ACC MCQ Ch 10, 11, 12
A company reported that its bonds with a par value of $50,000 and a carrying value of $58,000 are retired for $61,200 cash, resulting in a loss of $3,200. The amount to be reported under cash flows from financing activities is:
$(61,200).
Marwick Corporation issues 12%, 5 year bonds with a par value of $1,250,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%. What is the bond's issue (selling) price, assuming the following Present Value factors:
$1,346,502 Interest Exp. = $1,250,000 par × 0.12 stated interest rate × ½ = 75,000 (this is an annuity)($1,250,000 × 0.6139) + (75,000 × 7.7217) = $1,346,502
A company's board of directors votes to declare a cash dividend of $1.05 per share of common stock. The company has 21,000 shares authorized, 16,000 issued, and 15,500 shares outstanding. The total amount of the cash dividend is:
$1.05 × 15,500 shares outstanding = $16,275
CHAPTER 11
CHAPTER 11
A machine with a cost of $152,000 and accumulated depreciation of $96,000 is sold for $48,800 cash. The total amount related to this machine that should be reported in the operating section of the statement of cash flows under the indirect method is:
Machine book value = $152,000 − $96,000 = $56,000Proceeds from sale = $48,800 Loss on sale = $7,200***
On January 1, a company issues bonds dated January 1 with a par value of $380,000. The bonds mature in 3 years. The contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The market rate is 11%. Using the present value factors below, the issue (selling) price of the bonds is:
NOTESSS $370,491.
A corporation declared and issued a 20% stock dividend on October 1. The following information was available immediately prior to the dividend:
NOTESSSS 54,000 shares × 0.20 = 10,800 shares × $21 = $226,800
A company has earnings per share of $9.50. Its dividend per share is $1.10, its market price per share is $117.80, and its book value per share is $94. Its price-earnings ratio equals:
Price-Earnings Ratio = Market Price per Share/Earnings per Share Price-Earnings Ratio = $117.80/$9.50 = 12.40
A company has net income of $930,000; its weighted-average common shares outstanding are 186,000. Its dividend per share is $0.75, its market price per share is $94, and its book value per share is $85.00. Its price-earnings ratio equals:
Price-Earnings Ratio = Market Price per Share/Earnings per share Market Price per Share/(Net Income/Weighted-Average Common Shares Outstanding) Price-Earnings Ratio = $94/($930,000/186,000) = 18.80
On January 1, a company issued and sold a $404,000, 6%, 10-year bond payable, and received proceeds of $399,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is:
Cash = $404,000 × .06 × 1/2 = $12,120 Discount amortized = ($404,000 − $399,000)/20 = $250 Interest expense = $12,120 + $250 = $12,370 Debit Bond Interest Expense $12,370; credit Cash $12,120; credit Discount on Bonds Payable $250.
A company had net cash flows from operations of $131,000, cash flows from financing of $352,000, total cash flows of $533,000, and average total assets of $3,160,000. The cash flow on total assets ratio equals:
Cash Flow on Total Assets Ratio = Cash Flows from Operations/Average Total Assets Cash Flow on Total Assets Ratio = $131,000/$3,160,000 = 4.1%
On January 1 of Year 1, Congo Express Airways issued $4,600,000 of 7%, bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $4,280,000 and the market rate of interest for similar bonds is 9%. The bond premium or discount is being amortized using the straight-line method at a rate of $10,000 every 6 months. The life of these bonds is:
Annual discount amortization = $20,000 ($10,000 × 2) Bond discount = $4,600,000 − $4,280,000 = $320,000 Discount/Amortization = Life of bonds ($320,000/$20,000 = 16 years)****
A company issued 110 shares of $100 par value common stock for $12,000 cash. The total amount of paid-in capital is:
$12,000.
A company issues 10%, 5-year bonds with a par value of $120,000 on January 1 at a price of $124,748, when the market rate of interest was 9%. The bonds pay interest semiannually. The amount of each semiannual interest payment is:
$120,000 × .10 × 6/12 year = $6,000
A company has bonds outstanding with a par value of $100,000. The unamortized discount on these bonds is $5,000. The company calls these bonds at a price of $92,000 the gain or loss on retirement is:
$3,000 gain.**** Par value$100,000 Minus Unamortized discount 5,000 Carrying value of bonds$95,000 Retirement price 92,000 Gain on retirement$3,000
Alvarez Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year$328,000 Cash dividends declared for the year 73,750 Proceeds from the sale of equipment 126,800 Gain on the sale of equipment 7,350 Cash dividends payable at the beginning of the year 32,450 Cash dividends payable at the end of the year 39,500 Net income for the year 162,250 The ending balance in retained earnings is:
$328,000 + $162,250 − $73,750 = $416,500***
Mayweather reports net income of $332,500 for the year ended December 31. It also reports $108,000 depreciation expense and a $11,650 loss on the sale of equipment. Its comparative balance sheet reveals a $46,800 increase in accounts receivable, a $11,850 decrease in prepaid expenses, a $17,950 increase in accounts payable, a $14,700 decrease in wages payable, a $87,100 increase in equipment, and a $116,500 decrease in notes payable. Calculate the net increase in cash for the year.
