acc 102 - quiz 1 with answers

7/24/2019 ACC 102 - Quiz 1 With Answers

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Middlesex County College

ACC 102 – Financial Accounting

Quiz 1: Chapters 11 and 12

TET !""#$ET 1

A. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 30,000

shares were originally issued and 5,000 were subseuently reacuired. !hat is the number of shares

outstanding"

1. 35,000

#. $0,000

3. #5,000

%. 30,000

&. 'f (akota )ompany issues 1,500 shares of *+ par common stock for *$5,000,

1. )ommon tock will be credited for *$5,000

#. -aid'n )apital in /cess of -ar will be credited for *,000

3. -aid'n )apital in /cess of -ar will be credited for *++,000

%. )ash will be debited for *++,000

). The need )orporation issues 10,000 shares of *50 par preferred stock for cash at *$5 per share. The entry

to

record the transaction will consist of a debit to )ash for *$50,000 and a credit or credits to

1. -referred tock for *$50,000

#. -referred tock for *500,000 and -aid'n )apital in /cess of -ar2-referred tock for *#50,000

3. -referred tock for *500,000 and etained /arnings for *#50,000%. -aid'n )apital from -referred tock for *$50,000

(.4eis )orp. issues 1,000 shares of *15 par value common stock at *## per share. !hen the transaction is

recorded, credits are made to

1. )ommon tock, *15,000, and -aid'n )apital in /cess of -ar, *$,000

#. )ommon tock, *##,000, and etained /arnings, *15,000

3. )ommon tock, *$,000, and -aid'n )apital in /cess of tated 6alue, *15,000

%. )ommon tock, *##,000

/. abas )ompany has #0,000 shares of *100 par, #7 cumulative preferred stock and 100,000 shares of *50

par common stock. The following amounts were distributed as dividends

8ear 1 *10,000

8ear # %5,000

8ear 3 0,000

(etermine the dividends per share for preferred and common stock for the first year.



1. *0.50 and *0.10

#. *0.00 and *0.10

3. *0.50 and *0.00

%. *#.00 and *0.00

9. !hen !isconsin )orporation was formed on :anuary 1, the corporate charter provided for 100,000 share of *10

par value common stock. The following transaction was among those engaged in by the corporation during its

first month of operation The corporation issued ;,500 shares of stock at a price of *1+ per share.

The entry to record the above transaction would include a

1. debit to )ash for *;5,000

#. credit to )ommon tock for *13+,000

3. credit to -aid in )apital in /cess of -ar for *51,000

%. debit to )ommon tock for *;5,000

<. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that %5,000

shares were originally issued and 5,000 were subseuently reacuired. !hat is the amount of cash dividends to be

paid if a *# per share dividend is declared"

1. *;0,000

#. *10,000

3. *0,000

%. *100,00

=. Teas 'nc. has 10,000 shares of +7, *1#5 par value, cumulative preferred stock and 50,000 shares of *1 par

value

common stock outstanding at (ecember 31. !hat is the annual dividend on the preferred stock"

1. *$5 per share

#. *$5,000 in total

3. *10,000 in total

%. *0.$5 per share

'. abas )ompany has #0,000 shares of *100 par, #7 cumulative preferred stock and 100,000 shares of *50

par

common stock. The following amounts were distributed as dividends

8ear 1 *10,000

8ear # %5,000

8ear 3 0,000

(etermine the dividends per share for preferred and common stock for the second year.

1. *#.#5 and *0.00

#. *#.#5 and *0.%5

3. *0.00 and *0.%5

%. *#.00 and *0.%5



:. abas )ompany has #0,000 shares of *100 par, #7 cumulative preferred stock and 100,000 shares of *50

par common stock. The following amounts were distributed as dividends

8ear 1 *10,000

8ear # %5,000

8ear 3 0,000

(etermine the dividends per share for preferred and common stock for the third year.

