid principle balance will be reported as a long-term liability. a current liability. interest payable. part current and part long-term liability.

greater than face value - If the market rate of interest is lower than the contractual rate of interest, investor's will have to pay more than face value for the bonds. In these cases, bonds will sell at a premium.

If the company issues a $100,000, 12%, 10-year bond, that pays interest semiannually when market interest rate is 10%, the bond would sell at an amount equal to face value. greater than face value. that cannot be determined based on the information given. less than face value.

$212,000: Net cash provided by financing activities = issuance of common stock ($200,000 cash inflow) - cash dividends ($30,000 cash outflow) + issuance of bonds ($50,000 cash inflow) - purchase of treasury stock ($8,000 cash outflow) = $212,000.

In the current year, Walker Company issued common stock for $200,000 cash. The company also paid cash dividends $30,000 and issued a two-year note payable to purchase equipment for $45,000. Bonds payable increased from an issuance of bonds for cash for $50,000. Walker Company also purchased treasury stock that had a cost of $8,000 cash. The financing activities section of the statement of cash flows will report net cash provided by financing activities of $212,000. $172,000. $188,000. $257,000.

(c) is part of paid-in capital.

In the stockholders' equity section of the balance sheet, common stock: (a) is listed before preferred stock. (b) is added to total capital stock. (c) is part of paid-in capital. (d) is part of additional paid-in capital.

Total paid-in capital and retained earnings.

In the stockholders' equity section, the cost of treasury stock is deducted from Total paid-in capital and retained earnings. Retained earnings. Total stockholders' equity. Common stock and paid-in capital.

(b) additional taxes.

A major disadvantage of a corporation is: (a) limited liability of stockholders. (b) additional taxes. (c) transferable ownership rights. (d) separate legal existence.

$67,000: Cash payments for income taxes equals the income tax expense plus the decrease in the income taxes payable account ($25,000 + $60,000 - $18,000 = $67,000).

Bainbridge Company uses the direct method in determining net cash provided (used) by operating activities. The income statement shows income tax expense of $60,000. Income taxes payable were $25,000 at the beginning of the year and $18,000 at the end of the year. Cash payments for income taxes are $78,000. $60,000. $53,000. $67,000.

$4,300. Dividing the total proceeds ($4,515) by one plus the sales tax rate (1.05) will result in the amount of sales to be credited to the Sales Revenue account of $4,300 ($4,515 ÷ 1.05)

Becky Sherrick Company has total proceeds from sales of $4,515. If the proceeds include sales taxes of 5%, the amount to be credited to Sales Revenue is: (a) $4,000. (b) $4,300. (c) $4,289.25. (d) No correct answer given.

par value stock.

Capital stock to which the charter has assigned a value per share is called no-par value stock. authorized value stock. par value stock. stated value stock.

The times interest earned ratio is Income before Income Taxes and Interest Expense ($440,000 = $300,000 + $40,000 + $100,000) divided by Interest Expense ($40,000). The times interest earned ratio was 11 times ($440,000/$40,000).'

Corn Flake Corporation reported net income of $300,000. Interest expense was $40,000 and income taxes were $100,000. The times interest earned ratio was 7.5 times. 3 times. 11 times. 4.4 times.

presented in order of liquidity

Current or short-term liabilities under IFRS are presented in order of liquidity. presented in the order of maturity. presented before long-term liabilities on the statement of financial position. expected to be paid within 12 months or the operating cycle, whichever is longer.