What is the main purpose of a stock split?

reduce the market price of the stock per share

What is the journal entry to record the amortization of discount on bonds payable?

DR-Interest Expense; CR-Discount on Bonds Payable

See Question #44 on your Review Sheet

DR-Cash $92,000; CR-Notes Payable $92,000

Bonds with a face amount of $1,000,000 are sold at 104. The journal entry to record the issuance is

DR-Cash $1,040,000; CR-Premium on BP $40,000; CR-Bonds Payable $1,000,000

See Question 17 on your Review Sheet

DR-Treasury Stock $90,000; CR-Cash $90,000

How is the Balance in Discount on Bonds Payable reported?

Deduction to Bonds Payable since it's a contra account.

What is Treasury Stock?

Issued shares that have been reacquired

See Question #31 on your review sheet

DR-Cash $1,040,000; CR-Premium on BP $40,000; CR-Bonds Payable $1,000,000

How is Treasury Stock Shown on the Balance Sheet

Deduction to Stockholder's Equity

What is Stockholder's Equity?

Includes Retained Earnings and Paid-In Capital

What is the journal entry when bonds are issued at a discount?

DR-Cash; DR-Discount on BP; CR-Bonds Payable

See Question 9 on your review sheet

DR-Cash $17,000; CR-Paid-in Capital $5,000; CR-Common Stock $12,000

See question #50 on your review sheet

Premium on Bonds Payable for $5,000

See Question #32 on your review sheet

DR-Cash $1,900,000; DR-Discount on BP $100,000; CR-Bonds Paybale $2,000,000

The interest expense recorded on an interest payment date is increased when

by the amortization of discount on bonds payable

If Dakota Company issues 1,500 shares of $10 par Common Stock for $75,000, what is the journal entry?

DR-Cash $75,000, CR-CS $15,000, CR-Paid-In Capital $60,000

See question #6 on your Review Sheet

DR-Cash $48,000, CR-Paid-In Capital CS $12,000, CR-Common Stock $36,000

What journal entry is made to declare dividends?

DR-Cash Dividends; CR-Cash Dividends Payable

What is the journal entry when stock is issued over par?

