Acct 201 test 7

AnuU, Inc., sold 100,000 shares of the 1,000,000 shares it is allowed to sell. AnuU repurchased 10,000 of these shares. The number of shares issued equals ______ shares.

100,000 sold=issued

A company's distribution of its accumulated earnings is a(n) ______.

Dividend

Which of the following will cause earnings per share to decrease?

Re-issuance of treasury stock

Which of the following accounts are closed into Retained Earnings at yearend?

Revenue Accounts Expense Accounts Dividends

Additional Paid-in Capital of $1,000,000 is found in the ______ section of the ______.

Shareholders equity; balance sheet

A corporation has 200,000 shares of stock authorized, 80,000 shares issued and 70,000 shares outstanding. Which of the following statements is TRUE?

There are 10,000 shares of treasury stock

True or false: Some states allow corporations to issue no-par value common stock.

True

In Year 1, Stock to the Hand, Inc., issued 100,000 shares of the 1,000,000 shares of $0.50 par value common stock it is allowed to sell. The total received from issuing its common stock is $500,000. Stock to the Hand bought back 2,000 shares of its stock at a cost of $7 each. Show the effect of the purchase of treasury stock on the accounting equation:

Assets: (14,000) Cash Liabilities: No effect Shareholders Equity: (14,000) Treasury Stock

On January 1, Year 1, Big Seats Furniture, Inc., issued $200,000 worth of 8% bonds at $200,000. Interest will be paid annually on December 31. Show the effect of the first interest payment on the accounting equation.

Assets: (16,000) Cash Liabilities: No Effect Shareholders Equity: (16,000) Interest Expense

Tissues, Inc., issued 1,000 shares of its $0.50 par value common stock for $10 per share. Show the effect of issuing the common stock on the accounting equation:

Assets: 10,000 Cash Liabilities: No effect Shareholders Equity: 500 Common Stock; 9,500 Additional Paid-in Capital

Show the effect of the issuance of the note. Borrowed $11,620 at an annual interest rate of 6% by signing a 12-month installment note.

Assets: 11,620 Cash Liabilities: 11,620 Notes Payable Shareholders Equity: No effect

Daffy Duct, Inc., issued 100,000 shares of $1 par value common stock at $5 per share. Miss Steak, the bookkeeper, recorded the transaction with a $500,000 debit to Cash and $500,000 credit to Common Stock. Which of the following is true?

Common stock will be overstated

______ bonds are retired when the bondholder exchanges them for the issuing company's stock.

Convertible

A corporation ______ have a legal obligation to pay dividends.

does not

If Lawn & Order, Inc., had borrowed $20,000 by issuing an 8-month note at 6% on October 1, instead of a 4-month note at 6%, Interest Expense for the month ended October 31 would have been _______.

the same

On January 1, Year 1, Novel Tea, Inc., issued a $20,000, 8%, 10-year mortgage note. The note requires annual payments of $2,717 on December 31. Record the amounts in the Notes Payable T-account below for Year 1 given this information:

_______0_______|___20,000____ _____1,117_____|_______0________ _______0_______|___18,883_____

Cracked Egg Diner needed some long-term financing and arranged for a 10-year, $100,000, 7% mortgage loan on January 1, Year 1. Annual payments of $14,238 will be made on December 31 each year. For each item, select the amount as of or for the Year Ended December 31, Year 1, in the column of the one financial statement where the amount is found.

-(7,000); Income Statement -92,762; Balance Sheet -(7,000); Statement of Cash Flows- operating activities -(7,238); Statement of Cash Flows- financing activities

Identify each as a Current Liability, Long-term Liability or Neither: Deferred Revenue (5-month contract) Common Stock Interest Payable 5-Year Notes Payable Accounts Receivable

-Current liability -Neither -Current Liability -Long-term liability -Neither

Identify each as a Current Liability, Long-term Liability or Neither.: 10-Year Bonds Payable Common Stock 3-Month Notes Payable Accounts Payable Accounts Receivable

1. Long-term liability 2. Neither 3. Current liability 4. Current liability 5. Neither

On September 1, Jurasic Pork Company borrowed $50,000 on a 6%, 9-month note payable to XYZ National Bank. Given no previous adjusting entries have been recorded, Jurasic Pork's adjusting entry at December 31 would include a ______.

DR: Interest Expense $1,000 CR: Interest Payable $1,000

On November 1, Year 1, The Yacht Doc, Inc., borrowed $10,000 at 6% due in eight months. Record the adjusting journal entry for the interest incurred for the year ended December 31, Year 1.

DR: Interest Expense $100 CR: Interest Payable $100

The date, which follows the date of declaration, and determines which shareholders will receive the dividend is the ______.

Date of record

Which of the following line item amounts would be under the Retained Earnings column of a statement of shareholders' equity? (Select all that apply.)

Dividends and Net Income

Earnings per share (EPS) appears on the ______.

Income statement

On November 1, Year 1, Bondage, Inc., issued $30,000 of 10-year, 6% bonds at 100.000. The bonds pay interest annually on November 1. Which of the following will appear on Bondages balance sheet at December 31, Year 1?

Interest Payable, $300 The adjusting entry required at December 31 is a debit to Interest Expense (-SE) and a credit to Interest Payable (+L) for $300 (=$30,000 x 6% per year x 2/12 year).

Which financial statement reports the line item Dividends?

Statement of Shareholders Equity

Common Stock plus Additional Paid-in Capital (Contributed Capital) of $1,000,000 represents ______.

