Accounting- Test 4

Issuing of notes payable (entry)

DR Cash CR Notes Payable for Face Value

Julie Lambert has a large consulting practice. New clients are required to pay 40% of the consulting fees up front. The balance is paid at the conclusion of the consultation. How does Lambert account for the cash received at the end of the engagement?

DR Cash DR Unearned Service Revenue CR Service Revenue

Mohling Company typically sells subscriptions on an annual basis and publishes eight times a year. The magazine sells 60,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

DR Cash 600,000 CR Unearned Subscription Revenue 600,00

Accruing interest on notes payable (entry)

DR Interest Expense (FV * Annual Rate * Months Outstanding) CR Interest Payable

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 entry will Sadowski Brick Company make to pay off the note and interest at maturity assuming that interest has never been accrued?

DR Interest Expense 22,500 DR Notes Payable 500,000 CR Cash 522,500

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 entry will Sadowski Brick Company make to pay off the note and interest at maturity assuming that interest has not been accrued for the last three months?

DR Interest Payable 15,000 DR Notes Payable 500,000 DR Interest Expense 7,500 CR Cash 522,500

Payoff of notes payable (entry)

DR Notes Payable (for Face Value) DR Interest Expense (if not already accrued in previous entry) DR Interest Payable (for portion accrued in adjusting entries) CR Cash (For Face Value + Total Interest Owed Over Time that hasn't been paid yet, interest comes at the end for NPs)

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 entry will Sadowski Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?

DR Notes Payable 500,000 DR Interest Payable 22,500 CR Cash 522,50

If the market interest rate for a bond is lower than the stated interest rate, the bond will sell at a. a premium. b. a discount. c. par. d. either a discount or premium.

a. a premium

The amount of stock that may be issued according to the corporation's charter is referred to as the a. authorized stock. b. issued stock. c. treasury stock. d. outstanding stock.

a. authorized stock

Most companies pay current liabilities a. out of current assets. b. by issuing interest-bearing notes payable. c. by issuing stock. d.by creating long-term liabilities

a. out of current assets

The two ways that a corporation can be classified by ownership are a. publicly held and privately held. b. stock and non-stock. c. inside and outside. d. majority and minority.

a. publicly and privately held

What is classified as a current liability?

anything that will be paid in exactly one year

A company receives $264, of which $24 is for sales tax. The journal entry to record the sale would include a a. debit to Sales Taxes Expense for $24. b. credit to Sales Taxes Payable for $24. c. debit to Sales Revenue for $264. d. debit to Cash for $240.

b. Credit to sales tax payable for $24

Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued $10 par common stock for $62,500. As a result of this event (for purposes of this class), a. Kaplan's Common Stock account decreased $25,000. b. Kaplan's total stockholders' equity decreased $62,500. c. Kaplan's Paid-in Capital in Excess of Par Value account decreased $37,500. d. All of these answer choices are correct.

b. Kaplan's total stockholders' equity decreased $62,500.

If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at a. a premium. b. a discount. c. par. d. either a discount or premium.

b. a discount

The current portion of long-term debt should a. be paid immediately. b. be reclassified as a current liability. c. be classified as a long-term liability. d. not be separated from the long-term portion of debt.

b. be reclassified as a current liability

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is a. cash flows from investing activities. b. cash flows from operating activities. c. cash flows from financing activities. d. usually different from year to year.

b. cash flows from operating activities

The following totals for the month of April were taken from the payroll records of Noll Company. Salaries $120,000 FICA taxes withheld 9,180 Income taxes withheld 25,000 Medical insurance deductions 4,500 Federal unemployment taxes 320 State unemployment taxes 2,160 The entry to record the payment of net payroll would include a a. debit to Salaries and Wages Payable for $79,160. b. debit to Salaries and Wages Payable for $81,320. c. debit to Salaries and Wages Payable for $72,140. d. credit to Cash for $90,500.

b. debit to Salaries and Wages Payable for $81,320.

Treasury shares plus outstanding shares equal a. authorized stock. b. issued stock. c. unissued stock. d. distributable stock.

b. issued stock

The term legal capital is a descriptive term for a. stockholders' equity. b. par value. c. residual equity. d. market value.

b. par value

Outstanding stock of the Hall Corporation included 40,000 shares of $5 par common stock and 20,000 shares of 5%, $10 par value non-cumulative preferred stock. In 2019, Hall declared and paid dividends of $8,000. In 2020, Hall declared and paid dividends of $24,000. How much of the 2020 dividend was distributed to preferred shareholders? a. $14,000. b. $18,000. c. $10,000. d. None of these answer choices are correct.

c. $10,000

The interest owed on a $300,000 note payable, at the rate of 6%, on a 90-day note would be a. $18,000. b. $9,000. c. $4,500. d. $1,500.

c. $4,500

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: a. Common Stock $50,000 and Paid-in Capital in Excess of Stated Value $20,000. b. Common Stock $70,000. c. Common Stock $50,000 and Paid-in Capital in Excess of Par Value $20,000. d. Common Stock $50,000 and Retained Earnings $20,000.

c. Common Stock $50,000 and Paid-in Capital in Excess of Par Value $20,000.

Which of the following is not a current liability on December 31, 2022? a. A Note Payable due December 31, 2023 b. An Accounts Payable due January 31, 2023 c. A lawsuit judgment to be decided on January 10, 2023 d. Accrued salaries payable from 2022

c. a lawsuit judgement to be decided on January 10, 2023

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 a. debit to Cash of $5,000,000. b. debit to Premium on Bonds Payable for $150,000. c. credit to Bonds Payable for $5,000,000. d. credit to Cash for $5,150,000.

c. credit to bonds payable for 5,000,000

A disadvantage of the corporate form of business is a. its status as a separate legal entity. b. continuous existence. c. government regulation. d. ease of transfer of ownership

c. government regulations

Bonds with a face value of $600,000 and a quoted price of 98½ have a selling price of a. $589,500. b. $588,300. c. $588,030. d. $591,000.

d. $591,000

The contractual rate of interest is usually stated as a(n) a. monthly rate. b. daily rate. c. semiannual rate. d. annual rate

d. annual rate

Where should a lawsuit judgement be put in your financial statements?

since it is a contingency it belongs in the notes section

The amount of stock that is bought back from a corporation is a. authorized stock. b. issued stock. c. treasury stock. d. outstanding stock.

treasury stock