$332,500 + $108,000 + $11,650 + $11,850 + $17,950 − $46,800 − $14,700 = $420,450$420,450 − $87,100 − $116,500 = $216,850
Ford Company reports depreciation expense of $47,000 for Year 2. Also, equipment costing $162,000 was sold for its book value in Year 2. There were no other equipment purchases or sales during the year. The following selected information is available for Ford Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31Year 2Year 1Equipment$645,000 $807,000 Accumulated Depreciation-Equipment 456,000 535,000
$36,000. Accumulated depreciation on equipment sold = $535,000 + $47,000 − $456,000 = $126,000Cash received = $162,000 − $126,000 = $36,000 *NOTES
Clabber Company has bonds outstanding with a par value of $119,000 and a carrying value of $108,700. If the company calls these bonds at a price of $104,500, the gain or loss on retirement is:
$4,200 gain.** Carrying value of bonds$108,700 Retirement price−104,500 Gain on retirement$4,200
A corporation issued 320 shares of its $5 par value common stock in payment of a $4,000 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include:
A $2,400 credit to Paid-in Capital in Excess of Par Value, Common Stock. Debit Organization Expense$4,000 Credit Common Stock, $5 Par Value $1,600 Credit Paid-in Capital in Excess of Par Value, Common Stock $2,400
A corporation sold 9,500 shares of its $10 par value common stock at a cash price of $11 per share. The entry to record this transaction would include:
A credit to Common Stock for $95,000. Debit Cash$104,500 Credit Common Stock, $10 Par Value. $95,000 Credit Paid-in Capital in Excess of Par Value, Common Stock $9,500
Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 220 shares to its attorneys in payment of a $4,200 charge for drawing up the articles of incorporation. The entry to record this transaction would include:
A debit to Organization Expenses for $4,200.*** Debit Organization Expense$4,200 Credit Common Stock, $10 Par Value $2,200 Credit Paid-in Capital in Excess of Par Value, Common Stock $2,000
Green Company reports depreciation expense of $46,000 for Year 2. Also, equipment costing $158,000 was sold for a $5,600 gain in Year 2. The following selected information is available for Green Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31Year 2Year 1Equipment$640,000 $798,000 Accumulated Depreciation-Equipment 452,000 530,000
Accumulated depreciation on equipment sold = $530,000 + $46,000 − $452,000 = $124,000Cash received = ($158,000 − $124,000) + $5,600 = $39,600
Favre Company reports depreciation expense of $60,000 for Year 2. Also, equipment costing $200,000 was sold for a $12,100 loss in Year 2. The following selected information is available for Favre Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31Year 2Year 1Equipment$710,000 $910,000 Accumulated Depreciation-Equipment 508,000 600,000
Accumulated depreciation on equipment sold = $600,000 + $60,000 − $508,000 = $152,000 Cash received = ($200,000 − $152,000) − $12,100 = $35,900****
Chang Industries has bonds outstanding with a par value of $220,000 and a carrying value of $233,000. If the company calls these bonds at a price of $226,000, the gain or loss on retirement is:
Carrying value of bonds$233,000 Retirement price 226,000 Gain on retirement$7,000***
A company issued 90 shares of $100 par value common stock for $10,600 cash. The total amount of paid-in capital in excess of par is:
Cash $10,600 − Par Value (90 × $100) = Paid-in capital in excess of par $1,600
Analysis reveals that a company had a net increase in cash of $22,640 for the current year. Net cash provided by operating activities was $20,400; net cash used in investing activities was $11,200 and net cash provided by financing activities was $13,440. If the year-end cash balance is $27,600, the beginning cash balance was:
Cash = $27,600 ending balance − $22,640 increase in cash = $4,960 beginning balance
A company had average total assets of $3,760,000, total cash flows of $2,580,000, cash flows from operations of $520,000, and cash flows from financing of $1,380,000. The cash flow on total assets ratio equals:
Cash Flow on Total Assets Ratio = Cash Flows from Operations/Average Total Assets Cash Flow on Total Assets Ratio = $520,000/$3,760,000 = 13.83%
On January 1, a company issues bonds dated January 1 with a par value of $330,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $343,395. The journal entry to record the first interest payment using straight-line amortization is: (Rounded to the nearest dollar.)
