Term
| 1. A corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares. At the time of the stock dividend, the market value per share was $12. What is the entry to retained earnings on this transaction? |
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Definition
- $30,000 debit
- Large stock dividend, use par value. RE= par value * stock dividend declared |
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Term
| 2. Your Company had net income of $45,000. The weighted-average common shares outstanding were 8,000. The company repurchased 3,000 shares before the end of the year. There were no other stock transactions. Calculate the company's earnings per share. Round to nearest cent if necessary. |
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Definition
- $6.92
- earnings per share = net income divided by weighted-average common shares outstanding > weighted-average common shares outstanding = (8,000 + 8,000 – 3,000) ÷ 2 = 6,500, earnings per share = $45,000 ÷ 6,500 = $6.92 |
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Term
| 3. On January 1, 2014 Your Company had a $4,000 balance in the Accounts Receivable account and a zero balance in the Allowance for Doubtful Accounts account. During 2014, Your Company provided $75,000 of service on account. The company collected $64,000 cash from account receivable. Bad debts are estimated to be 2% of sales on account. The amount of bad debts expense to recognize on the 2014 income statement is: |
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Definition
- $1500
- Bad debt expense = total credit sales for the period time the bad debt percentage estimate
- $1,500 = $75,000 * .02 |
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Term
| 4. Your Corporation, a calendar-year company, acquired a new machine on 1/1/12. The cost of the machine is $720,000, and the machine has an estimated useful life of 8 years (or 800,000 units of product). The machine has an expected salvage value of $60,000. Calculate depreciation expense, double-declining balance method, for 2013. Accumulated depreciation at the beginning of the year was $180,000. |
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Definition
- $135,000
- Double declining balance depreciation = [cost – accumulated depreciation] ÷ useful life * 2
- [$720,000-$180,000] ÷ 8 * 2 = $135,000 |
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Term
| 5. Your Company uses the perpetual inventory method. Your Company purchased 4,000 units of inventory that cost $8.00 each. At a later date the company purchased an additional 6,000 units of inventory that cost $10.00 each. If Your Company uses the LIFO cost flow method and sells 7,000 units of inventory, the amount of cost of goods sold will be: |
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Definition
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Term
| 6. Paying off an accounts payable is properly classified as |
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Definition
- Asset Use
- asset use -- cash is going down and no other assets are changing |
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Term
| 7. A small stock dividend is one that is 25% or less of the previously outstanding shares. |
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Definition
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Term
| 8. Price-earnings ratio is the ratio of a company's earnings per share to its current market value per share. |
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Definition
- False
- Price Earnings ratio= current mkt value per share / company’s earnings per share |
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Term
| 9. A reverse stock split increases both the market value per share and the par or stated value per share. |
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Definition
- True
- Instead of two for one as in a normal stock split, you are giving one for two |
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Term
| 10. Your Corporation’s unadjusted bank balance at September 30, 2014 is $1,730. The following information is available for the bank reconciliation: Deposits in transit, $500, Outstanding checks,$300, Bank service charges, $40, Bank collected an accounts receivable for Your Company, $350, NSF check written by one of Your Company’s customers, $600. What is Your Company’s true cash balance? |
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Definition
- $1930
- Book balance + deposits in transit – outstanding checks |
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Term
| 11. Your Company issued a $100,000 face value bond on January 1, 2013. The 10 year term bond was issued at 97 and had a 2% stated rate of interest that is payable on December 31st of each year. How much cash did the company receive when the bond was issued? |
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Definition
- $97,000
- $100,000 * .97 |
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Term
| 12. Your Company issued a $100,000 face value bond on January 1, 2013. The 10 year term bond was issued at 97 and had a 2% stated rate of interest that is payable on December 31st of each year. What is the amount of the annual bond discount amortization? |
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Definition
- $300
- Bond Discount= face value – cash received
- Amortization of Bond Discount= discount/term of bond |
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Term
| 13. Your Company issued a $100,000 face value bond on January 1, 2013. The 10 year term bond was issued at 97 and had a 2% stated rate of interest that is payable on December 31st of each year. How much cash do the bond holders get at the end of year one? |
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Definition
- 2000
- Annual cash payment to bondholder= face value * interest rate |
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Term
| 14. Your Company issued a $100,000 face value bond on January 1, 2013. The 10 year term bond was issued at 97 and had a 2% stated rate of interest that is payable on December 31st of each year. What is the interest expense for year one? |
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Definition
- $2300
- Interest Expense= face value * interest rate + amortization of bond discount |
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Term
| 15. Company issued a $100,000 face value bond on January 1, 2013. The 10 year term bond was issued at 102 and had a 3% stated rate of interest that is payable on December 31st of each year. How much cash do the bond holders get at the end of year one? |
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Definition
- $2800
- Bond Premium (face value – cash received), annual cash payment to bondholder (face * interest rate), amortization of bond premium (premium/term of bond) |
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