ACC 121 Final

a company issues $50,000 of 5%, 10-year bonds dated Jan. 1 and pay semiannually on June 30 and December 31 each year. These bonds are sold for $48,000. Using straight-line amortization method, the company will amortize the discount by $______ on each semiannual interest payment.

100

On Jan. 1, Lang, Inc. has 100,000 shares of stock issued and outstanding. The board of directors of Lang wants to authorize a large stock dividend. This means that they must authorize a stock dividend of at least ___________ shares of stock.

25,001

a $1,000 face value bond w/ a quoted price of 96 is selling for $________

960

__________ stock is the number of shares that a corporation's charter allows it to sell. The number of these shares usually exceeds the number of shares issued (and outstanding), often by a large amount.

Authorized

When a corporation declares and pays a cash dividend, there are three notable important dates. Which date does not require a formal journal entry to the financial statements?

Date of record

Jordan Inc.'s charter states that there are 50,000 shares of stock with a par value of $5 per share. This typically means that investors must pay a (minimum/maximum) of $5 per share to invest in the corporation.

Minimum

Stockholders/Shareholders

Owners of the coprorations

Philip's Inc. reports stockholders' equity on its financial statements. The two items reported in the stockholders' equity section of Philip's balance sheet are _________ Capital and Retained Earnings.

Paid-in

________ stock has/have special rights that give it priority over other types of stock in one or more areas.

Preferred

(Privately/Publicly) held corporation does not offer its stock for the public sale and usually has few stock holders

Privately

(Privately/Publicly) held corporation offers its stock for the public sale and can have thousands of stockholders

Publicly

On March 15, the board of directors of Richmond, Inc. declare a cash dividend of $1 per share. On March, there are 1,000 shares of stock issued and outstanding. The journal entry required on the date of declaration will include a debit to the ______ account.

Retained Earnings

True or False: when issuing stock for noncash assets, the stock given in exchange is recorded at its par (or stated) value with any excess recorded in the APIC account.

True

Corporation

a entity that is seperate from its owners and has many of the same rights and privileges as individuals

If the market rate of interest is greater than the contractual rate of interest, bonds will sell (at a discount/at a premium/at face value)

at a discount

A company issues $90,000 of 5%, 5-year bonds dated Jan. 1 that pay interest semiannually each year. If the issuer accepts $95,000 for the bonds, the $5,000 premium on bonds payable will (not affect/increase/decrease) total interest expense recognized over the life of the bond.

decrease

when a bond contract rate is less than the current market rate on the date of issuance, the bond will be sold at a(n) _________.

discount

a bond discount increases interest (payable/expense) at each semiannual interest payment.

expense

if the market rate of interest rate is 10%, a $10,000, 12%, 10-year bond, that pays interest semiannually would sell at an amount (less than/equal to/greater than) face value

greater than

Sales revenue less cost of goods sold is called

gross profit

The ________ value per share is the price at which a stock is bought and sold.

market

When issuing stock for non-cash assets, the corporation records the assets received at their ____________ values.

market

the bond's ________ rate are of interest is the rate that the borrowers are willing to pay and lenders are willing to accepts for a particular bond and its risk level.

market

_________ value stock is stock not assigned a value per share by the corporate charter. Its advantage is that it can be issued at any price without the possibility of a minimum legal capital.

no-par

the ______ value of a stock is an amount assigned per share by the corporation in its charter.

par

the bond contract rate determines the annual interest paid by multiplying the bond _______ value by the contract rate

par

When the board of directors authorizes a cash dividend to investors, there are three important dates involved-- the date of declaration, date of record, and date of ________.

payment

Martin, Inc.'s charter authorizes 50,000 shares of stock with a par value of $1 per share. 1,000 shares of stock are issued at a market value of $5 per share. This means that the shares of stock are issued at a (premium/discount).

premium

when the contract rate of the bonds is higher than the market rate, the bond sells at a higher price than par value. The amount by which the bond price exceeds par value is the _________ on bonds.

premium

the account that consists of a company's cumulative net income less any losses and dividends declared since its inception is called _______

retained earnings

Public Sale

selling and trading stock on an organized stock market

capital stock

shares issued to obtain capital (owner financing)

the ______________ bond amortization method allocates an equal portion of the total bond interest expense to each interest period.

single-line

Vernon, Inc.'s charter did not assign a par-value to its authorized stock. However, Vernon's directors assigned a(n) ____________ value per share. This minimum legal capital per share in this case.

stated

outstanding stock

stock held by stockholders

organization expenses

the costs to start a corporation

Market value per share

the price at which a stock is bought and sold

True or false: in a perpetual inventory system, cost of good sold is recorded with each sale.

true

common stock

when a company has only one class of stock

A __________ is the distribution of cash to its owners. This is determined by the board of directors.

cash dividend

Darby Inc. has 25,000 shares of stock issued and outstanding. All the shares of stock have the same rights and characteristics; therefore, the stock is called _______ stock:

common

the legal document between the shareholders and the issuer is called the bond ________.

indenture

authorized stock

the number of shares that a corporation's charter allows it to sell

True or False: no journal entry is required for stock authorization

true