Debit Bond Interest Expense $13,510; debit Premium on Bonds Payable $1,340; credit Cash $14,850. Cash payment = $330,000 × 0.09 × ½ = $14,850 Premium Amortization = $343,395 − $330,000 = $13,395/10 = $1,340 Interest Expense = $330,000 × 0.09 × ½ = $14,850 − $1,340 = $13,510
On January 1, a company issues bonds dated January 1 with a par value of $280,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $291,365. The journal entry to record the issuance of the bond is:
Debit Cash $291,365; credit Premium on Bonds Payable $11,365; credit Bonds Payable $280,000.***** Premium = $291,365 − $280,000 = $11,365The issued bond is always recorded at par (face) value in the Bonds Payable account, with the difference between par value and issue price recorded as a discount or premium, depending on whether the issue price is greater than par (premium) or less than par (discount).
On January 1, Parson Freight Company issues 9.0%, 10-year bonds with a par value of $3,400,000. The bonds pay interest semiannually. The market rate of interest is 10.0% and the bond selling price was $3,168,967. The bond issuance should be recorded as:
Debit Cash $3,168,967; debit Discount on Bonds Payable $231,033; credit Bonds Payable $3,400,000.
Use the following information to calculate cash received from dividends: Dividends revenue$30,800 Dividends receivable, January 1 2,800 Dividends receivable, December 31 3,800
Increase in Dividends Receivable = $3,800 − $2,800 = $1,000 Cash received from dividends = $30,800 − $1,000 = $29,800****
The following data were reported by a corporation: Authorized shares24,000 Issued shares19,000 Treasury shares5,500 The number of outstanding shares is:
Issued Shares − Treasury Shares = Outstanding Shares19,000 − 5,500 = 13,500
Jordan's net income for the year ended December 31, Year 2 was $189,000. Information from Jordan's comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2. At December 31Year 2Year 1Common Stock, $5 par value$504,000 $453,600 Paid-in capital in excess of par 952,000 856,600 Retained earnings 692,000 585,600
NOTES
On January 1, $405,600 of par value bonds with a carrying value of $442,000 is converted to 67,600 shares of $5 par value common stock. The entry to record the conversion of the bonds includes all of the following entries except:
NOTES Debit to Bonds Payable $442,000.
A company's income statement showed the following: net income, $130,000; depreciation expense, $38,000; and gain on sale of plant assets, $12,000. An examination of the company's current assets and current liabilities showed the following changes accounts receivable decreased $11,000; merchandise inventory increased $26,000; prepaid expenses increased $7,800; accounts payable increased $5,000. Calculate the net cash provided or used by operating activities.
$138,200.*** Net income$130,000 Depreciation expense 38,000 Gain on sale of plant assets (12,000) Decrease in accounts receivable 11,000 Increase in merchandise inventory (26,000) Increase in prepaid expenses (7,800) Increase in accounts payable 5,000 Net cash provided by operating activities$138,200
In preparing a company's statement of cash flows for the most recent year, the following information is available: Loss on the sale of equipment$15,200Purchase of equipment 157,000Proceeds from the sale of equipment 138,000Repayment of outstanding bonds 93,000Purchase of treasury stock 68,000Issuance of common stock 102,000Purchase of land 127,000Increase in accounts receivable during the year 49,000Decrease in accounts payable during the year 81,000Payment of cash dividends 41,000 Net cash flows from investing activities for the year were:
$146,000 of net cash used. Purchase of equipment$(157,000) Purchase of land (127,000) Proceeds from sale of equipment 138,000 $(146,000)***
Ultimate Sportswear has $230,000 of 7% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $630,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $43,000. This dividend should be distributed as follows:
$16,100 preferred; $26,900 common.**** Preferred stock dividend: $230,000 × 7% = $16,100Common stock dividend: $43,000 − $16,100 = $26,900
Charger Company's most recent balance sheet reports total assets of $30,600,000, total liabilities of $17,850,000 and total equity of $12,750,000. The debt to equity ratio for the period is (rounded to two decimals):
$17,850,000/$12,750,000 = 1.40
Sweet Company's outstanding stock consists of 1,500 shares of noncumulative 5% preferred stock with a $100 par value and 11,500 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1$3,500 Year 2$9,000 Year 3$39,500 The total amount of dividends paid to preferred and common shareholders over the three-year period is:
$18,500 preferred; $33,500 common. Preferred stock dividend: 1,500 shares × $100/share × 5% = $7,500 per year. Year 1: $3,500 to preferred, $0 to common. Year 2: $7,500 to preferred, $1,500 to common. Year 3: $7,500 to preferred, $32,000 to common. Preferred total = $3,500 + $7,500 + $7,500 = $18,500. Common total = $0 + $1,500 + $32,000 = $33,500.
