Atg302

A feature common to both stock splits and stock dividends is that there

is no effect on total stockholders' equity.

Treasury shares are shares

issued but not outstanding.

A dividend which is a return to stockholders of a portion of their original investments is a

liquidating dividend.

At the date of the financial statements, common stock shares issued would exceed common stock shares outstanding as a result of the

purchase of treasury stock.

On January 1, 2017, Sheffield Corp. issued eight-year bonds with a face value of $6140000 and a stated interest rate of 4%, payable semiannually on June 30 and December 31. The bonds were sold to yield 6%. Table values are

$6140000 × 0.623 = $3825220.

Bonita Industries issued $101000 of ten-year, 8% bonds that pay interest semiannually. The bonds are sold to yield 6%. One step in calculating the issue price of the bonds is to multiply the face value by the table value for

20 periods and 3% from the present value of 1 table

A mining company declared a liquidating dividend. The journal entry to record the declaration must include a debit to

A paid-in capital account.

On September 1, 2017, Hyde Corp., a newly formed company, had the following stock issued and outstanding: Common stock, no par, $1 stated value, 5,000 shares originally issued at $15 per share. Preferred stock, $10 par value, 1,500 shares originally issued for $25 per share. Hyde's September 1, 2017 statement of stockholders' equity should report

C$5,000 p$15,000 APIC$92,500

Which of the following statements about property dividends is not true?

The accounting for a property dividend should be based on the carrying value (book value) of the nonmonetary assets transferred.

When treasury stock is purchased for more than the par value of the stock and the cost method is used to account for treasury stock, what account(s) should be debited?

Treasury stock for the purchase price.

Total stockholders' equity represents

a claim against a portion of the total assets of a company.

The interest rate written in the terms of the bond indenture is known as the

coupon rate, nominal rate, or stated rate.

If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a

credit to Interest Expense.

If bonds are initially sold at a discount and the straight-line method of amortization is used, interest expense in the earlier years will

exceed what it would have been had the effective-interest method of amortization been used.

Cash dividends are paid on the basis of the number of shares

outstanding

Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to

the market rate multiplied by the beginning-of-period carrying amount of the bonds.

Reich, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from date of issue. If the bonds were issued at a premium, this indicates that

the nominal rate of interest exceeded the market rate.

In January 2017, Marigold Corp., a newly formed company, issued 9700 shares of its $10 par common stock for $15 per share. On July 1, 2017, Marigold Corp. reacquired 970 shares of its outstanding stock for $12 per share. The acquisition of these treasury shares

decreased total stockholders' equity.

The declaration and issuance of a stock dividend larger than 25% of the shares previously outstanding

decreases retained earnings but does not change total stockholders' equity.

Stockholders' equity is generally classified into two major categories:

earned capital and contributed capital.

The rate of interest actually earned by bondholders is called the

effective rate.

The accounting problem in a lump sum issuance is the allocation of proceeds between the classes of securities. An acceptable method of allocation is

either the proportional method or the incremental method.

Bond interest paid is equal to the

face amount of the bonds multiplied by the stated interest rate.

When the interest payment dates of a bond are May 1 and November 1, and a bond issue is sold on June 1, the amount of cash received by the issuer will be

increased by accrued interest from May 1 to June 1.

Marigold Corp. retires its $600000 face value bonds at 105 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $622470. The entry to record the redemption will include a

$622470 - $600000 = $22470 premium.

A company issues $25100000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are $24603200. What is interest expense for 2018, using straight-line amortization?

($25100000 × 0.078) + ($496800 ÷ 20) = $1982640.

On January 1, 2017, Vaughn Manufacturing issued eight-year bonds with a face value of $5950000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are:

($5950000 × 0.05) × 10.106 = $3006535.

What effect does the issuance of a 2-for-1 stock split have on each of the following?

PAR_Decrease RE-No effect

Quirk Corporation issued a 100% stock dividend of its common stock which had a par value of $10 before and after the dividend. At what amount should retained earnings be capitalized for the additional shares issued?

Par value

Which of the following features of preferred stock makes it more like a debt than an equity instrument?

Redeemable

Which dividends do not reduce stockholders' equity?

Stock dividends

The generally accepted method of accounting for gains or losses from the early extinguishment of debt treats any gain or loss as

a difference between the reacquisition price and the net carrying amount of the debt which should be recognized in the period of redemption.

Cumulative preferred dividends in arrears should be shown in a corporation's balance sheet as

a footnote.

The balance in Common Stock Dividend Distributable should be reported as a(n)

addition to capital stock.

Long-term debt that matures within one year and is to be converted into stock should be reported

as noncurrent and accompanied with a note explaining the method to be used in its liquidation.

Common stockholders of a business enterprise are said to be the residual owners. The term residual owner means that shareholders

bear the ultimate risks and uncertainties and receive the benefits of enterprise ownership.

A primary source of stockholders' equity is

both income retained by the corporation and contributions by stockholders.

Sheridan Company issued $99000 of ten-year, 8% bonds that pay interest semiannually. The bonds are sold to yield 6%. Another step in calculating the issue price of the bonds is to

multiply $3960 by the table value for 20 periods and 3% from the present value of an annuity table.

"Gains" on sales of treasury stock (using the cost method) should be credited to

paid-in capital from treasury stock.

Marigold Corp. owns 4250000 shares of stock in Cullumber Company. On December 31, 2017, Marigold distributed these shares of stock as a dividend to its stockholders. This is an example of a

property dividend.

The preemptive right of a common stockholder is the right to

share proportionately in any new issues of stock of the same class.

If management wishes to "capitalize" part of the earnings, it may issue a

stock dividend

In a corporate form of business organization, legal capital is best defined as

the par value of all capital stock issued.

An early extinguishment of bonds payable, which were originally issued at a premium, is made by purchase of the bonds between interest dates. At the time of reacquisition

the premium must be amortized up to the purchase date, interest must be accrued from the last interest date to the purchase date, any costs of issuing the bonds must be amortized up to the purchase date.