1. A S600,000 bond was retired at 98 when the Net Carrying Value of the bond was
ID: 2600489 • Letter: 1
Question
1. A S600,000 bond was retired at 98 when the Net Carrying Value of the bond was S590,000. The entry to record the retirement would include a A) Gain on bond redemption of $10,000. B) Loss on bond redemption of $10,000. C) Loss on bond redemption of $2,000. D) Gain on bond redemption of $2,000. 2. A $600,000 bond was retired at 103 when the Net Carrying Value of the bond was S622,000. The entry to record the retirement would include a A) Gain on bond redemption of $18,000. B) Loss on bond redemption of $12,000. C) Loss on bond redemption of $18,000. D) Gain on bond redemption of $4,000. 3. If Vickers Company issues 4,000 shares of S5 par value common stock (C/S) for $140,000, A) Common Stock (C/S) will be credited (CR) for $140,000. B) Paid-In Capital in Excess of Par Value (APIC C) Paid-In Capital in Excess of Par Value (APIC) will be credited (CR) for $120,000. D) Cash will be debited (DR) for $120,000. will be credited (CR) for $20,000. 4. If Common Stock (C/S) is issued for an amount greater than par value, the excess should be credited (CR) to A) Cash. B) Retained Earnings. C) Paid-in Capital in Excess of Par Value. (APIC or PIC) D) Legal Capital. 5. If Kiner Company issues 3,000 shares of $5 par value Common Stock (C/S) for S70,000, the account A) Common Stock (C/S) will be credited (CR) for $15,000. B) Paid-in Capital in Excess of Par Value (APIC) will be credited (CR) for $15,000. C) Paid-in Capital in Excess of Par Value (APIC) will be credited (CR) for $70,000. D) Cash will be debited (DR) for $55,000. Page 1Explanation / Answer
Answer 4 : The correct option is (C) - Paid-in-capital in excess of par value (APIC or PIC). Paid in capital is credited with the amount which is difference between the cash debited and the par value of common stock credited.
Option A - cash cannot be credited as it is debited in the journal entry.
Option B retained earning cannot be credited in the journal entry as it the portion that is retained out of net profit not to be paid as dividend.
Option D legal capital cannot be credited as this is the capital which is always at the par value.
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