Sweet Company's outstanding stock consists of 1,300 shares of cumulative 5% preferred stock with a $100 par value and 10,300 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1$2,300 Year 2$6,300 Year 3$33,500 The total amount of dividends paid to preferred and common shareholders over the three-year period is:
$19,500 preferred; $22,600 common. Preferred stock dividend: 1,300 shares × $100/share × 5% = $6,500 per year. Year 1: $2,300 to preferred, $0 to common. Year 2: $6,300 to preferred, $0 to common. Year 3: $10,900 to preferred, $22,600 to common. Preferred total = $2,300 + $6,300 + $10,900 = $19,500. Common total = $0 + $0 + $22,600 = $22,600.
Sweet Company's outstanding stock consists of 1,600 shares of cumulative 6% preferred stock with a $100 par value and 10,600 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1$2,600 Year 2$6,600 Year 3$35,000 The amount of dividends paid to preferred and common shareholders in year 3 is:
$19,600 preferred; $15,400 common. Preferred stock dividend: 1,600 shares × $100/share × 6% = $9,600 per year × 3 years = $28,800 total preferred dividends. $28,800 − $9,200 paid to preferred in years 1 and 2 = $19,600 paid to preferred in year 3. $35,000 − $19,600 preferred = $15,400 to common.
On January 1 of Year 1, Congo Express Airways issued $3,100,000 of 8% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $2,850,000 and the market rate of interest for similar bonds is 9%. The bond premium or discount is being amortized at a rate of $8,333 every six months. After accruing interest at year end, the company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond issue in the amount of:
$2,990,666. *NOTES*
Alfredo Inc. reports net income of $253,000 for the year ended December 31. It also reports $97,700 depreciation expense and a $6,150 gain on the sale of equipment. Its comparative balance sheet reveals a $40,100 decrease in accounts receivable, a $18,050 increase in accounts payable, and a $14,050 decrease in wages payable. Calculate the cash provided (used) in operating activities using the indirect method.
$253,000 + $97,700 + $40,100 + $18,050 − $14,050 − $6,150 = $388,650
On July 1, Shady Creek Resort borrowed $270,000 cash by signing a 10-year, 9% installment note requiring equal payments each June 30 of $42,071. What is the journal entry to record the first annual payment?
$270,000 principle × 9% = $24,300 interest $42,071 payment − $24,300 interest = $17,771 principal payment Debit Interest Expense $24,300; debit Notes Payable $17,771; credit Cash $42,071.*****
Adonis Corporation issued 10-year, 11% bonds with a par value of $270,000. Interest is paid semiannually. The market rate on the issue date was 10%. Adonis received $286,827 in cash proceeds. Which of the following statements is true?
$270,000 × 11% × ½ = $14,850 each interest payment Adonis must pay $270,000 at maturity plus 20 interest payments of $14,850 each.
Torino Company has 2,900 shares of $20 par value, 7.0% cumulative and nonparticipating preferred stock and 29,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $3,500 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:
$4,620.**** Preferred stock dividend: 2,900 shares × $20/share × 7.0% = $4,060Prior year: Dividend paid = $3,500; $560 in arrearsCurrent year: $560 in arrears + $4,060 current dividend = $4,620
A machine with a cost of $140,000, accumulated depreciation of $90,000, and current year depreciation expense of $19,500 is sold for $44,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:
$44,000.
A company issued 9%, 15-year bonds with a par value of $460,000 that pay interest semiannually. The market rate on the date of issuance was 9%. The journal entry to record each semiannual interest payment is:
$460,000 × 0.09 × ½ year = $20,700 Debit Bond Interest Expense $20,700; credit Cash $20,700.
On July 1, Shady Creek Resort borrowed $490,000 cash by signing a 10-year, 11% installment note requiring equal payments each June 30 of $83,203. What amount of interest expense will be included in the first annual payment?
