ACCT 5

Lakukan tugas rumah & ujian kamu dengan baik sekarang menggunakan Quizwiz!

Investing Activities cash outflows

to buy intangible assets to buy plant assets to loan money in return for notes receivable to buy investments

Financing Acivities cash outflows

to pay dividends to shareholders to purchase treasury stock withdrawals by owners to pay off longterm debt

operating activities cash outflow

to pay operating expenses to pay taxes to pay interest owed to pay salaries and wages to pay suppliers for good services

financing activities

transactions and events that affect long-term liabilities and equity -getting cash from issuing debt and repaying debt -receiving cash from or distributing cash to owners -borrowing and repaying principal are financing

A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital in excess of par is:

1,000

sections of cash flow statement

1. operating activities 2. investing activities 3. financing activities

JE to convert from accounts payable

Notes payable Dr. 500 Interest expense Dr. 10 Cash Cr. 510

depreciation adjustment to net income

add back depreciation expense to net income because depreciation did not reduce cash

increase in current liabilities

add to net income

Amortization adjustment to net income

added back to net income because it is a non-cash expense

decreases in current asset

added to net income

accounts payable

amounts owed to suppliers for products or services purchased on credit

where is net income

beginning of the cash flow statement

Cash dividends

date of declaration- Dr. Retained earnings Cr. common dividend payable date of record- NO JE date of payment- Dr. Common dividend payable Cr. Cash

FICA taxes

employee withhold federal insurance contributions act from employees pay. -social security taxes: withholdings to cover retirement disability, and survivorship @ 6.2% -medicare taxes: withholding to cover medical benefits @ 1.45% -they are computed seperately

Calculate maturity value of note payable

face value plus interest

Financing Activities cash inflows

from contributions by owners from issuing long-term debt (notes payable and bonds payable) from issuing its common and preferred stock from reissuing its treasury stock

Investing Activities cash inflow

from selling intangible assets from selling investments from collecting principal on notes receivable from selling plant assets

gain on sale adjustment to net income

gain is subtracted from net income because it was not a cash outflow

gross pay

is the total compensation an employee earns including wages, salaries, commission, bonuses, and any compensation earned before deductions such as taxes.

Authorized Number of Shares

number of shares that a corporations charter allows it to sell number of authorized shares usually exceeds number of shares issued

par value

Par value is an arbitrary amount assigned to each share of stock when it is authorized.

Gross pay is:

Total compensation earned by an employee before any deductions.

FICA taxes include:

Social Security and Medicare taxes.

bottom of cash flow statement

the Net Increase (Decrease) in Cash and Cash Equivalents

Trey Morgan is an employee who is paid monthly. For the month of January of the current year, he earned a total of $4,538. The FICA tax for social security is 6.2% and the FICA tax rate for Medicare is 1.45% for both the employee and the employer. The amount of federal income tax withheld from his earnings was $680.70. What is the total amount of taxes withheld from the Trey's earnings?

$1,027.86

Trey Morgan is an employee who is paid monthly. For the month of January of the current year, he earned a total of $4,538. The FICA tax for social security is 6.2% and the FICA tax rate for Medicare is 1.45% for both the employee and the employer. The amount of federal income tax withheld from his earnings was $680.70. His net pay for the month is:

$3,510.14

On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note (calculate interest for 30 days)?

$75

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the maturity value of the note on March 1?

$9,240

operating activities cash inflow

-sale of goods or services -from cash sales to customers -from receipt of interest revenue -from receipt of dividend revenue -from collections on credit sales

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the amount of interest to be paid at maturity?

240 or 720

A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:

A credit to Common Stock for $14,000.

An increase in the accounts receivable account during the year should be reported on the statement of cash flows as:

A decrease in cash flows from operating activities

A dividend payment to shareholders during the year should be reported on the statement of cash flows as:

An decrease in cash flows from financing activities

A decrease in the inventory account during the year should be reported on the statement of cash flows as:

An increase in cash flows from operating activities

The number of shares that a corporation's charter allows it to sell is referred to as:

Authorized stock.

JE to borrow money

Cash $2000 Dr. Notes Payable $2000 Cr. (when interest and principal are paid) Notes payable Dr. 2000 Interest payable Dr. 40 Cash Cr. 2040

On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%, $7,500 note. What is the journal entry needed to record the transaction by Jarrett Company?

Debit Cash $7,500; credit Notes Payable $7,500.

Obligations to be paid within one year or the company's operating cycle, whichever is longer, are:

Current liabilities.

The date the directors vote to declare and pay a dividend is called the:

Date of declaration.

On December 1, Watson Enterprises signed a $24,000, 60-day, 4% note payable as replacement of an account payable with Erikson Company. What is the journal entry that should be recorded upon signing the note?

Debit Accounts Payable $24,000; credit Notes Payable $24,000.

A corporation issued 2,500 shares of its no par common stock at a cash price of $11 per share. The entry to record this transaction would be:

Debit Cash $27,500; credit Common Stock $27,500.

A company issued 70 shares of $30 par value preferred stock for $4,000 cash. The journal entry to record the issuance is:

Debit Cash $4,000; credit Paid-in Capital in Excess of Par Value, Preferred Stock $1,900; credit Preferred Stock $2,100.

