1) A bond discount or premium must
a always be amortized using straight-line amortization
b always be amortized using the effective-interest method
c be amortized using the effective-interest method if it yields annual amounts that are materially different than the straight-line method
d be amortized using the straight-line method if it yields annual amounts that are materially different than the effective-interest method
e none of the above
etained Earnings $250,000
Preferred Stock, 6% $100 par value, 8,000 shares issued $800,000
Paid-in Capital in excess of par value, Preferred $ 50,000
Common stock, $10 par value, 50,000 shares issued $500,000
Paid-in Capital in Excess of par value, Common $100,000
Treasury Stock, common, 9,300 shares $120,000
2) the b/s prepared at Dec 31, would report legal capital of
3) the b/s prepared at Dec 31, would report total capital of
4) the b/s prepared at Dec 31, would report total stockholders' equity of
5) the number of common shares outstanding at Dec 31 is
KM Company issues a 10-year bond with a face value of $5,000,000 and stated interest rate of 8% on January 1, 2007 when the market rate was 10%. Interest is paid on June 30 and Dec 31 each year. Assume the effective interest method of amortizing bond premiums and bond discount is used.
6) the bond will sell for Ans: $4,376,943
7) the amount of interest (cash) paid on Dec 31, 2007 is
8) the amount of interest expense to be recorded on Dec 31, 2007 is
9) what amount will be recorded in the Dec 31, 2007 journal entry to amortize the premium or discount
10) the carrying value of the bond on Dec 31, 2007, after the premium or discount is amortized is
11) the total amount of cash KM Company will pay over the life of the bond is Ans: $7,000,000
12) the total cost of borrowing from the issuance of the bond is Ans: 4623,110.52
13) Blue Company is authorized to issue 500,000 shares of $1 par value common stock. On May 1, 2006, Blue issues 50,00 shares for $75,000. The journal entry to record the issuance of stock includes a credit to
14) Red Company is authorized to issue 500,000 shares of no-par common stock. The stock has a stated calue of $1 per share. On May 1, 2006, Green issues 50,00 shares for $75,000. The journal entry to record the issuance of stock includes a credit to
15) On March 1, 2009, the Miranda Company purchased 2,00 shares of its common stock for $25 par value for the treasury. On July 1, 2009, 1,000 of the treasury shares were sold for $30 per share. On October 1, 2009, 1,000 of the treasury shares were sold at $15 per share.
16) which of the following is true regarding the purchase of stock on March 1?
17) refer to question #16. By what amount did treasury stock change, if at all?
18) refer to question #16. By what amount did total equity change, if at all?
19) which of the following is true regarding the sale of treasury stock on July 1?
20) refer to question #19. By what amount did treasury stock change, if at all?
21) refer to question #19. By what amount did total equity change, if at all?
22) Which of the following is true regarding the sale of treasury stock on October 1?
23) refer to question #22. By what amount did treasury stock change, if at all?
24) refer to question #22. By what amount did total equity change, if at all?
Scenario 1: Assuming enough credit Balance in present in Paid in capital to absorb loss
Decrease in Treasury Stock by 25000
Paid in capital decrease by $10000 (Loss on sale)
So net change is 25000-10000 = 15000
Scenario 2: Assuming credit Balance in present in Paid is only from the amount gained earlier so the loss is limited to gain made earlier then decrease will be $5000 and rest will go to P&L)
25) what is the balance in Retained earnings at the end of the year?
26) what is the effect of the dividend on retained earnings?
27) refer to previous question. by what amount did re change, if at all?
28) what is the effect of the dividend on common stock?
29) refer to previous question. by what amount did re change, if at all?
30) what is the effect of the dividend on paid-in capital?
31) refer to previous question. by what amount did re change, if at all?
32) what is the effect of the dividend on the number of shares outstanding?`
33) refer to previous question. by what amount did re change, if at all?
34) what is the effect of the dividend on total equity and total assets?
35) refer to previous question. by what amount did re change, if at all?
A company with 50,000 authorized shares of $1 par common stock issued 10,000 shares of $10 per share. Subsequently, the company declared and paid a $3 cash dividend per share. One the date the company declared the dividend, the market price of the shares is $30 per share.
36) what is the effect of the dividend on retained earnings?
37) refer to previous question. by what amount did re change, if at all?
38) what is the effect of the dividend on common stock?
39) refer to previous question. by what amount did re change, if at all?
40) what is the effect of the dividend on paid-in capital?
41) refer to previous question. by what amount did re change, if at all?
42) what is the effect of the dividend on the number of shares outstanding?
43) refer to previous question. by what amount did re change, if at all?
44) what is the effect of the dividend on total equity and total assets?
45) refer to previous question. by what amount did re change, if at all?
46) Which of the following is the correct matching concerning an investor's influence on the operations and financials affairs of an investee
48) Ridge Company uses the equity method to account for its investment in FMP Enterprises. During 2005, FMP earned net income of $70,000 and paid dividends of $20,000. In accounting for the investment during 2005, ridge will
49) On jan 1, Blackstone co. purchased 10% of the 1,000,000 shares of common stock outstanding of merliton enterprises for 800,000. For the year ended dec 31, merliton earned net income of $50,000 and paid dividends of $10,000. the market value of merliton's stock on dec 31 is $9. Blackstone's investment in merilton will be reported on its dec 31 b/s at:
50) On jan 2, matthews corp purchased 30% of the 1,000,000 shares of outstanding common stock of edmonds co. for 900,000. For the year ended dec 31, edmonds reported a net loss of $100,000 and paid cash dividends of $30,000 on its common stock. the market value of merliton's stock on dec 31 is $2.50. matthew's investment in edmonds will be reported on its dec 31 b/s at:
51 On January 1, Belle Corporation purchased 25% of the 1,000,000 shares of common stock outstanding of Lane Corporation for $5,000,000. For the year ended December 31, Lane Corporation reported net income of $10,000,000 and paid cash dividends of $1,000,000. The market value of the Lane's stock on December 31 is $30. Belle's investment in Lane will be reported on its December 31 balance sheet.