$490,000 principal × 11% = $53,900 interest
A corporation issued 8% bonds with a par value of $1,250,000, receiving a $70,000 premium. On the interest date 5 years later, after the bond interest was paid and after 40% of the premium had been amortized, the corporation called the bonds at $1,237,500. The gain or loss on this retirement is:
$54,500 gain.*** Par value$1,250,000 Unamortized premium (70,000 × 60%) 42,000 Carrying value of bonds$1,292,000 Retirement price 1,237,500 Gain on retirement$54,500
Barclays Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year$253,000 Cash dividends declared for the year 55,000 Proceeds from the sale of equipment 93,800 Gain on the sale of equipment 5,100 Cash dividends payable at the beginning of the year 24,200 Cash dividends payable at the end of the year 32,000 Net income for the year 121,000 The amount of cash paid for dividends was:
$55,000 + $24,200 − $32,000 = $47,200***
Salah's net income for the year ended December 31, Year 2 was $193,000. Information from Salah's comparative balance sheets is given below. Compute the cash paid for dividends during Year 2. At December 31Year 2Year 1Common Stock, $5 par value$508,000 $457,200 Paid-in capital in excess of par 956,000 860,200 Retained earnings 696,000 589,200
$589,200 + $193,000 − $696,000 = $86,200***
A machine with a cost of $148,000 and accumulated depreciation of $103,000 is sold for $59,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:
$59,000.
A company issues 7% bonds with a par value of $70,000 at par on January 1. The market rate on the date of issuance was 6%. The bonds pay interest semiannually on January 1 and July 1. The cash paid on July 1 to the bond holder(s) is:
$70,000 × 0.07 × 1/2 year = $2,450
Morgan Company issues 8%, 20-year bonds with a par value of $770,000 that pay interest semiannually. The amount paid to the bondholders for each semiannual interest payment is.
$770,000 × 0.08 × ½ year = $30,800
A company has bonds outstanding with a par value of $150,000. The unamortized premium on these bonds is $3,825. If the company retired these bonds at a call price of $145,500, the gain or loss on this retirement is:
$8,325 gain. Par value$150,000 Plus Unamortized premium 3,825 Carrying value of bonds$153,825 Retirement price 145,500 Gain on retirement$8,325
Halverstein Company's outstanding stock consists of 11,200 shares of cumulative 5% preferred stock with a $10 par value and 4,800 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1$0Year 2$9,600Year 3$41,000 The amount of dividends paid to preferred and common shareholders in Year 2 is:
$9,600 preferred; $0 common. Preferred stock dividend: 11,200 shares × $10/share × 5% = $5,600 Year 1 dividends in arrears $5,600 Year 2 dividends paid to preferred shareholders = $5,600 in arrears + $4,000 of remaining dividend declared; $1,600 of the Year 2 dividend is in arrears
Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 250 shares of its common stock on May 1 for $12,500. On July 1, it reissued 125 of these shares at $53 per share. On August 1, it reissued the remaining treasury shares at $48 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2?
***125*** $12,500 / 250 shares = $50 cost per share May 1$0 July 1: ($53 sell - $50 cost) $ 3/share × 125 shares 375 August 1: ($48 sell - $50 cost )$ −2/share × 125 shares (250) Balance, August 2. $125
The following data has been collected about Keller Company's stockholders' equity accounts:
**NOTES Issued shares − Outstanding shares = Treasury shares; 9,500 − 2,100 = 7,400
A machine with a cost of $131,000 and accumulated depreciation of $85,500 is sold for $51,000 cash. The amount that should be reported in the operating activities section reported under the direct method is:
0
The accountant for Crusoe Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year$133,000Cash dividends declared for the year 53,000Proceeds from the sale of equipment 88,000Gain on the sale of equipment 8,400Cash dividends payable at the beginning of the year 25,000Cash dividends payable at the end of the year 28,400Net income for the year 99,000 What is the ending balance for retained earnings?
Beginning balance$133,000 Net income for the year 99,000 Cash dividends declared (53,000) Ending balance$179,000**
The accountant for TI Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year$173,000Cash dividends declared for the year 54,800Net income for the year 103,000 What is the ending balance for retained earnings?
