Accouting exam 3

Lakeland, Inc. has 25,000 shares of 8%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2012. There were no dividends declared in 2011. The board of directors declares and pays a $250,000 dividend in 2012. What is the amount of dividends received by the common stockholders in 2012? $50,000

Correct answer. Your answer is correct. A corporation is not committed to a legal obligation when it declares None of the above

corporation is subject to more federal and state government regulations.

A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

A corporation purchases 30,000 shares of its own $30 par common stock for $45 per share, recording it at cost. What will be the effect on total stockholders' equity? Decrease by $1,350,000

Accounting for treasury stock is done by the cost method.

Working capital is current assets minus current liabilities.

Brief Exercise 4 Manuel Company had cash sales of $86,800 (including taxes) for the month of June. Sales are subject to 8.5% sales tax. Prepare the entry to record the sale. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) CAsh (debit) 86,800 sales revenue (credit) 80,000 Sales Tax Payable (credit) 6,800

Salon Company originally issued 3,000 shares of $10 par value common stock for $90,000 ($30 per share). Salon subsequently purchases 300 shares of treasury stock for $27 per share and resells the 300 shares of treasury stock for $29 per share. In the entry to record the sale of the treasury stock, there will be a credit to Paid-In Capital from Treasury Stock for $600.

Era Company has 3,000 shares of 5%, $100 par non-cumulative preferred stock outstanding at December 31, 2013. No dividends have been paid on this stock for 2012 or 2013. Dividends in arrears at December 31, 2013 total $0.

On March 1, Cooper Company borrows $80,000 from New National Bank by signing a 6-month, 6%, interest-bearing note. Prepare the necessary entries below associated with the note payable on the books of Cooper Company. Correct answer. Your answer is correct. Prepare the entry on March 1 when the note was issued. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Exercise 12 Prepare any adjusting entries necessary on June 30 in order to prepare the semiannual financial statements. Assume no other interest accrual entries have been made. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

If bonds are originally sold at a discount using the straight-line amortization method: Entry field with correct answer Unamortized discount is subtracted from the face value of the bond to determine its carrying value.

Multiple Choice Question 95 A company receives $348, of which $28 is for sales tax. The journal entry to record the sale would include a debit to Cash for $348.

Multiple Choice Question 116 Kelly Rice has a large consulting practice. New clients are required to pay one-half of the consulting fees up front. The balance is paid at the conclusion of the consultation. How does Rice account for the cash received at the end of the engagement? Cash Service Revenue

Brief Exercise 4 Correct answer. Your answer is correct. Manuel Company had cash sales of $86,800 (including taxes) for the month of June. Sales are subject to 8.5% sales tax. Prepare the entry to record the sale. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Cash 86,800 Sales Revenue 80,000 Taxes Payable 6,800

Multiple Choice Question 66 Correct answer. Your answer is correct. Which of the following is usually not an accrued liability? Notes payable

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $40,000. The bill was for services performed in helping the company incorporate. Crain should record this transaction by debiting Organization Expense for $40,000.

New Corp. issues 2,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to Common Stock $20,000 and Paid-in Capital in Excess of Par $8,000.

The entry to record the proceeds upon issuing an interest-bearing note is Entry field with correct answer Cash Notes Payable

On October 1, 2013, Pennington Company issued an $80,000, 10%, nine-month interest-bearing note. Assuming interest was accrued in June 30, 2014, the entry to record the payment of the note on July 1, 2014, will include a: Entry field with incorrect answer debit to Interest Payable of $6,000.

On January 1, Health Corporation issues $3,000,000, 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, $12,000.

Pakota Company issued $800,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year? Entry field with incorrect answer $787,200 /

Trendy Company issued $600,000 of 8%, 5-year bonds at 106. Assuming straight-line amortization and annual interest payments, how much bond interest expense is recorded on the next interest date? $40,800

The market rate of interest for a bond issue which sells for more than its face value is less than the interest rate stated on the bond.