ACCOUNTING 221 Quiz1

Choice Questions Select the best answer for the following questions. Each question is worth 5 points. n 1 5 / 5 points A corporation has the following account balances: Common Stock, $10 par value, $740,000; Paid-in ...

Choice Questions Select the best answer for the following questions. Each question is worth 5 points. n 1 5 / 5 points A corporation has the following account balances: Common Stock, $10 par value, $740,000; Paid-in Capital in Excess of Par, $1,850,000. Based on this information, the _______________. legal capital is $2,590,000 shares issued are 1,850,000 shares outstanding are 740,000 legal capital is $740,000 View Feedback n 2 5 / 5 points On January 2, 2015, Easton Corporation issued 50,000 shares of 5% cumulative preferred stock at $100 par value. No dividends have been paid to any shareholders since the formation of the corporation. Management wants to issue a dividend to common shareholders on December 31, 2016. What dividend amount, if any, must be paid to the preferred stockholders entitled before any distribution is made to common stockholders? $0 $500,000 $250,000 $125,000 View Feedback n 3 5 / 5 points The Frederick Company has 100,000 shares of $5 par common stock outstanding. Management declares (not pays) a 10% stock dividend. The market value of a share of common stock was $32 immediately prior to the stock dividend declaration. The journal entry is: debit retained earnings, $320,000; credit stock dividend distributable, $10,000; credit paid in capital in excess of par, $310,000. debit retained earnings, $320,000; credit stock dividend distributable, $50,000; credit paid in capital in excess of par, $270,000. debit stock dividends distributable, $320,000; credit common stock, $320,000.debit stock dividends distributable, $50,000; credit common stock, $50,000. View Feedback n 4 0 / 5 points The Frederick Company has 100,000 shares of $5 par common stock outstanding. Management PAYS (not declares) a 10% stock dividend. The market value of a share of common stock was $32 immediately prior to the stock dividend declaration. The journal entry is: debit retained earnings $320,000; credit stock dividend distributable $10,000; credit paid in capital in excess of par $$310,000. debit retained earnings $320,000; credit stock dividend distributable $50,000; credit paid in capital in excess of par $$270,000. debit stock dividends distributable $320,000; credit common stock $320,000. debit stock dividends distributable $50,000; credit common stock $50,000. View Feedback n 5 5 / 5 points Cambridge Hat Company previously purchased 20,000 shares of treasury stock on the open market for $12 per share. Later, the company resells 10,000 shares for $14 per share. What is the journal entry for the sale? debit cash, $140,000; credit treasury stock, $120,000; credit additional paid-in capital—treasury stock, $20,000 debit cash, $140,000; credit treasury stock, $140,000 debit cash, $140,000; credit treasury stock, $20,000; credit additional paid-in capital, $120,000 debit cash, $140,000; credit treasury stock, $120,000; credit retained earnings, $20,000 View Feedback n 6 5 / 5 points Smith Ventures Inc. purchased 10% of the outstanding stock of Jones Company. Smith paid $15 per share to acquire 8,000 shares and will treat this purchase as available-for-sale securities. Par value of the stock is 50 cents. Smith uses a calendar year, and on December 31, the market value of Jones stock is $17 per share. What is the entry Smith needs to make on December 31? debit unrealized gain on available-for-sale securities, $16,000; credit available-for-sale securities, $16,000. no entry is required because the stock has not been sold.debit available-for-sale securities, $16,000; credit unrealized gain on available-for-sale securities, $16,000. debit available-for-sale securities, $8,000; credit unrealized gain on available-for-sale securities, $8,000. View Feedback n 7 5 / 5 points Richmond Corporation has issued an outstanding common stock of 