Beginning balance$173,000 Net income for the year 103,000 Cash dividends declared (54,800) Ending balance$221,200***
A company had a beginning balance in retained earnings of $44,300. It had net income of $7,300 and declared and paid cash dividends of $5,950 in the current period. The ending balance in retained earnings equals:
Beginning balance$44,300 Plus net income 7,300 Less dividends (5,950) Ending balance$45,650***
A company had a beginning balance in retained earnings of $440,000. It had net income of $70,000 and declared and paid cash dividends of $75,000 in the current period. The ending balance in retained earnings equals:
Beginning balance$440,000 Plus net income 70,000 Less dividends (75,000) Ending balance$435,000
James Company has 1,900 shares of $100 par preferred stock, which were issued at par. It also has 34,000 shares of common stock outstanding, and its total stockholders' equity equals $764,600. The book value per common share is:
Book Value per Share = Stockholders' Equity Applicable to Common/Common Shares Outstanding Book value per share = [$764,600 − (1,900 shares × $100/share)]/34,000 = $16.90/share
A company has 37,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $458,800, and the par value per common share is $10. The book value per share is:
Book Value per Share = Stockholders' Equity Applicable to Common/Common Shares Outstanding Book Value per Share = $458,800/37,000 shares = $12.40 per shares
A company has 850 shares of $64 par value preferred stock outstanding. It also has 16,000 shares of common stock outstanding, and the total value of its stockholders' equity is $596,800. The company's book value per common share equals:
Book Value per Share = Stockholders' Equity Applicable to Common/Common Shares Outstanding Book Value per Share = [$596,800 − (850 shares × $64/share)]/16,000 = $33.90/share.
The accountant for Sysco Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year$849,000Net income for the year 245,000Cash dividends declared for the year 45,000Retained earnings balance at the end of the year 1,097,000Cash dividends payable at the beginning of the year 10,600Cash dividends payable at the end of the year 11,900 What is the amount of cash dividends paid that should be reported in the financing section of the statement of cash flows?
Cash dividend declared$45,000 Plus cash dividend payable, beginning 10,600 Less cash dividend payable, ending (11,900) Cash dividend paid$43,700***
The accountant for Walter Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year$129,500Cash dividends declared for the year 49,500Proceeds from the sale of equipment 84,500Gain on the sale of equipment 7,700Cash dividends payable at the beginning of the year 21,500Cash dividends payable at the end of the year 24,200Net income for the year 95,500 The amount of cash dividends paid during the year would be:
Cash dividends payable at the beginning of the year$21,500 Cash dividends declared during the year 49,500 Cash dividends payable at the end of the year (24,200) Cash dividends paid during the year$46,800***
A company issued 5-year, 9% bonds with a par value of $102,000. The company received $99,947 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is:
Cash interest paid: $102,000 × .09 × ½ year = $4,590.00 Discount amortization: ($102,000 − $99,947)/10 periods = $205.30 Interest expense = $4,590.00 + $205.30 = $4,795.30****
A company issued 6-year, 8% bonds with a par value of $650,000. The market rate when the bonds were issued was 7.5%. The company received $656,500 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:
Cash interest paid: $650,000 × .08 × ½ year = $26,000 Premium amortized: ($656,500 − $650,000)/12 = $542 Interest expense: $26,000 − $542 = $25,458
On January 1 of Year 1, Congo Express Airways issued $2,500,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $2,280,000 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $7,333 every six months. The amount of interest expense recognized by Congo Express Airways on the bond issue in Year 1 would be:
Cash paid every six months = $2,500,000 × 7% × 6/12 = $87,500 Discount amortization every six months = $7,333; Interest Expense ($87,500 + $7,333) × 2 = $189,666.****
On January 1, a company issues bonds dated January 1 with a par value of $350,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $335,819. The journal entry to record the issuance of the bond is:
Debit Cash $335,819; debit Discount on Bonds Payable $14,181; credit Bonds Payable $350,000.*** Discount = $350,000 − $335,819 = $14,181The issued bond is always recorded at par (face) value in the Bonds Payable account, with the difference between par value and issue price recorded as a discount or premium, depending on whether the issue price is greater than par (premium) or less than par (discount).
