Mid test study guide

on november 1, 2012, the bagel factory signed a $100,000, 6%, six month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2013. The bagel factory should report interest payable at december 31, 2012, in the amount of: A) $0 B) $1000 C) $2000 D) $3000

$1000

If bonds with a face value of $209,000 are issued at 93, the amount of cash proceeds is

$209000 x .93 = $194,370

On November 1, 2017, Austin Services issued $305,000 of five-year bonds with a stated rate of 12%. The bonds were issued at par, and Austin makes semiannual payments on April 30 and October 31. On December 31, 2017, Austin made an adjusting entry to accrue interest at year-end. No further entries were made until April 30, 2018, when the first payment was made. What amount of interest expense was recorded for the period of January 1 to April 30, 2018?

$305,000 (12%) (4/12) = 12,200

The balance in the Bonds Payable account is a credit of $67,000. The balance in the Discount on Bonds Payable account is a debit of $3,350. What is the bond's carrying amount?

$67,000-$3,350= $63,650

A corporation declares a dividend of $0.50 per share on 18,000 shares of common stock. Which of the following is included in the entry to record the declaration? A) Cash Dividends is debited for $9,000. B) Paid-In Capital in Excess of Par—Common is credited for $9,000. C) Cash Dividends is credited for $9,000. D) Dividends Payable—Common is debited for $9,000.

18,000 (0.50)= $9000 A. Cash Dividends 9000 Dividend Payable 9000

The Frozen Lake Company issues $503,000 of 10%, 10-year bonds at 107 on March 31, 2017. The bond pays interest on March 31 and September 30. Assume that the company uses the straight-line method for amortization. The journal entry to record the first interest payment on September 30, 2017 includes a __ A) debit to Cash for $25,150 B) debit to Interest Expense for $26,911 C) debit to Interest Expense for $23,389 D) credit to Premium on Bonds Payable for $1,761

503,000(1.07)= $538210 - 503,000= $35210 premium $35,210/20 (10 year bond, interest paid semi-annually)= 1761 Interest Pay= 503,000 (10%) (6/12)=25,150 - 1761 (first interest payment) C. Interest Expense 23,389 Premium on Bonds Pay 1,761 Interest Pay 25,150

Sanella Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $18.25 per share. Common Stock, $14 Par, 129,000 shares authorized, 48,000 shares issued and outstanding= $672,000 Paid-in Capital in Excess of Par—Common= 167,000 Retained Earnings 350,000 Total Stockholders' Equity $1,189,000 What would be the balance in the Common Stock account after the issuance of a 10% stock dividend? A) $334,000 B) $604,800 C) $739,200 D) $672,000

672,000

Which of the following is included in the entry to record the issuance of 14,000 shares of $7 par value common stock at $21 per share cash? A) Cash is debited for $294,000. B) Common Stock is debited for $98,000. C) Common Stock is credited for $294,000. D) Paid-In Capital in Excess of Par—Common is debited for $196,000.

A. Cash 294000 Common Stock 98000 Paid in Capital in Excess of par 196000

On November 1, 2012, the bagel factory signed a $100000, 6%, six month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2013. The bagel factory records the appropriate adjusting entry for the note on December 31, 2012. In recording the payment of the note plus accrued interest at maturity on May 1, 2013, the bagel factory would: A) Debit interest expense, $2000 B) Debit interest expense, $1000 C) Debit interest payable, $2000 D) Debit interest expense, $3000

B) Debit interest expense, $2000

On December 1, 2012, Old World Deli signed a $300,000, 5%, six month note payable with the amount borrowed plus accrued interest due six months later one June 1, 2013. Old World Deli should record which of the following adjusting entries at December 31, 2012? A) Debit interest expense and credit interest payable, $7500 B) Debit interest expense and credit cash, $7500 C) Debit interest expense and credit interest payable, $1250 D) Debit interest expense and credit cash, $1250

C) Debit interest expense and credit interest payable $1250

The Distribution of a stock dividend__________. A) decreases both assets and liabilities B) decreases assets and increase liabilities C) effects only stockholder's equity accounts D) increases both dividends payable and cash

C) effects only stockholder's equity accounts

Lafayette, Inc. was incorporated on January 1, 2014. Lafayette issued 15,000 shares of common stock and 800 shares of preferred stock on that date. The preferred stock is cumulative, $100 par, with an 12% dividend rate. Lafayette has not paid any dividends yet. In 2017, Lafayette had its first profitable year, and on November 1, 2017, Lafayette declared a total dividend of $44,000. What is the total amount that will be paid to common stockholders? A) $9,600 B) $38,400 C) $5,600 D) $44,000

C. 800 (12%)(100)= 9600 x 4= 38400 44,000-38400= 5600 to common stockholders

On January 1, 2017, Toland Sales issued $30,000 in bonds for $22,300. These are eight-year bonds with a stated interest rate of 12% pay semiannual interest. Toland Sales uses the straight-line method to amortize the bond discount. What is the bond carrying amount after the first interest payment on June 30, 2017? (Round your intermediate answers to the nearest dollar.)

Discount= 30000-22300= 7700 $7700/16 (number of interests payments, 8 year bond with interest paid twice a year)= $482 $22,300+$482= $22,782

On January 1, 2017, Streuly Sales issued $29,000 in bonds for $20,700. These are six-year bonds with a stated rate of 12% and pay semiannual interest. Streuly Sales uses the straight-line method to amortize the Bond Discount. After the second interest payment on December 31, 2017, what is the balance of Discount on Bonds Payable?

Discount= 8300 debit balance 8300/12= 692 per year Semi annually- 692 (2)= 1384 credited (reduced) per year After the first year- $8300-$1384= $6916 debit balance

Ropers, Inc. purchases 16,000 shares of its previously issued $2 par value common stock for $460 per share. Which of the following is the correct journal entry to record this transaction? A) Debit Common Stock—$2 Par Value $7,360,000, and credit Cash $7,360,000. B) Debit Cash $7,328,000, and credit Paid-In Capital in Excess of Par—Common $7,328,000. C) Debit Cash $7,328,000, and credit Treasury Stock—Common $7,328,000. D) Debit Treasury Stock—Common $7,360,000, and credit Cash $7,360,000.

Ignore par value 16000x460= $7,360,000 D. Treasury Stock 7,360,000 Cash 7,360,000

Refer to the following list of liability balances at December 31, 2017. Accounts Payable= 15,000 Employee Health Insurance Payable= 1,150 Employee Income Tax Payable= 600 Estimated Warranty Payable= 1,400 Long-Term Notes Payable (Due 2021)= 40,000 FICA—OASDI Taxes Payable= 1,060 Sales Tax Payable= 670 Mortgage Payable (Due 2022)= 15,000 Bonds Payable (Due 2023)= 54,000 Current Portion of Long-Term Notes Payable= 10,500 What is the total amount of long-term liabilities?

Long-Term Notes Payable (Due 2021)= 40,000 Mortgage Payable (Due 2022)= 15,000 Bonds Payable (Due 2023)= 54,000 = $109,000