## Monday, 17 March 2014

 On January 1, 2010, Applied Technologies Corporation (ATC) issued \$318,000 in bonds that mature in 12 years. The bonds have a stated interest rate of 9 percent. When the bonds were issued, the market interest rate was 9 percent. The bonds pay interest once per year on December 31.

rev: 03-02-2011

8.
award:
5 out of
5.00 points

You did not receive credit for this question in a previous attempt
 Requirement 1: Determine the price at which the bonds were issued and the amount that ATC received at issuance. (Omit the "\$" sign in your response.)

rev: 03-02-2011

Explanation:
 Because the stated interest rate was equal to the market interest rate, the bond would have been issued at face value, meaning a quoted price of 100. The amount received at issuance would be \$318,000 × 100% = \$318,000.

9.
award:
5 out of
5.00 points

You did not receive credit for this question in a previous attempt
 Requirement 2: Prepare the journal entry to record the bond issuance. (Omit the "\$" sign in your response.)

 General Journal Debit Credit Cash Bonds payable

rev: 03-02-2011

10.
award:
5 out of
5.00 points

You did not receive credit for this question in a previous attempt
 Requirement 3: Prepare the journal entry to record the interest payment on December 31, 2010, assuming no interest has been accrued earlier in the year. (Omit the "\$" sign in your response.)

 General Journal Debit Credit Interest expense Cash

rev: 03-02-2011

Explanation:
 Interest Expense = (\$318,000 × 9% × 12/12) = 28,620

 On January 1, 2010, Innovative Solutions, Inc., issued \$248,000 in bonds at face value. The bonds have a stated interest rate of 7 percent. The bonds mature in 11 years and pay interest once per year on December 31.

rev: 03-02-2011

11.
award:
5 out of
5.00 points

You did not receive credit for this question in a previous attempt
 Requirement 1: Prepare the journal entry to record the bond issuance. (Omit the "\$" sign in your response.)

 General Journal Debit Credit Cash Bonds payable

rev: 03-02-2011

12.
award:
5 out of
5.00 points

You did not receive credit for this question in a previous attempt
 Requirement 2: Prepare the journal entry to record the interest payment on December 31, 2010. Assume no interest has been accrued earlier in the year. (Omit the "\$" sign in your response.)

 General Journal Debit Credit Interest expense Cash

rev: 03-02-2011

Explanation:
 Interest Expense = (\$248,000 × 7% × 12/12) = 17,360

13.
award:
5 out of
5.00 points

You did not receive credit for this question in a previous attempt
 Requirement 3: Assume the bonds were retired immediately after the first interest payment at a quoted price of 103. Prepare the journal entry to record the early retirement of the bonds. (Omit the "\$" sign in your response.)

 General Journal Debit Credit Bonds payable Loss on bond retirement Cash

rev: 03-02-2011

Explanation:
 Cash = (\$248,000 × 103%) = 255,440

 Ahlers Clocks is a retailer of wall, mantle, and grandfather clocks and is located in the Empire Mall in Sioux Falls, South Dakota. Assume that a grandfather clock was sold for \$5,400 cash plus 8 percent sales tax. The clock had originally cost Ahlers \$3,100.

rev: 03-03-2011

14.
award:
10 out of
10.00 points

You did not receive credit for this question in a previous attempt
 Requirement 1: Show the accounting equation effects (indicate the direction of the effect by selecting + for increase, – for decrease and NE for no effect).

 Assets = Liabilities + Stockholders' Equity Cash +5,832 Sales tax payable +432 Sales revenue +5,400 Inventory -3,100 No effect NE Cost of goods sold -3,100

rev: 03-03-2011

15.
award:
10 out of
10.00 points

You did not receive credit for this question in a previous attempt
 Requirement 2: Prepare the journal entry related to this transaction. Assume Ahlers uses a perpetual inventory system. (Omit the "\$" sign in your response.)