50,000 shares, $5 par value. On July 1, the company pays a 2-for-1 stock split. What are the legal capital and the par value of the stock immediately after the split? Legal capital, $250,000; par value, $5. Legal capital, $250,000; par value, $2.50. Legal capital, $125,000; par value, $5. Legal capital, $500,000; par value, $2.50. View Feedback n 8 0 / 5 points On January 10, Acme Ventures Inc. purchased 30% of the outstanding stock of Gamma Ray Manufacturing Corp. The purchase was 30,000 shares at $10 per share. Acme received dividends from Gamma Ray in the amount of $15,000 on June 15 and again on December 15. Gamma reported net income for the year ended December 31 in the amount of $250,000. What is the journal entry, if any, that Acme needs to make dated December 31? No entry on December 31 because the dividends were paid on different dates. Debit investment in Gamma Ray Corp., $45,000; credit income from Gamma Ray Corp., $45,000. Debit investment in Gamma Ray Corp., $75,000; credit income from Gamma Ray Corp., $75,000. Debit investment in Gamma Ray Corp., $75,000; credit income from Gamma Ray Corp., $45,000; credit dividends income, $30,000. View Feedback n 9 0 / 5 points High Adventure Corp. issues $100,000 of 7%, 10-year bonds for 98. High Adventure uses the straight-line method to amortize any bond discounts or premiums. The bonds pay interest semiannually. On the maturity date of the bond, what is the journal entry for the final interest payment and the redemption of the bonds?Debit bonds payable, $98,000; debit interest expense, $3,600; credit cash, $101,500; credit discount on bonds payable, $100. Debit bonds payable, $100,000; debit interest expense, $3,500; credit cash, credit cash $103,500. Debit bonds payable, $100,000; debit interest expense, $3,430; credit cash, $103,430. Debit bonds payable, $100,000; debit interest expense, $3,600; $103,500; credit discount on bonds payable, $100. View Feedback n 10 5 / 5 points On January 1, 2016, Towson Inc. issued $500,000, 20-year, 6% bonds at 101. Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2016, is: debit cash, $500,000; credit bonds payable, $500,000. debit cash, $505,000; credit bonds payable, $505,000. debit cash, $500,000; debit premium on bonds payable, $5,000; credit bonds payable, $505,000. debit cash, $505,000; credit bonds payable, $500,000; credit premium on bonds payable, $5,000. View Feedback Entries For this part of the quiz, you will be uploading your work through answer sheets. The instructions for how to upload your answer sheets are provided within each question. n 11 0 / 20 points Salisbury Corporation formed a corporation on January 3, 2016, and is authorized to issue 500,000 shares of $10 par value common stock. The company has the following stock transactions. 1/10/2016 – Issued 200,000 shares of stock at $16 per share. 1/25/2016 – The law firm that helped the company incorporate and file all forms for the stock issue accepts 1,000 shares of newly issued stock in lieu of cash for its legal bill rendered. The amount of the legal bill was $20,000. 6/10/2016 – Salisbury Corporation declares a 50 cent per share dividend payable July 15 to shareholders of record as of June 30, 2016.6/30/2016 – The record date for the dividend declared on June 10. 7/15/2016 – The dividend declared on June 10 is paid. 9/15/2016 – Salisbury Corporation declares a 10% stock dividend payable on September 30 to shareholders of record as of September 20. The market value of the stock was $15 immediately prior to the declaration of the stock dividend. 9/30/2016 – The stock dividend declared on September 15 is paid. 10/15/2016 – Salisbury Corporation buys 5,000 shares of its own stock on the open market for $18 per share. 12/18/2016 – Salisbury Corporation resells 2,000 shares of the treasury stock for $20 per share. Instructions: Journalize the above transactions for Salisbury Corporation. Problem 1 Answer Sheet Instructions To submit your answers for this part of the exam, fill in the answer sheet and upload it to the exam. Download: Quiz 1 Problem 1 Answer Sheet  To upload your answer sheet, follow these instructions:  Click the Insert Stuff icon (first on the left).  