accounting exam 4

A corporation issues $300,000, 10%, 5-year bonds on January 1, 2020, for $287,400. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2020's adjusting entry is:

$32,520

Bonds with a face value of $500,000 and a quoted price of 97¼ have a selling price of:

$486,250

Winrow Company received proceeds of $754,000 on 10-year, 8% bonds issued on January 1, 2019. The bonds had a face value of $800,000, pay interest annually on December 31, and have a call price of 101. Winrow uses the straight-line method of amortization. What is the amount of interest Winrow must pay the bondholders in 2019?

$64,000

On January 1, 2020, $3,000,000, 10-year, 10% bonds, were issued for $2,910,000. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is:

$750

Which one of the following events would not require a journal entry on a corporation's books?

2-for-1 stock split

The following data is available for BOX Corporation at December 31, 2020: Common stock, par $10 (authorized 30,000 shares) $270,000 Treasury stock (at cost $15 per share) $ 1,200 Based on the data, how many shares of common stock are outstanding?

26,920

The following data is available for BOX Corporation at December 31, 2020:

27,000

Five thousand bonds with a face value of $1,000 each, are sold at 102. The entry to record the issuance is:

Cash 5,100,000 Premium on Bonds Payable 100,000 Bonds Payable 5,000,000

Madson Company typically sells subscriptions on an annual basis and publishes six times a year. The magazine sells 90,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

Cash 900,000 Unearned Subscription Revenue 900,000

Alt Corp. issues 5,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:

Common Stock $50,000 and Paid-in Capital in Excess of Stated Value $20,000

On January 1, 2020, Ermler Company, a calendar-year company, issued $2,000,000 of notes payable, of which $500,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2020, is:

Current liabilities, $500,000; Long-term Debt, $1,500,000

A corporation purchases 20,000 shares of its own $20 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity?

Decrease by $700,000

On October 1, Sam's Painting Service borrows $150,000 from National Bank on a 3-month, $150,000, 4% note. What entry must Sam's Painting Service make on December 31 before financial statements are prepared?

Interest Expense 1,500 Interest Payable 1,500

Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1. Sadowski Brick Company signs a $500,000, 6%, 9-month note. What is the adjusting entry required if Sadowski Brick Company prepares financial statements on June 30?

Interest Expense 15,000 Interest Payable 15,000

The effect of the declaration of a cash dividend by the board of directors is to: Increase Decrease

Liabilities Stockholders' equity

If Norben Company issues 6,000 shares of $5 par value common stock for $210,000, the account:

Paid-in Capital in Excess of Par Value will be credited for $180,000

Which of the following statements about treasury stock is true?

Purchasing treasury stock is done to eliminate hostile shareholder buyouts

If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at:

a discount

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in:

a separate schedule or note to the financial statements

In the balance sheet, the account Premium on Bonds Payable is:

added to bonds payable

The amount of stock that may be issued according to the corporation's charter is referred to as the:

authorized stock

Molina Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2020, at 103. The journal entry to record the issuance will show a:

credit to Bonds Payable for $5,000,000

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to:

decrease total assets and stockholders' equity

The payment of a cash dividend would be classified as a(n):

financing activity

The declaration of a small stock dividend will:

increase paid-in capital

A corporation has the following account balances: Common Stock, $1 par value, $80,000; Paid-in Capital in Excess of Par Value, $2,700,000. Based on this information, the:

number of shares issued is 80,000

Cash receipts from interest and dividends are classified as:

operating activities

Generally, the most important category on the statement of cash flows is cash flows from:

operating activities

Most companies pay current liabilities:

out of current assets

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

within one year, or the operating cycle, whichever is longer