 General Journal Debit Credit Cash Sales tax payable Sales Cost of goods sold Inventory

rev: 03-03-2011

Explanation:
 Sales Tax Payable : (\$5,400 × 8%) = 432

 A company sells 1 million shares of stock with no par value for \$16.40 a share. In recording the transaction, it would:

debit Cash for \$16.40 million and credit Common Stock for \$16.40 million.
 debit Cash for \$16.40 million, credit Common Stock for \$34,000 and credit Additional Paid-in Capital for \$16,366,000.
 debit Cash for \$34,000, debit Capital Receivable for \$16,366,000, credit Common Stock for \$34,000 and credit Additional Paid-in Capital for \$16,366,000.
debit Cash for \$34,000 and credit Common Stock for \$34,000.

 A company issues 515,000 shares of preferred stock for \$29 a share. The stock has a fixed annual dividend rate of 5% and a par value of \$14 per share. The current price of the preferred stock is \$31 a share. Preferred stockholders can anticipate receiving a per share annual dividend of:

 5% of the \$31 current market price per share. 5% of the \$15 additional paid-in capital per share. 5% of the \$14 par value per share. 5% of the \$29 issue price per share

 A company issues 101,000 shares of preferred stock for \$41 a share. The stock has a fixed dividend rate of 6% and a par value of \$4 per share. The company records the issuance with a (rounded):

debit of \$4.14 million to Cash and a credit of \$4.14 million to Preferred Stock.
 debit of \$404,000 to Cash, a debit of \$3.74 million to Long-term Investments, a credit of \$404,000 to Preferred Stock, and a credit of \$3.74 million to Contributed Capital.
debit of \$404,000 to Cash and a credit of \$404,000 to Preferred Stock.
 debit of \$4.14 million to Cash, a credit of \$404,000 to Preferred Stock, and a credit of \$3.74 million to Additional Paid-in Capital.

 A corporate charter specifies that the company may sell up to 25 million shares of stock. The company sells 17 million shares to investors and later buys back 5.5 million shares.

rev: 03-03-2011

4.
value:
10.00 points
You received credit for this question in a previous attempt
 The number of authorized shares after these transactions are accounted for is:

rev: 03-03-2011
 17 million shares. 12 million shares. 20 million shares. 25 million shares.

5.
value:
10.00 points
You received credit for this question in a previous attempt
 The number of issued shares after these transactions have been accounted for is:

rev: 03-03-2011
 20 million shares. 13 million shares. 17 million shares. 12 million shares.

6.
value:
10.00 points
You received credit for this question in a previous attempt
 The current number of shares of treasury stock after these transactions have been accounted for is:

rev: 03-03-2011
 20.0 million shares. 12.0 million shares. 5.5 million shares. 8.0 million shares.

7.
value:
10.00 points
You received credit for this question in a previous attempt
 The current number of outstanding shares after these transactions have been accounted for is:

rev: 03-03-2011
 25.0 million shares. 11.5 million shares. 13.0 million shares. 8.0 million shares.

 A company issues 1.11 million shares of preferred stock with a par value of \$7.50 and a market price of \$31.50 per share. The issuance should be recorded as (rounded):

 a debit to Cash of \$26.64 million, a debit to Treasury Stock of \$8.33 million, and a credit to Preferred Stock of \$34.97 million.
a debit to Cash of \$8.33 million and a credit to Preferred Stock of \$8.33 million.

 a debit to Cash of \$34.97 million, a credit to Preferred Stock of \$8.33 million, and a credit to Additional Paid-in Capital of \$26.64 million.
a debit to Cash of \$34.97 million and a credit to Preferred Stock of \$34.97 million.

 Incentive Corporation was organized in 2009 to operate a financial consulting business. The charter authorized the following capital stock: common stock, par value \$6 per share, 13,500 shares. During the first year, the following selected transactions were completed:

 a. Issued 6,300 shares of common stock for cash at \$19 per share. b. Issued 2,300 shares of common stock for cash at \$26 per share.