A company issued 60 shares of $100 par value common stock for $7,000 cash. The journal entry to record the issuance is:

Debit Cash $7,000; credit Common Stock $6,000; credit Paid-in Capital in Excess of Par Value, Common Stock $1,000.

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the payment of the cash dividend is:

Debit Common Dividend Payable $12,000; credit Cash $12,000.

On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of the note?

Debit Notes Payable $50,000; debit Interest Expense $625; credit Cash $50,625.

. On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%, $7,500 note. What is the journal entry needed to record the payment of the note by Jarrett Company on the maturity date?

Debit Notes Payable $7,500; debit Interest Expense $150; credit Cash $7,650.

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the declaration of the cash dividend is:

Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000.

JE to pay when due

Dr interest expense Dr Interest payable Dr notes payable Cr cash

JE to issue stock

Dr. Cash 300,000 Cr. Common stock, $10 Par Value 300,000

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:

Financing activities.

The appropriate section in the statement of cash flows for reporting the borrowing of money by issuing long term debt is

Financing activities.

The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:

Financing activities.

The appropriate section in the statement of cash flows for reporting the payment of long-term debt is

Financing activities.

The Wage and Tax Statement given to each employee annually is:

Form W-2.

characteristics of a corporation: Disadvantages

Governmental regulation. Corporate taxation.

Addams Corporation paid cash dividends totaling $75,000 during its most recent fiscal year. How should this information be reported on Addam's statement of cash flows?

In financing activities as a use of funds.

The appropriate section in the statement of cash flows for reporting the purchase of a new building is

Investing activities.

Investing activities do not include the:

Issuance of common stock.

short term note payable JE (extend period)

accounts payable Dr. 600 Cash Cr. 100 Notes Payable Cr. 500

long term liability

Obligations due after one year

A premium on common stock:

Occurs when a corporation sells its stock for more than par or stated value.

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as:

Operating activities.

The appropriate section in the statement of cash flows for reporting the depreciation is

Operating activities.

If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n):

Operating activity.

When preparing a statement of cash flows using the indirect method, each of the following should be classified as an operating cash flow except:

Proceeds from the disposal of a long-term asset with no gain or loss.

characteristics of a corporation: Advantages

Separate legal entity. Limited liability. Transferable ownership rights. Continuous life. No mutual agency for stockholders. Easier capital accumulation.

Issued Number of Shares

The total number of shares of a corporation's stock that have been sold or issued by the corporation

treasury stock

Treasury stock represents shares of a company's own stock that has been acquired. A corporation might acquire its own stock to: Use its shares to buy other companies. Avoid a hostile takeover. Reissue to employees as compensation. Maintain a strong market.

Par value of a stock refers to the:

Value assigned per share by the corporate charter.

sales taxes payable JE

cash 6300 Dr. sales 6000 Cr. Sales Taxes Payable Cr. 300 (6000x .05 sales tax)

presentation of cash flow statement

cash flow of operating activities cash flow of investing activities cash flow of financing activities net increase (decrease) in cash cash (and equivalents) balance at prior period end cash (and equivalents) balance at current period end

Net Pay Calculation

gross pay - deductions ex- gross earning for week: 1462.00 deductions -social security tax: 87.72 -medicare tax: 21.93 -federal income tax: 263.40 -retirement savings united fund: 20.00 - united fund: 5.00 net pay=1063.95

Operating Activities

include transactions and events that affect net income. -production and purchase of inventory -the sale of good and services to customers -expenditures to operate the business

Investing Activities

include transactions and events that come from the purchase of long term assets -purchase of sale investment -lending and collecting money for notes receivable

calculate net cash flow

inflow - outflow

Salaries payable

is a liability account with a normal credit balance

loss on sale of plant asset adjustment to net income

loss is added back to net income because it is not a cash outflow

calculate interest expense

multiply principal of the note (500) by the annual interest rate (12%) for the fraction of the year the note is outstanding (60 days/ 360 days) -500 x .12 x 60/360 = 10

common stock

normal credit balance equity

JE for interest expense

notes payable Dr. 500 interest expense Dr. 10 cash Cr. 510

Calculate Outstanding Shares

number of issued shares minus the number of shares held in the company's treasury.

current liability

or short term liabilities are liabilities that are due within one year or the company's operating cycle -paid w current assets or other current liabilities

Treasury stock location

shown as a reduction in total stockholders' equity on the balance sheet. Dr. treasury stock, common Cr. cash

Outstanding number of shares

stock held by stockholders equity section of balance sheet NO JE

decreases in current liabilities

subtract from net income

increases in current assets

subtracted from net income

Current Portion of Notes Payable

the amount of the principal that is payable within one year (current liability)


Set pelajaran terkait

Exam 6: Chapter 43- Drugs used to treat glaucoma and other eye disorders

View Set

Corp. Finance Test 2 Spring 2016

View Set

Business Law Chapter 38: Antitrust Law and Promoting Competition

View Set

Combo with "Infectious" and 13 others

View Set

Intro to Dance Final Exam Review

View Set

Just studying for Anesthesia (from handouts)

View Set

VNSG1423 MODULE2: with ASSIGNMENT for Y's

View Set

B&G Chapter 6 Practice Questions

View Set