1. *%.50 and *0.#5

#. *3.#5 and *0.#5

3. *%.50 and *0.0

%. *#.00 and *0.#5

>. abas )ompany has #0,000 shares of *100 par, #7 cumulative preferred stock and 100,000 shares of *50

par

common stock. The following amounts were distributed as dividends

8ear 1 *10,000

8ear # %5,0008ear 3 0,000

(etermine the dividends in arrears for preferred stock for the second year.

1. *#5,000

#. *10,000

3. *0

%. *30,000

?. @n :anuary 1, 6ermont )orporation had %0,000 shares of *10 par value common stock issued and outstanding.

All

%0,000 shares had been issued in a prior period at *#0.00 per share. @n 9ebruary 1, 6ermont purchased

3,$50 shares of treasury stock for *#% per share and later sold the treasury shares for *#1 per share on arch 1.

The Bournal entry to record the purchase of the treasury shares on 9ebruary 1, would include a

1. credit to Treasury tock for *0,000

#. debit to Treasury tock for *0,000

3. debit to a loss account for *11#,500

%. credit to a gain account for *11#,500

. !hich of the following statements is not true about a #for1 split"

1. -ar value per share is reduced to half of what it was before the split.

#. Total contributed capital increases.

3. The market price will probably decrease.

%. A stockholder with ten shares before the split owns twenty shares after the split



4. A corporation has 50,000 shares of *#5 par stock outstanding that has a current market value of *150 per share.

'f the corporation issues a 5for1 stock split, the market value of the stock after the split will be approimately

1. *#5

#. *150

3. *5

%. *30

@. 4evada )orporation has 30,000 shares of *#5 par stock outstanding that has a current market value of *1#0. 'f

the corporation issues a 5for1 stock split, the number of shares outstanding will be

1. +0,000

#. +,000

3. 150,000

%. 15,000

TET !""#$ET 2

A.@n :anuary 1 of the current year, the &arton )orporation issued 107 bonds with a face value of *#00,000. The

bonds are sold for *11,000. The bonds pay interest semiannually on :une 30 and (ecember 31 and the

maturity date is (ecember 31, five years from now. &arton records straightline amortiCation of the bond

discount. The bond interest epense for the year ended (ecember 31 is

1. *10,00

#. *1;,#00

3. *#1,;00

%. *#,000

&. elling the bonds at a premium has the effect of

1. raising the effective interest rate above the stated interest rate

#. attracting investors that are willing to pay a lower rate of interest than on similar bonds

3. causing the interest epense to be higher than the bond interest paid

%. causing the interest epense to be lower than the bond interest paid

).The Bournal entry a company records for the issuance of bonds when the contract rate is greater than the marketrate would be

1. debit &onds -ayable, credit )ash

#. debit )ash and (iscount on &onds -ayable, credit &onds -ayable

3. debit )ash, credit -remium on &onds -ayable and &onds -ayable

%. debit )ash, credit &onds -ayable



(. &onds -ayable has a balance of *1,000,000 and (iscount on &onds -ayable has a balance of *10,000. 'f

the issuing corporation redeems the bonds at $.5, what is the amount of gain or loss on redemption"

1. *10,000 loss

#. *#5,000 loss

3. *#5,000 gain

%. *15,000 gain

/. A *300,000 bond was redeemed at ; when the carrying value of the bond was *##,000. The entry to record

the

redemption would include a

1. loss on bond redemption of *%,000

#. gain on bond redemption of *%,000

3. gain on bond redemption of *#,000

%. loss on bond redemption of *#,000

9. 'f a company borrows money from a bank as an installment note, the interest

portion of each annual payment will

1. eual the interest rate on the note times the carrying amount of the note at the beginning of the period