 Requirement 1:

 Show the effects of each transaction on the accounting equation. (Indicate the account, amount, and direction of the effect on the accounting equation (+ for increase, – for decrease and NE for no effect).)

 Assets = Liabilities + Stockholders' Equity a. b.

 Requirement 2:

 Give the journal entry required for each of these transactions. (Omit the "\$" sign in your response.)

 Event General Journal Debit Credit a. b.

 Requirement 3:

 Prepare the stockholders' equity section as it should be reported on the 2009 year-end balance sheet. At year-end, the accounts reflected a profit of \$200. (Omit the "\$" sign in your response.)

 Stockholders' Equity Contributed capital: Common stock \$ Additional paid-in capital Total contributed capital Retained earnings Stockholders' equity \$

 Requirement 4:

 Incentive Corporation has \$43,000 in the company's bank account. Should the company declare cash dividends at this time?
No
 On July 1, 2010, Jones Corporation had the following capital structure:

 Common stock, par \$1,237,000 authorized shares,                        152,000 issued and outstanding \$ 152,000 Additional paid-in capital 82,000 Retained earnings 192,000 Treasury stock None

 Required: Complete the following table based on three independent cases involving stock transactions (Round your par value answers to 2 decimal places. Omit the "\$" sign in your response):

 Case 1: The board of directors declared and issued a 10 percent stock dividend when the stock price was \$8 per share. Case 2: The board of directors declared and issued a 100 percent stock dividend when the stock price was \$8 per share. Case 3: The board of directors voted a 2-for-1 stock split. The stock price prior to the split was \$8 per share.

 Case 1 Case 2 Case 3 Items Before Stock Transactions After 10% Stock Dividend After 100% Stock Dividend After Stock Split Number of shares outstanding Par per share \$ 1 \$ \$ \$ Common Stock \$ \$ \$ \$ Additional Paid-in Capital 82,000 Retained Earnings 192,000 Total Stockholders' Equity \$ \$ \$ \$

 The 2008 annual report for Fortune Brands, the seller of Pinnacle golf balls and MasterLock padlocks, disclosed that 750 million shares of common stock have been authorized. At the end of 2007, 221 million shares had been issued and the number of shares in treasury stock was 83 million. During 2008, 4 million common shares were reissued from treasury, and 6 million common shares were purchased for treasury stock.

 Required:

 (a) Determine the number of common shares issued at the end of 2008. (Enter your answer in millions.)

 Issued stock

 (b) Determine the number of common shares in treasury at the end of 2008. (Enter your answer in millions.)

 Treasury stock

 (c) Determine the number of common shares outstanding at the end of 2008. (Enter your answer in millions.)

 Shares outstanding

 GE buys back 305,000 shares of its stock from investors at \$50 a share. Two years later it reissues this stock for \$70 a share. The stock reissue would be recorded as (rounded):

 a debit to Cash of \$15.25 million, and a debit to Stockholders' Equity of \$6.10 million, a credit to Treasury Stock of \$15.25 million, and a credit to Gain on Sale of \$6.10 million.
 a debit to Cash of \$15.25 million, a debit to Additional Paid-in Capital of \$6.10 million, a credit to Treasury Stock of \$15.25 million, and a credit to Stockholders' Equity of \$6.10 million.
a debit to Cash of \$21.35 million and a credit to Treasury Stock of \$21.35 million.
 a debit to Cash of \$21.35 million, a credit to Treasury Stock of \$15.25 million, and a credit to Additional Paid-in Capital of \$6.10 million

 The balance sheet for Crutcher Corporation reported 142,500 shares outstanding, 235,000 shares authorized, and 14,000 shares in treasury stock

 Required: Compute the maximum number of new shares that Crutcher could issue.

 Maximum number of new shares

 IBM issues 200,000 shares of stock with a par value of \$0.16 for \$165 per share. Three years later, it repurchases these shares for \$95 per share. IBM records the repurchase in which of the following ways?

