Accounting 201 Exam 4

You just won the lottery and have elected to receive 10 annual payments instead of the lump sum of $74,818.59. Calculate the amount of your annual payment assuming a 6% interest rate. a. $17,178.90 b. $10,165.44 c. $10,832.11 d. $18,000.00

b. $10,165.44

Cash flows from acquiring and selling products are classified as a. financing activities. b. operating activities. c. investing activities. d. distribution activities.

b. operating activities.

A bond issuing at 101.25 means that the bond a. sold for $101.25. b. stated rate is lower than the market rate of interest. c. sold at a discount. d. sold for $1,012.50.

d. sold for $1,012.50.

Total stockholders' equity includes $50,000 of common stock with a stated value of $0.50, and 5,000 shares of treasury stock with a total cost of $25,000. How many total shares are outstanding? a. 100,000 b. 105,000 c. 95,000 d. 150,000

c. 95,000

When using the indirect method to determine operating cash flows, how is the issuance of stock to retire a long-term debt shown on a statement of cash flows? a. operating activity b. investing activity c. not reported on the statement of cash flows d. financing activity e. noncash investing or financing activity

e. noncash investing or financing activity

Cash flows from borrowing and paying off a 90-day bank loan are classified as a. financing activities. b. investing activities. c. operating activities. d. purchasing activities.

a. financing activities.

Cash flows from acquiring and disposing of long-term assets are classified as a. investing activities. b. operating activities. c. financing activities. d. purchasing activities.

a. investing activities.

Tom liquidates an investment, and his proceeds will be received in 8 annual payments of $10,000 each with interest computed at 7%. What is the Present Value of this Annuity? a. $59,713.00 b. $89,228.00 c. $17,181.90 d. $5,820.10

a. $59,713.00

The Kaplan Group sold $200,000 of 10-year bonds for $190,000. The face rate on the bonds was 8% and interest is paid annually on December 31. What entry would be made on December 31 when the interest is paid? (Numbers are omitted.) a. Interest ExpenseDiscount on Bonds PayableCash b. Interest ExpenseCash c. Interest ExpenseDiscount on Bonds PayableCash d. Interest ExpenseBonds PayableCash

a. Interest ExpenseDiscount on Bonds PayableCash

Manatee Manufacturing sells a piece of equipment to make room for new machinery. Manatee will receive the sales price of $50,000 at the end of 4 years. Assuming interest at a rate of 6% per year, the Present Value of this future cash flow is how much? a. $63,124.00 b. $39,604.50 c. $39,515.50 d. $173,255.50

b. $39,604.50

A corporation issued $150,000 of 10-year bonds at the stated rate of 8%, with interest payable semiannually. How much cash will the bond investors receive at the end of the first interest period? a. $3,000 b. $6,000 c. $24,000 d. $12,000

b. $6,000

A graphics design company issued bonds in the amount of $1,000,000 with a stated interest rate of 8%. If the interest is paid semiannually and the bonds are due in 10 years, what would be the total amount of interest paid over the life of the bonds? a. $1,000,000 b. $800,000 c. $80,000 d. $400,000

b. $800,000

Suppose a corporation issues 5,000 shares of $1 par common stock for $30 per share. In addition to the increase in cash, what effect does this transaction have on the accounting equation? a. Common stock increases $150,000. b. Retained earnings increases $150,000. c. Paid-in capital in excess of par increases $145,000. d. Gain on stock issuance increases $145,000.

c. Paid-in capital in excess of par increases $145,000.

Which of the following is true for a corporation that issues 1,000 shares of $2 par common stock at $5 per share? a. The common stock account will increase by $5,000. b. The per share dividend amount on these shares is $2. c. Total stockholders' equity will increase by $5,000. d. $2 per share is the maximum selling price for these shares of stock.

c. Total stockholders' equity will increase by $5,000.

