Question 1: The Defiance College sells season tickets for four home football games at a price of $15. For the 2011 season, 5,000 season tickets were sold.
(a) Write the journal entry or use the horizontal model to show the effect of the sale of the season tickets.
(b) Write the journal entry or use the horizontal model to show the effect of hosting a home football game.
(c) What category on the balance sheet would the account balance representing funds received for games not yet played be classified (current assets, non-current assest, current liabilities, long-term debt, revenue, expense)? Assume that The Defiance College follows the same accounting and financial reporting procedures that are used in business.
Question 2: Ariel, Inc., issued $30 million face amount of 9% bonds when market interest rates were 9.30% for bonds of similar risk and other characteristics.
(a) How much interest will be paid annually on these bonds?
(b) Will the bonds be issued at a premium or discount? Explain your answer.
(c) Will the annual interest expense on these bonds be more than, equal to, or less than, the amount of interest paid each year? Explain your answer.
Question 3: The balance sheet caption for common stock is:
Common stock, $10 par value, 7,000,000 shares authorized, 5,700,000 shares issued, 5,500,000 shares outstanding.
(a) Calculate the dollar amount that should be reported for Common Stock.
(b) Calculate the total amount of a cash dividend of $1.00 per share.
(c) What accounts for the difference between issued shares and outstanding shares?