1. The initial selling price for a share of stock is called the: A. list price B
ID: 2585407 • Letter: 1
Question
1. The initial selling price for a share of stock is called the:
A. list price
B. stated value
C. par value
D. issue price
2. The journal entry to record $230,000 of bonds that were issued at 98 would be to:
A.
debit Cash, $230,000; credit Bonds payable, $225,400; credit Premium on bonds payable, $4,600.
B.
debit Cash, $225,400; credit Bonds payable, $225,400.
C.
debit Cash, $225,400; debit Discount on bonds payable, $4,600; credit Bonds payable, $230,000.
D.
debit Cash, $230,000; credit Bonds payable, $230,000.
3. When preparing the Statement of Cash Flows by the indirect method, if current liabilities increase, the difference is:
A.
deducted from investing activities.
B.
deducted from net income.
C.
added to investing activities.
D.
added to net income.
4. Vintage Boutique's outstanding stock is 90 shares of $110 par, 11% cumulative preferred stock and 2,500 shares of $14 par common stock. Vintage Boutique paid$1,600 in cash dividends during the year. No dividends are in arrears. Common stockholders received:
A.
$1,600.
B.
$0.
C.
$1,089.
D.
$511.
5. TNT Construction had cash sales for the month of June totaling $44,000. TNT offers a 1year warranty on its construction services. If TNT estimates warranty claims will equal 5% of sales, the journal entry to record the estimated warranty expense for the month is:
A.
debit Estimated warranty payable, $2,200; credit Warranty expense, $2,200.
B.
debit Warranty expense, $2,200; credit Cash, $2,200.
C.
debit Warranty expense, $2,200; credit Sales revenue, $2,200.
D.
debit Warranty expense, $2,200; credit Estimated warranty payable, $2,200.
6. If a company has 2,500 shares authorized and 1,500 have been issued, the annual dividends on $20 par 5% preferred stock is $1,500.
True
False
7. On January 1, Greene Autos signed a $250,000, 6%, 30year mortgage that requires semiannual payments of $9,033 on June 30 and December 31 of each year. The journal entry to record the first semiannual payment would be (round interest calculation to the nearest dollar) to:
A.
debit Interest Expense, $1,533; debit Mortgage Payable, $7,500; credit Cash, $9,033.
B.
debit Mortgage Payable, $9,033; credit Cash, $9,033.
C.
debit Interest Expense, $7,500; debit Mortgage Payable, $1,533; credit Cash, $9,033.
D.
debit Interest Expense, $7,500; debit Mortgage expense, $1,533; credit Cash, $9,033.
8. The journal entry to record the distribution of a stock dividend includes a:
A.
credit to Retained Earnings.
B.
credit to Cash.
C.
credit to Dividends Payable.
D.
credit to Common Stock.
9. Losses on the sale of longterm assets are:
A.
subtracted from operating activities.
B.
added to investing activities.
C.
added to operating activities.
D.
subtracted from investing activities.
Explanation / Answer
1. d . The initial selling price for shares of stock is called issue price.
2. c. Journai entry:
Cash $225400
Discount on bonds payable $4600
To Bonds payable $230000
3. D. If current liabilities is increase is added to Net income
4. Answer : D. $511
Cash dividend $1600
Preferred stock dividend (90 shares * $110 * 11%) = $1089
Common stock received = $511 ($1600 - $1089).
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