23. Sizemore, Inc. has 10,000 shares o and 100,000 shares of If the board of dir

Question

23. Sizemore, Inc. has 10,000 shares o and 100,000 shares of If the board of directors declares a $40,000 dividend, the A) preferred stockholders will receive 1/10th of what te-no"oorm- B) preferred stockholders will receive the entire $40.0oo C)$40,000 will be held as restricted retained earnings and paid out D) preferred stockholders will receive $20,000 and the common par value common stock outstanding a Dercember 31,22 , $100 par value, curative preferredsta date receive $20,000. 24. National Molding is building a new plant that will take three years to construct The in part by funds borrowed duing the construction period There are significant architect fees the following statements is true? excavation fees, and building permit tees Which d A) Excavation s) Architect fees are capitalized but building permit fees are not D) The fees are capitalized but building permit fees are not capitalized during the construction as part of the cost ef the buann capitalized cost is interest on borrowed funds. equal to the contract price to build the plant less any for $42,000. What is the amount of the gain or loss on disposal of the plant asse? A) $42,000 loss. B) $24,000 loss C) $24,000 gain. D) $42,000 gain. 25. A plant asset with a cost of $360.000 and accumuliated depreciation of $342,000 is sold 26, On January 1, 2012, $1,000,000, 10-year, 10% bonds, were issued for sero,000. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is A) $9,700. B) $3,000. C) $808. D) $250

Explanation / Answer

Answer 23-B. preferred stockholders will receive the entire $40,000 Dividends to be paid to Preferred Stock = 10,000 Shares X $100 X 6% Dividends to be paid to Preferred Stock = $60,000 Dividend Declared = $40,000 So, all the dividend declared should be paid to Preferrred Stock. Answer 24-C. Interest is capitalized during the construction as part of the cost of the building. The Architect Fees, excavation costs and building permit fees should be capitalized and added to the cost of Building. Interest paid on the funds used in the construction of building should be capitalized. Answer 25-C. $24,000 Gain Cost of Equipment          360,000 Accumulated Depreciation - Equipment          342,000 Book Value of Equipment            18,000 Equipment Selling Price            42,000 Book Value of Equipment            18,000 Gain on Sale of Equipment            24,000 Answer 26-D. $250 Face Value of Bonds      1,000,000 Issue of Bonds at Price          970,000 Discount on issue of Bonds            30,000 Amortization of Discount per Annum (on Straight Line Basis) = $30,000 / 10 Years = $3,000 per annum Monthly Amortization of Discount = $3,000 / 12 Months = $250

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