Debit Treasury Stock for \$19.00 million and credit Cash for \$19.00 million.
 Debit Common Stock for \$32,000, debit Additional Paid-in Capital for \$18,968,000 and credit Cash for \$19.00 million.
 Debit Common Stock for \$32,000, debit Additional Paid-in Capital for \$32,968,000 and credit Cash for \$33.00 million.
 Debit Stockholders' Equity for \$33.00 million, credit Additional Paid-in Capital for \$19.00 million and credit Cash for \$19.00 million.

 On January 2, Daniel Harrison contributed \$25,000 to start his business. At the end of the year, the business had generated \$38,100 in sales revenues, incurred \$22,860 in operating expenses, and distributed \$4,400 for Daniel to use to pay some personal expenses.

 Required:

 (a) Prepare a statement of owner's equity, assuming this is a sole proprietorship. (Leave no cells blank - be certain to enter "0" wherever required. Amounts to be deducted should be indicated with minus sign. Omit the "\$" sign in your response.)

 Statement of Owner's Equity Daniel Harrison, capital, beginning of year \$ : Capital contributions : Net income for year : Withdrawals for year Daniel Harrison, capital, end of year \$

 (b) Prepare the section of the balance sheet showing his owner's equity, assuming this is a sole proprietorship. (Omit the "\$" sign in your response.)

 Balance Sheet (partial)   Owner's Equity Daniel Harrison, Capital \$

 (c) Prepare the section of the balance sheet showing his stockholder's equity, assuming this is a corporation with no-par value stock. (Omit the "\$" sign in your response.)

 Balance Sheet (partial)   Stockholder's Equity Common stock \$ Retained earnings Total stockholders' equity \$

 Fonthouse Corp. issues 14,000 shares of \$4.00, no-par value preferred stock for cash at \$62.00 per share.

rev: 03-03-2011

16.
value:
10.00 points
You received credit for this question in a previous attempt
 The journal entry to record the transaction will consist of a debit to Cash for \$868,000 and a credit (or credits) to:

rev: 03-03-2011
 Investment in Fonthouse Stock for \$868,000. Preferred Stock for \$868,000. Preferred Stock for \$728,000 and Additional Paid-In Capital for \$168,000. Preferred Stock for \$728,000 and Retained Earnings for \$168,000.

17.
value:
10.00 points
You received credit for this question in a previous attempt
 If the company pays the fixed dividend on the preferred stock, the transaction will:

rev: 03-03-2011
 decrease Preferred stock by \$56,000. decrease Retained earnings by \$868,000. increase Liabilities by \$56,000. decrease Cash by \$56,000.

 A company sells 1 million shares of common stock with a par value of \$0.14 for \$16.20 a share. To record the transaction, the company would:

 debit Cash for \$140,000, debit Capital Receivable for \$16,060,000, credit Common Stock for \$140,000 and credit Additional Paid-in Capital for \$16,060,000.
debit Cash for \$16.20 million and credit Common Stock for \$16.20 million.
debit Cash for \$140,000 and credit Common Stock for \$140,000.
 debit Cash for \$16.20 million, credit Common Stock for \$140,000 and credit Additional Paid-in Capital for \$16,060,000.

 On February 16, a company declares a 36¢ dividend to be paid on April 5. There are 2.02 million shares of common stock issued and 102,000 shares of treasury stock. What does the company record in February?

 A debit to Dividends Declared and a credit to Dividends Payable for \$727,200. A debit to Dividends Declared and a credit to Dividends Payable for \$690,480. A debit to Dividends Payable and a credit to Cash for \$727,200. A debit to Dividends Payable and a credit to Cash for \$690,480.

 To reduce its stock price, Shriver Food Systems, Inc., declared and issued a 35 percent stock dividend. The company has 888,000 shares authorized and 289,100 shares outstanding. The par value of the stock is \$15 per share and the market value is \$110 per share.

 Required: Prepare the journal entry to record this large stock dividend. (Omit the "\$" sign in your response.)

 General Journal Debit Credit