#. remain constant over the term of the note

3. eual the interest rate on the note times the face amount

%. increase over the term of the note



<. @n the first day of the fiscal year, =awthorne )ompany obtained an *;;,000, $year, 57 installment note from

ea

ide &ank. The note reuires annual payments of *15,#0;, with the first payment occurring on the last day

of the

fiscal year. The first payment consists of interest of *%,%00 and principal repayment of *10,;0;. The

Bournal entry

=awthorne would record to make the first annual payment due on the note would include a

1. debit to cash for *15,#0;

#. credit to notes payable for *10,;0;3. debit to interest epense for *%,%00

%. debit to notes payable for *15,#0;

=. @n :anuary 1, <emstone )ompany obtained a *1+5,000, 10year, $7 installment note from <uarantee &ank.

The note reuires annual payments of *#3,%#, with the first payment occurring on the last day of the fiscal

year. The first payment consists of interest of *11,550 and principal repayment of *11,%#. The Bournal entry to

record the payment of the first annual amount due on the note would include a

1. debit to cash for *11,%#

#. credit to interest payable for *11,550

3. debit to notes payable for *11,%#

%. debit to interest epense for *#3,%#

'. @n :anuary 1, <emstone )ompany obtained a *1+5,000, 10year, $7 installment note from <uarantee &ank.

The

note reuires annual payments of *#3,%#, with the first payment occurring on the last day of the fiscal

year. The

first payment consists of interest of *11,550 and principal repayment of *11,%#. The Bournal entry to

record the

issuance of the installment note for cash on :anuary 1 would include a

1. debit to interest epense for *11,550

#. credit to interest payable for *11,550

3. credit to notes payable for *1+5,000

%. debit to notes payable for *1+5,000

:. @n :anuary 1, Dero )ompany obtained a *5#,000, %year, +.57 installment note from egional &ank. The note

reuires annual payments consisting of principal and interest of *15,1$, beginning on (ecember 31 of the

current

year. The (ecember 31, 8ear 1 carrying amount in the amortiCation table for this installment note will

be eual to

1. *#$,+35

#. *%0,#01

3. *3+,;#1

%. *%;,+#0

>. @n :anuary 1, 8ear 1, Dero )ompany obtained a *5#,000, %year, +.57 installment note from egional &ank.

The note reuires annual payments of *15,1$, beginning on (ecember 31, 8ear 1. The (ecember 31, 8ear #

carrying amount in the amortiCation table for this installment note will be eual to

1. *#+,000.

#. *#$,+35



3. *#1,+%#

%. *#;,%0#

?. @n :anuary 1, 8ear 1, Dero )ompany obtained a *5#,000, %year, +.57 installment note from egional &ank.

The note reuires annual payments of *15,1$, beginning on (ecember 31, 8ear 1. The (ecember 31, 8ear 3

carrying amount in the amortiCation table for this installment note will be eual to

1. *0

#. *13,000

3. *1%,#5#

%. *1+,+03

. An installment note payable for a principal amount of *%,000 at +7 interest reuires ?awson )ompany to

repay the principal and interest in eual annual payments of *##,315 beginning (ecember 31, of the first year,

for each of the net five years. After the final payment, the carrying amount on the note will be

1. *1,#+3

#. *#1,053

3. *##,315

%. *0

4. The present value of *%0,000 to be received in two years, at 1#7 compounded annually, is Erounded to

nearest

dollarF1. *31,;;;

#. *%;,11#

3. *;,11#

%. *%0,000

@. A corporation issues for cash *,000,000 of ;7, 30year bonds, interest payable semiannually. The

amount received for the bonds will be

1. present value of +0 semiannual interest payments of *3+0,000, plus present value of *,000,000 to be

repaid

in 30 years

#. present value of 30 annual interest payments of *$#0,000

3. present value of 30 annual interest payments of *3+0,000, plus present value of *,000,000 to be repaid

in 30years

%. present value of *,000,000 to be repaid in 30 years, less present value of +0 semiannual interest payments of

*3+0,000

acc 102 - quiz 1 with answers

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