DR-Cash, CR-Common Stock, CR-Paid-In Capital

See Question #43 on your Review Sheet

DR-Notes Payable $12,620; DR-Interest Expense $4,800; CR-Cash $17,420

See question #46 on your review sheet

gain on bond redemption of $4,000

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ACC 211 Test One Review

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Questions 51

Answers

1
What is the main purpose of a stock split?
increase paid-in capital
increase the market price of the stock per share
increase retained earnings
reduce the market price of the stock per share
2
What is the journal entry to record the amortization of discount on bonds payable?
DR-Discount on Bonds Payable; CR-Cash
DR-Interest Expense; CR-Cash
DR-Interest Expense; CR-Discount on Bonds Payable
DR-Bonds Payable; CR-Cash
3
See Question #44 on your Review Sheet
DR-Notes Payable $12,620; DR-Interest Expense $4,820; CR-Cash $17,420
DR-Notes Payable $92,000; CR-Cash $92,000
DR-Notes Payable $17,420; CR-Cash $17,420
DR-Cash $92,000; CR-Notes Payable $92,000
4
See Question 15 on your Review Sheet
160,000 shares
20,000 shares
320,000 shares
4,000 shares
5
Identify a disadvantage of a corporation.
Double Taxation
Continuous Life
Limited Liability
Raising Large amounts of Capital
6
See question #40 on your review sheet
Loss on redemption $12,000
Loss on redemption $24,000
Gain on redemption $12,000
Loss on redemption $6,000
7
See question #28 on your review sheet
$5.08
$5.00
$8.00
$18.00
8
Which account uses the term "deficit "?
Dividends
Common Stock
Retained Earnings
Paid-In-Capital
9
See question #49. Does it sell below
True
False
10
See Question #37 on your review sheet
$97,000
$194,000
$970,000
$100,000
11
See question #22 on your review sheet
$150
$600
$24
$6
12
See Question #41 on your review sheet
Debit-Bonds Payable $285,000
CR-Cash $300,000
DR-Loss on redemption $3,000
DR-Loss on Redemption $15,000
13
See Question 10 on your review sheet
$0, $.25
$.25, $0
$10,000; $0
$1.13; $0
14
Bonds with a face amount of $1,000,000 are sold at 104. The journal entry to record the issuance is
DR-Cash $1,040,000; CR-Bonds Payable $1,040,000
DR-Cash $1,040,000; CR-Discount on BP $40,000; CR-Bonds Payable $1,000,000
DR-Cash $1,040,000; CR-Premium on BP $40,000; CR-Bonds Payable $1,000,000
DR-Cash $1,040,000; DR-Premium on BP $40,000; CR-Bonds Payable $1,000,000
15
See Question 17 on your Review Sheet
DR-Cash $90,000; CR-Treasury Stock $90,000
DR-Treasury Stock $78,750; CR-Cash $78,750
DR-Cash $78,750; DR-Paid In Capital $11,250; CR-Treasury Stock $90,000
DR-Treasury Stock $90,000; CR-Cash $90,000
16
How is the Balance in Discount on Bonds Payable reported?
Asset
Deduction to Bonds Payable since it's a contra account.
Added to Bonds Payable
Included in Stockholder's Equity
17
See question #23 on your review sheet
100 shares
10,000 shares
40,000 shares
160,000 shares
18
What is Treasury Stock?
Unissued shares
Issued shares that have been reacquired
Reflects Outstanding Stock
Added to retained earnings
19
See Question #31 on your review sheet
DR-Cash $1,040,000; CR-Premium on BP $40,000; CR-Bonds Payable $1,000,000
DR-Cash $1,040,000; DR-Premium on BP $40,000; CR-Bonds Payable $1,000,000
DR-Cash $1,040,000; CR-Bonds Payable $1,040,000
DR-Cash $1,004,000; CR-Premium on BP $4,000; CR-Bonds Payable $1,000,000
20
See question #29 on your review sheet
$510,000
$430,000
$600,000
$560,000
21
How is Treasury Stock Shown on the Balance Sheet
Deduction to Stockholder's Equity
Addition to Stockholder's Equity
Liability
It's nor reported on the Balance Sheet
22
See question #21 on your review sheet
$150
$5
$25
$30
23
See question #19 on your review sheet
$4,800
$3,200
$6,400
$8,800
24
See Question #5 on your review sheet.
60,000
40,000
100,000
50,000
25
See question #47
$1,027,500
$1,000,000
$972,500
$1,080,000
26
What is Stockholder's Equity?
Includes Paid-In Capital and Liabilities
Cash on hand
Net Income on the Income Statement
Includes Retained Earnings and Paid-In Capital
27
What journal entry is made when contract rate equals the market rate?
DR-Cash; CR-Premiun on Bonds Payable; CR-Bonds Payable
DR-Bonds Payable; CR-Cash
DR-Cash; DR-Discount on Bonds Payable; CR-Bonds Payable