The amount shareholders have invested in exchange for stock

On August 1, Year 1, Luna Sea Motel, Inc., issued a 9%, 8-month, $10,000 note and a 9%, 10-month, $10,000 note. The interest payable on the 9%, 8-month note will be _____ the interest on the 10-month note as of December 31.

The same

On January 1, Year 1, Faux Sure, Inc., borrowed $40,000 on a five-year, 7% note. The loan will be repaid in 5 equal installments of $9,756 each year, beginning on December 31, Year 1. Notes Payable at December 31, Year 2, will be _____ Notes Payable at December 31, Year 1.

lower than

The line item Repurchase of Treasury Stock is reported in the ______.

Financing activities section on the statement of cash flows

On January 1, Year 1, Brewed Awakening, Inc., borrowed $310,000 at 7% interest. The loan will be repaid with equal annual installment payments of $60,000 made on the last day of each year. The entry to record the second year's payment includes a debit to Interest Expense of $______.

$19,019 SO... 310,000 x .07 = 21,700 then... 60,000-21700 = 38,300 then... 310,000 - 38,300 = 271,700 finally... 271,700 x .07 = 19,019

In Year 1, Stock to the Hand, Inc., sold 20,000 shares of the 100,000 shares of $0.40 par value common stock it is allowed to sell. The total received from issuing its common stock is $200,000. Stock to the Hand bought back 2,000 shares of its stock at a cost of $12 each. It also declared and paid a $0.10 per share dividend to its common shareholders. What is the authorized number of shares?

100,000

On February 28, Year 1, Mighty Ducks, Inc., issued $100,000, 20-year, 6% bonds at 100.000. The bonds pay interest semi-annually on February 28 and August 31. At the end of the year, December 31, Year 1, the adjusting entry includes a debit to Interest Expense of $______. (round to the nearest $ amount)

2,000 100,000 x .06 x 4/12 = 2,000

B. Row, Inc., needed some long-term financing and arranged for a 10-year, $100,000, 7% mortgage loan on January 1, Year 1. Annual payments of $14,238 will be made on December 31 each year. The journal entry to record the issuance of the note includes:

DR: Cash $100,000 CR: Notes payable $100,000

On June 30, the board of directors of Dive Inn, Inc., declared a cash dividend of $0.20 per share on its $2 par value, 100,000 common shares outstanding. The date of record is the close of business on July 7, payable July 31. The entry to record the payment of dividends on July 31 includes a ______. (Select all that apply.)

DR: Dividends Payable 20,000 CR: Cash 20,000

On June 30, the board of directors of Dive Inn, Inc., declared a cash dividend of $0.20 per share on its $2 par value, 100,000 common shares outstanding. The date of record is the close of business on July 7, payable July 31. The entry to record the payment of dividends on July 31 includes a ______.

DR: Dividends payable $20,000 CR: Cash $20,000

On September 1, Jurasic Pork Company borrowed $50,000 on a 6%, 6-month note payable to XYZ National Bank. Jurasic Pork recorded an adjusting entry at December 31, its year end. On March 1, the due date, Jurasic Pork recorded its payment of the note and interest. This entry includes a ______.

DR: Interest Expense $500 DR: Interest Payable $1,000 DR: Notes Payable $50,000 CR: Cash $51,500

On November 1, Year 1, Pans on Fire, Inc., borrowed $100,000 cash on an 1-year, 6% note payable that requires Pan's on Fire to pay both principal and interest on October 31, Year 2. The last adjusting journal entry was made on December 31, Year 1, its year end. The entry to record the payment on October 31, Year 2 would include a ______. (Select all that apply.)

DR: Notes payable 100,000 DR: Interest Expense 5,000 DR: Interest Payable 1,000 CR: Cash 106,000

Dilution Solutions, Inc., repurchased 1,000 shares of its $1 par value common stock for $5,000. The journal entry to record this transaction includes a $5,000 ______ to Treasury Stock.

Debit

On January 1, Year 1, Clean Dirt, Inc., signed a $10,000,000, 6%, 10-year mortgage note to finance the purchase of an excavator. The note will be repaid in 10 equal annual installments of $1,358,679. Over the 10-year period, as each installment payment is made, the portion of the payment that is Interest Expense ________.

Decreases

The purchase of treasury stock ______.

Decreases total assets and decreases shareholders equity

On January 1, Lettuce Eat, Inc., issued $700,000 of 7% bonds at par value. Interest is paid semiannually on June 30 and December 31. By what amount should Cash be credited when recording the first interest payment?

24,500 700,000 x .07 x 6/12 = 24,500

Which of the following statements is FALSE? Sales is found on the Income Statement Notes Payable is found on the Balance Sheet Inventory is found on the Balance Sheet Additional Paid-in-Capital found on the Statement of Cash Flows

Additional Paid-in Capital found on the Statement of Cash Flows

Tissues, Inc., issued 1,000 shares of its $0.50 par value common stock for $10 per share. Show the effect of issuing the common stock on the accounting equation:

Assets: 10,000 Cash Liabilities: No effect Shareholders Equity: 500 Common Stock; 9,500 Additional paid-in capital

A common reason for calling in a callable bond before its maturity date is that _____.

Market interest rates decreased

Tequila Mockingbird, Inc., needed some long-term financing and arranged for a 10-year, $100,000, 7% mortgage loan on January 1, Year 1. Annual payments of $14,238 will be made on December 31 each year. For each item, select the amount as of or for the Year Ended December 31, Year 2, in the column of the one financial statement where each amount is found.

Notes Payable: 85,017; Balance Sheet Interest Expense: 6,493; Income Statement