Fetzer Company declared a $0.35 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 shares in treasury stock. The journal entry to record the payment of the dividend is:
Debit Common Dividends Payable $63,700; credit Cash $63,700. $0.35 × (190,000 issued shares − 8,000 treasury shares) = $63,700
On January 1, Year 1, Stratton Company borrowed $220,000 on a 10-year, 9% installment note payable. The terms of the note require Stratton to pay 10 equal payments of $34,280 each December 31 for 10 years. The required general journal entry to record the payment on the note on December 31, Year 2 is:
Debit Interest Expense $18,497; debit Notes Payable $15,783; credit Cash $34,280.****** Year 1 - Interest expense = $220,000 × 9% = $19,800 Principal payment = $34,280 − $19,800 = $14,480 Year 2 - Interest expense = ($220,000 − $14,480) × 9% = $18,497 Principal payment = $34,280 − $18,497 = $15,783
On January 1, a company issues bonds dated January 1 with a par value of $410,000. The bonds mature in 5 years. The contract rate is 11%, and interest is paid semiannually on June 30 and December 31. The market rate is 12% and the bonds are sold for $394,914. The journal entry to record the first interest payment using straight-line amortization is:
Debit Interest Expense $24,058.60; credit Discount on Bonds Payable $1,508.60; credit Cash $22,550.00. Cash payment of interest = $410,000 × .11 × ½ = $22,550 Discount Amortization = ($410,000 − $394,914)/10 = $1,508.60 Interest Expense = $22,550 + $1,508.60 = $24,058.60
On January 1, a company issues bonds dated January 1 with a par value of $630,000. The bonds mature in 3 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $609,000. The journal entry to record the first interest payment using straight-line amortization is:
Debit Interest Expense $31,850; credit Discount on Bonds Payable $3,500; credit Cash $28,350.*** Cash payment of interest = $630,000 × 0.09 × ½ = $28,350 Discount Amortization = $630,000 − $609,000 = $21,000/6 = $3,500 Interest Expense = $28,350 + $3,500 = $31,850
A corporation issued 5,600 shares of $10 par value common stock in exchange for some land with a market value of $82,000. The entry to record this exchange is:
Debit Land $82,000; credit Common Stock $56,000; credit Paid-In Capital in Excess of Par Value, Common Stock $26,000.**** Debit Land$82,000 Credit Common Stock, $10 Par Value $56,000 Credit Paid-in Capital in Excess of Par Value, Common Stock $26,000
Eastline Corporation had 12,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 4,080 shares. At the time of the stock dividend, the market value per share was $16. The entry to record this dividend is:
Debit Retained Earnings $40,800; credit Common Stock Dividend Distributable $40,800. 4,080/12,000 shares = large stock dividend of 34%.Large stock dividends are recorded at par value (4,080 shares × $10)
Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 27,000 shares authorized, 13,200 shares issued, and 10,800 shares of common stock outstanding. The journal entry to record the dividend declaration is:
Debit Retained Earnings $5,400; credit Common Dividends Payable $5,400.*** $0.50 × 10,800 shares = $5,400
Global Corporation had 44,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 5% stock dividend when the market value of each share was $29. The entry to record the dividend declaration is:
Debit Retained Earnings $63,800; credit Common Stock Dividend Distributable $44,000; credit Paid-In Capital in Excess of Par Value, Common Stock $19,800.***** Retained earnings: 44,000 shares × 5% × $29 = $63,800Common Stock Dividend Distributable: 44,000 shares × 5% × $20 = $44,000Paid-in Capital in Excess of Par Value, Common Stock: 44,000 shares × 5% × $9 = $19,800
Fetzer Company declared a $0.40 per share cash dividend. The company has 220,000 shares authorized, 209,000 shares issued, and 8,800 shares in treasury stock. The journal entry to record the dividend declaration is:
Debit Retained Earnings $80,080; credit Common Dividends Payable $80,080. $0.40 × (209,000 issued shares − 8,800 treasury shares) = $80,080
On August 1, a $58,800, 9%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest of $23,229.22. The entry to record the first payment on July 31 would include:
Debit to Interest Expense of $5,292.00.**** Interest Expense 5,292.00 Notes Payable 17,937.22 Cash 23,229.22
Use the following information to calculate cash received from dividends: Dividends revenue$72,000 Dividends receivable, January 1 6,150 Dividends receivable, December 31 4,800
Decrease in Dividends Receivable = $6,150 − $4,800 = $1,350 Cash received from dividends = $72,000 + $1,350 = $73,350
On January 1, a company issued and sold a $300,000, 5%, 10-year bond payable, and received proceeds of $293,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The carrying value of the bonds immediately after the first interest payment is:
Discount amortized = ($300,000 - $293,000)/20 = $350Carrying Value = $300,000 bond payable less $6,650 unamortized discount ($7,000 − $350). $293,350.