DR-Cash; CR-Bonds Payable
28
If the market rate of interest is lower than the contract rate, bonds will sell at a premium.
True
False
29
See question 13 on your review sheet
$1,200
$55,000
$108,000
$1,350,000
30
See question #39 on your review sheet
Loss on Redemption $23,000
Loss on Redemption $12,000
Gain on Redemption of $23,000
Gain on Redemption $35,000
31
Treasury stock reduces Stockholder's Equity
True
False
32
What is the journal entry when bonds are issued at a discount?
DR-Interest Expense; DR-Discount on BP; CR-Bonds Payable
DR-Bonds Payable; CR-Discount on BP; CR-Cash
DR-Cash; DR-Discount on BP; CR-Bonds Payable
DR-Cash; CR-Premium on Bonds Payable; CR-Bonds Payable
33
See Question 9 on your review sheet
DR-Cash $12,000; CR-Common Stock $12,000
DR-Cash $17,000; CR-Common Stock $17,000
DR-Cash $12,000; DR-Paid-in Capital $5,000; CR-Common Stock $17,000
DR-Cash $17,000; CR-Paid-in Capital $5,000; CR-Common Stock $12,000
34
See question #50 on your review sheet
Interest Expense for $5,000
Premium on Bonds Payable for $5,000
Interest Expense for $2,500
Premium on Bonds Payable for $2,500
35
When there is a discount on bonds payable, what is the effect on interest?
Increases the interest expense
Decreases the interest expense
No effect on interest expense
Attracts investors to pay lower rate
36
See Question #32 on your review sheet
DR-Cash $1,900,000; DR-Discount on BP $100,000; CR-Bonds Paybale $2,000,000
DR-Cash $2,000,000; CR-Bonds Payable $2,000,000
DR-Cash $2,000,000; CR-Premium on BP $100,000; CR-Bonds Paybale $1,900,000
DR-Cash $1,900,000; CR-Discount on BP $100,000; CR-Bonds Paybale $2,000,000
37
The interest expense recorded on an interest payment date is increased when
the M.R. of interest is less than the stated rate of interest on that date
only if the bonds were sold at face value
by the amortization of premium on bonds payable
by the amortization of discount on bonds payable
38
If Dakota Company issues 1,500 shares of $10 par Common Stock for $75,000, what is the journal entry?
DR-Cash $75,000, CR-CS $15,000, CR-Paid-In Capital $60,000
DR-Cash $75,000, CR-CS $75,000
DR-Treasury Stock $75,000, CR-Cash $75,000
DR-Cash $15,000, DR-Paid-In Capital $60,000, CR-CS $75,000
39
Stock that remains in the hands of the stockholders is called____
Outstanding Stock
Issued Stock
Authorized Stock
Treasury Stock
40
If $2,000,000 of 10% bonds are issued at 96, the amount of cash received from the sale is
$2,080,000
$192,000
$2,000,000
$1,920,000
41
See question #6 on your Review Sheet
DR-Cash $36,000, DR-Paid-In Capital $12,000 and CR-CS
DR-Cash $48,000, CR-Paid-In Capital CS $12,000, CR-Common Stock $36,000
DR-Common Stock-$36,000, DR-Paid-In Capital-CS $12,000, CR-Cash $48,000
DR-Cash $48,000, CR-Common Stock $48,000
42
What journal entry is made to declare dividends?
No entry required
DR-Cash Dividends Payable; CR-Cash
DR-Cash Dividends Payable; CR-Cash Dividends
DR-Cash Dividends; CR-Cash Dividends Payable
43
What is the journal entry when stock is issued over par?
DR-Cash, CR-Common Stock, CR-Paid-In Capital
DR-Cash, CR-Common Stock
DR-Cash, DR-Paid-in Capital, CR-Common Stock
DR-Common Stock, DR-Paid-In Capital, CR-Common Stock
44
See Question 11 on your review sheet
$100,000
$50,000
$80,000
$40,000
45
See Question #43 on your Review Sheet
DR-Notes Payable $12,620; DR-Interest Expense $4,800; CR-Cash $17,420
DR-Cash $17,420; CR-Notes Payable $17,420
DR-Notes Payable $12,620; CR-Cash $12,620
DR-Cash $92,000; CR-Notes Payable $92,000
46
See question #46 on your review sheet
gain on bond redemption of $3,000
loss on bond redemption of $4,000
gain on bond redemption of $4,000
loss on bond redemption of $3,000
47
If the market rate of interest is 10%, and the company contracts at 9%, bonds will be issued at a premium
False
True
48
Dividends in Arrears get presented on the Statement of Owner's Equity section on a Balance Sheet.
False
True
49
See question #20 on your review sheet
$19,200
$12,800
$48,800
$32,000
50
See question #25 on your review sheet
$45,000
$40,000
$50,000
$60,000
51
See question 14 on your review sheet.
$1.13, $0
$.45, $0
$.25, $0
$0, $1.13

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