Click Upload to retrieve the file from your computer and upload it.  For Link Text: (Your Name) Final Exam Answer Sheet  Click Add. (Ignore the Choose Destination prompt.)  Click OK. 1. debit retained earnings, $320,000; credit stock dividend distributable, $50,000; credit paid in capital in excess of par, $270,000. 2. debit cash, $140,000; credit treasury stock, $120,000; credit additional paid-in capital— treasury stock, $20,000 3. debit available-for-sale securities, $16,000; credit unrealized gain on available-for-sale securities, $16,000. 4. Legal capital, $250,000; par value, $2.50. 5. Debit investment in Gamma Ray Corp., $75,000; credit income from Gamma Ray Corp., $75,000. 6. Debit bonds payable, $100,000; debit interest expense, $3,600; $103,500; credit discount on bonds payable, $100. 7. debit cash, $505,000; credit bonds payable, $500,000; credit premium on bonds payable, $5,000. Question 11 10-01-16 Cash Dr 3200000 Common stock Cr 2000000Additional Paid in capital Cr 1200000 ( To record issuance of 200000 shares @ 16) 25-01-16 Legal and professional charges Dr 16000 Common stock Cr 16000 ( to record legal expenses paid through common stock) 10-06-16 Dividends Dr 100500 Dividends payable Cr 100500 ( to record declaration of dividend @ 0.50 per share = ( 200000 + 1000) * 0.5) 30-06-16 No entry required on record date 15-07-16 Dividends Payable Dr 100500 Cash Cr 100500 ( to record payment of dividend declared on 10th june) 15-09-16 Dividends Dr 201000 Dividends payable Cr 201000 ( to record declaration of dividend @ 10% of 1= 1 per share = ( 200000 + 1000) *1) 30-09-16 Dividends Payable Dr 201000 Cash Cr 201000 ( to record payment of dividend declared on 15th September) 15-10-16 Treasury stock Dr 90000 Cash Cr 90000 ( To record purchase of treasury stock 5000 @ 18) 20-10-16 Cash Dr 40000 Treasury Stock Cr 36000 Additional paid in capital Cr 4000 ( to record resale of 2000 treasury stock @ 20) This question has not been graded. The correct answer is not displayed for Long Answer type questions. View Feedback n 12 0 / 15 points This problem is worth 15 points. On July 1, 2016 Alpha Company sells $1,000,000 face value of 10% five year bonds which call for semiannual interest payments. The bonds are dated April 1, 2016 so these bonds are issued between interest dates. The market rate at the date of issue is also 10%. For simplicity, use a 360-day year and 30 day months for all calculations. 1. Record the journal entries for the issuance of the bonds 2. Record the journal entries for the first interest payment due on October 1, 2016. Assume that interest has not been accrued at each month end. Click here to download the Question 2 Answer Sheet.Question 12 DATE ACCOUNT TITLE DEBIT CREDIT 1/4/2016 Cash 1081145 Premium on Bonds 81145 Bonds payable 1000000 50000*8.1109+1000000*.6756 = 1081145 1/10/2016 Interest Expense 41885 Premium on Bonds 8115 Cash 50000 1000000*.05 = 50000 81145/10 = 8115 50000-8115 This question has not been graded. The correct answer is not displayed for Long Answer type questions. View Feedback n 13 0 / 15 points On April 1, 2016 Alpha Company sells $1,000,000 face value of 10% five year bonds which call for semiannual interest payments. The bonds are dated April 1, 2016 so these bonds are issued on an interest date. The market rate at the date of issue is 8%. Use the straight line method of amortization of any bond premium or discount. For simplicity, use a 360-day year and 30 day months for all calculations. 1. Record the journal entries for the issuance of the bonds 2. Record the journal entries for the first interest payment due on October 1, 2016. Assume that interest has not been accrued at each month end. Click to download the Question 3 Answer Sheet. DATE ACCOUNT TITLE DEBIT CREDIT July 1 Cash 1000000 Bonds Payable 1000000 Oct 1 Interest Expense 50000 Cash 50000