A company reported the following information: 2020 2019 Accounts receivable $50,000 $65,000 Inventories. 43,000 40,000 Accounts payable. 29,000 39,000 Net income. 100,000 Depreciation expense 11,000 If the indirect method is used to prepare the operating activities section of the statement of cash flows, what amount will be reported as net cash inflow from operating activities for 2020? a. $111,000 b. $109,000 c. $92,000 d. $113,000

d. $113,000

Eric is considering buying a car. He can either purchase the car outright or make 5 annual payments of $10,000 at the end of each year. If the interest rate is 7%, how much is the outright purchase price? a. $7,129.90 b. $14,025.50 c. $57,863.70 d. $41,002.00

d. $41,002.00

If the stated interest rate is 12% per year, but it is compounded semiannually, then the adjusted rate used for present or future value calculations will be a. 1% per 6-month period. b. 6% per 6-month period. c. 3% per quarter. d. 12% per year.

b. 6% per 6-month period.

Ladder DistributorsThe stockholders' equity section of the December 31, 2019, balance sheet is provided below: Common Stock, $30 par, 20,000 shares issued and outstanding: $600,000 Paid-in Capital in Excess of Par--Common Stock: 240,000 Retained Earnings: 700,000 Total Stockholders' Equity: $1,540,000 Assume that all of the 20,000 shares of stock that was issued as of December 31, 2019, was issued for $42 per share. On March 1, 2020, the company reacquired 4,000 shares of its common stock for $50 per share. Refer to Ladder Distributors. Suppose the company reissued 1,000 shares of its treasury stock on June 1, 2020, for $39 each. Which of the following is true regarding the entry required to record this transaction? a. A credit to treasury stock is required for $39,000. b. A debit to retained earnings is required for $11,000. c. A debit to treasury stock is required for $50,000. d. A debit to paid-in capital from treasury stock transactions is required for $3,000.

b. A debit to retained earnings is required for $11,000.

Ladder Distributors The stockholders' equity section of the December 31, 2019, balance sheet is provided below:Common Stock, $30 par, 20,000 shares issued and outstanding$600,000Paid-in Capital in Excess of Par--Common Stock240,000Retained Earnings700,000Total Stockholders' Equity$1,540,000Assume that all of the 20,000 shares of stock that was issued as of December 31, 2019, was issued for $42 per share. On March 1, 2020, the company reacquired 4,000 shares of its common stock for $50 per share.Refer to Ladder Distributors. What is the total amount of stockholders' equity that will be presented on the company's March 31, 2020, balance sheet? a. $1,708,000 b. $1,740,000 c. $1,340,000 d. $1,372,000

c. $1,340,000

Mark is planning on making an investment in a new computer system. He wants to know how much he must invest to have $9,000 in 4 years if the interest rate is 5% per year? a. $7,826.83 b. $10,939.59 c. $7,404.30 d. $2,479.41

c. $7,404.30

Lanier Tech This company was incorporated as a new business on January 1, 2019. The company is authorized to issue 50,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par, cumulative, participating preferred stock. On January 1, 2019, the company issued 8,000 shares of the common stock for $15 per share and 2,000 share of the preferred stock for $30 per share. Net income for the year ended December 31, 2019 was $375,000.Refer to Lanier Tech. What is the amount of the company's total capital stock at December 31, 2019? a. $350,000 b. $120,000 c. $60,000 d. $180,000

d. $180,000

Landmark Company This company reported the following information in the stockholders' equity section of its December 31, 2019 balance sheet:7% Cumulative, Non-participating Preferred Stock, $100 par, 500 shares authorized, issued, and outstanding, callable at par value$50,000Common Stock, $12 par, 100,000 shares authorized600,000Paid-in Capital in Excess of Par--Common Stock25,000Retained Earnings825,000 Refer to Landmark Company. If the company repurchased 500 shares of its common stock for $20 per share, what is the amount of total stockholders' equity after this transaction? a.$1,494,000 b.$1,510,000 c.$1,500,000 d.$1,490,000

d.$1,490,000