On January 1, a company issued and sold a $350,000, 6%, 10-year bond payable, and received proceeds of $342,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The carrying value of the bonds immediately after the second interest payment is:
Discount amortized = ($350,000 − $342,000)/20 = $400 Carrying Value = $350,000 bond payable less $7,200 unamortized discount ($8,000 − (2 × $400)). $342,800.****
A company paid $0.70 in cash dividends per share. Its earnings per share is $4.42 and its market price per share is $27.25. Its dividend yield equals:
Dividend Yield = Cash Dividends per Share/Market Price per Share Dividend Yield = $0.70/$27.25 = 2.57%
A company paid $0.90 in cash dividends per share. Its earnings per share is $2.90, and its market price per share is $28.00. Its dividend yield equals:
Dividend Yield = Cash Dividends per Share/Market Price per Share Dividend Yield = $0.90/$28.00 = 3.2%
Mayan Company had net income of $32,980. The weighted-average common shares outstanding were 9,700. The company declared a $4,400 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:
Earnings per Share = (Net Income − Preferred Dividends)/Weighted-Average Common Shares Outstanding Earnings per Share = ($32,980 − $4,400) / 9,700 = $2.95
Mayan Company had net income of $33,250. The weighted-average common shares outstanding were 9,500. The company has no preferred stock. The company's earnings per share is:
Earnings per Share = (Net Income − Preferred Dividends)/Weighted-Average Common Shares Outstanding Earnings per Share = ($33,250 − $0) / 9,500 = $3.50**
A company's income statement showed the following: net income, $127,000 and depreciation expense, $30,900. An examination of the company's current assets and current liabilities showed the following changes: accounts receivable decreased $9,700; merchandise inventory increased $18,600; and accounts payable increased $3,700. Calculate the net cash provided or used by operating activities.
Net income$127,000 Depreciation expense 30,900 Decrease in accounts receivable 9,700 Increase in merchandise inventory (18,600) Increase in accounts payable 3,700 Net cash provided by operating activities$152,700***
In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income$56,000Accounts payable decreased by 20,000Accounts receivable increased by 27,000Inventories increased by 7,000Depreciation expense 34,000 Net cash provided by operating activities was:
Net income$56,000 Depreciation exp. 34,000 Increase in A/R (27,000)Increase in Inventories (7,000)Decrease in A/P (20,000) $36,000
In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income$56,500 Accounts payable decreased by 22,500 Accounts receivable increased by 29,500 Inventories increased by 9,500 Cash dividends paid 14,900 Depreciation expense 24,500 Net cash provided by operating activities was:
Net income$56,500 Depreciation exp. 24,500 Increase in A/R (29,500) Increase in Inventories (9,500) Decrease in A/P (22,500) $19,500
In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income$71,000 Accounts payable increased by 37,000 Accounts receivable decreased by 63,000 Inventories decreased by 24,000 Cash dividends paid 33,000 Depreciation expense 58,000 Net cash provided by operating activities was:
Net income$71,000 Depreciation exp. 58,000 Decrease in A/R 63,000 Decrease in Inventories 24,000 Increase in A/P 37,000 $253,000***
In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income$73,000 Accounts payable increased by 20,100 Accounts receivable decreased by 27,100 Inventories increased by 9,200 Depreciation expense 36,300 Net cash provided by operating activities was:
Net income$73,000 Depreciation exp. 36,300 Decrease in A/R 27,100 Increase in Inventories (9,200) Increase in A/P 20,100 $147,300
Use the following information and the indirect method to calculate the net cash provided or used by operating activities: Net income$85,800 Depreciation expense 12,500 Gain on sale of land 8,000 Increase in merchandise inventory 2,550 Increase in accounts payable 6,650
Net income$85,800 Depreciation expense 12,500 Gain on sale of land (8,000) Increase in merchandise inventory (2,550) Increase in accounts payable 6,650 Net cash used by operations$94,400***
On September 1, Ziegler Corporation had 67,000 shares of $5 par value common stock, and $201,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:
No entry is made for this transaction.
Bagrov Corporation had a net decrease in cash of $13,500 for the current year. Net cash used in investing activities was $55,500 and net cash used in financing activities was $41,500. What amount of cash was provided (used) in operating activities?
Operating − $55,500 investing − $41,500 financing = $13,500 cash decrease Operating − $97,000 = − $13,500 Operating = − $13,500 + $97,000 Operating = $83,500 provided.****
Fargo Company's outstanding stock consists of 400 shares of noncumulative 5% preferred stock with a $10 par value and 7,000 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid: year 1$40,000 year 2$9,000 year 3$49,000 The amount of dividends paid to preferred and common shareholders in year 1 is:
Preferred stock dividend: 400 shares × $10/share × 5% = $200$40,000 − $200 preferred = $39,800 to common $200 preferred; $39,800 common.
Stormer Company reports the following amounts on its statement of cash flow: Net cash provided by operating activities was $30,500; net cash used in investing activities was $11,000 and net cash used in financing activities was $13,500. If the beginning cash balance is $5,500, what is the ending cash balance?
Provided by operating activities$30,500 Used in investing activities$(11,000) Used in financing activities$(13,500) Net increase in cash$6,000 Plus Beginning Cash$5,500 Ending Cash$11,500***
