MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answer the question. * 1) On March 1, 2015, Vinnie Services issued a 5% long-term notes payable for $15,000. It is payable over a 3-year term in $5,000 principal installments on March 1 of each year, beginning March 1, 2016. Each yearly installment will include both principal repayment of $5,000 and interest payment for the preceding one-year period. What is the amount of total cash payment that the Vinnie will make on March 1, 2016? A) $5,375 B) $5,750 $5,000 D) $15,000 are categorized as either current assets or long-term assets on the balance sheet depending on the maturity date. A) Held-to-maturity investments B) Equity Investments Trading investments D) Matured investments 3) Which of the following is true of a Discount on Bonds Payable account? A) It is added to the Bonds Payable balance and shown with long-term liabilities on the balance sheet B) It is added to the Bonds Payable balance and shown with owner's equity on the balance sheet. It is subtracted from the Bonds Payable balance and shown with the current liabilities on the balance sheet. D) It is subtracted from the Bonds Payable balance and shown with long-term liabilities on the balance sheet 4) Unrealized holding gains or losses on trading investments are reported in the section of the income statement A) Fixed Assets B) Current Assets C) Minority Interest D) Other Revenues and Expenses * 5) On November 1, 2014, Archangel Services issued $300,000 of 5-year bonds with a stated rate of 10%. The bonds were sold at par, and Archangel makes semiannual payments on April 30 and October 31. At December 31, 2014, Archangel made an adjusting entry to accrue interest at year-end. No further entries were made until April 30, 2015, when the first payment was sent out. How much interest expense was recorded for the period of January 1 to April 30, 2015? A) $24,000 B) $30,000 $10,000 D) $15,000 6) Rick Co. purchases 7,000 shares of its own $2 par value common stock for $160 per share. Which of the following is the correct journal entry to record this transaction? A) Debit Cash $2,240,000, and credit Paid In Capital in Excess of Par-Common $2.240,000 B) Debit Treasury Stock-Common $1,120,000 and credit Cash $1,120,000 Debit Cash $2,240,000 and credit Treasury Stock-Common $2,240,000 D) Debit Common Stock-$2 Par Value $2,240,000 and credit Cash $2,240,000 7) The par value of stock is A) the price paid if the corporation purchases its own stock back B) the current selling price of stock. the highest price for which a share can sell D) the amount assigned by a company to a share of its stock 8) Which of the following would be included in the entry to record the issuance of 5,000 shares of $10 par value common stock at $13 per share cash? A) Cash would be debited for $65,000. B) Common Stock would be debited for $50,000 Paid-In Capital in Excess of Par-Common would be debited for $15,000 D) Common Stock would be credited for $65,000. * 9) On December 2, 2015, Ewell Company purchases a piece of land from the original owner. In payment for the land, Ewell Company issues 8,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of $400,000. Which of the following is included in the journal entry to record this transaction? A) debit Cash $400,000 B) debit Common Stock-$1 Par Value for $8,000 and debit Paid-In Capital in Excess of Par - Common $392,000. credit Common Stock-$1 Par Value for $400,000 D) Credit Common Stock-51 Par Value for $8,000 and credit Paid-In Capital in Excess of Par -Common $392,000 10) Prior period adjustments A) affect balance sheet accounts only, and must be included on single-step income statements. B) must be included as a separate line item on a multi-step income statement. C) always increase the beginning balance of retained earnings D) are shown on the statement of retained earnings as corrections to the beginning balance. 11) A bond is issued at premium A) when a bond's stated interest rate is higher than the market interest rate. B) when a bond's stated interest rate is equal to the market interest rate. when a bond's stated interest rate is less than the market interest rate. D) when a bond's stated interest rate is less than the effective interest rate. 12) All available-for-sale (AFS) investments are reported on the balance sheet at: A) historical cost. B) current market value. replacement cost. D) net realizable value 13) Glitter Services owns 30% of voting stock of Grey Investments. During the year 2015, Grey Investments earned profits of $250,000. Under the equity method, which of the following journal entries will Glitter Services record? A) Long-term Investments-Grey Investments 75.000 Revenue from Investments 75,000 250,000 B) Long-term Investments-Grey Investments Cash 250,000 Cash 75,000 one-term Invest Long-term Investments Grey Investments 75.00 D) Cash 75,000 Dividend Revenue 754000 14) Outstanding stock refers to the A) total amount of stock that has not been sold yet. B) total amount of stock that has been authorized by state law. shares of stock that are held by the stockholders. D) shares of stock that have been sold for the highest price. 15) If bonds with a face value of $200,000 are sold at 98, the amount of cash proceeds is: A) $202,000. B) $192,157. $200,000 D) $196,000 16) Which of the following statements is true of a corporation? A) Shareholders are authorized to sign contracts or make business commitments on behalf of the corporation B) Shares of stock cannot be readily bought and sold by investors on the open market. The liabilities of the corporation can be paid by the personal assets of the shareholders D) Corporations pay income tax on corporate camings, and shareholders pay personal income tax on corporate dividends and gains from sale of stock * 17) Satum Corporation has 10,000 shares of 10% $75 par no cumulative preferred stock outstanding and 20,000 shares of no-par common stock outstanding At the end of the current year, the corporation declares a dividend of $180,000. How is the dividend allocated between preferred and common stockholders? A) The dividend is allocated $75,000 to preferred shareholders and $105,000 to common shareholders. B) The dividend is allocated $72,000 to preferred shareholders and $108,000 to common shareholders. The dividend is allocated $60,000 to preferred shareholders and $120,000 to common shareholders. D) The dividend is allocated $5,000 to preferred shareholders and $115,000 to common shareholders. 38) Green Services invests its excess cash in Creative Technologies and acquires 1,000 shares for $53.25. Grpen Services own less than 1% of Creative's voting stock and plans to hold the stock for two yelly While preparing the journal entry to record the transaction Mlong-leem Investments-Held-ho-Maturity will be debited for $58.250. 5) Long-term Investment-Signification Interest Investments will be debited for 250. ' Long-term Investments Available-for-Sale will be debited for $53,20 D) Long-term Investments Heading Investments will be credited for $320. 18) The two basic sources of stockholders' equity are A) common stock and bonds common stock and preferred stock B) loans from banks and gifts from donors. D) paid-in capital and retained earnings X 19 On June 1, 2015, Smith Services issued $30,000 of 7.50% bonds that mature in five years. They were sold at a premium, for a total of $31,250. The bonds pay semiannual interest payments on June 30 and December 31 of each year. On December 31, 2015, how much is the total amount paid to bondholders? A) $2,343.75 B) $1,171.88 $1,125.00 D) $2,250.00 20 Preferred stock is a stock A) that is distributed by corporations to avoid liquidation B) that gives its owners certain benefits over common stock that is distributed to employees of the company as a performance incentive. D) that sells for a very high price. 21 On July 1, 2014, Miniature Company has bonds with balances as shown below. Bonds Payable 65,000 Discount on Bonds Payable 3.250 If the company is the bonds for 566,150, what will be the effect on the income Matement? A) gain on retirement of $4,400 B) no effect on net income sales revenue of $61,750 D) loss on retirement of $4,400 * 12. On January 1, 2015, Carter Sales issued $15,000 in bonds for $14.700. They were 6-year bonds with a stated rate of 9% and pay semiannual interest. Carter Sales uses the straight-line method to amortize the Bond Discount. Immediately after issue of the bonds, the ledger balances appeared as follows: Bonds Payable 15.000 Discount on Bonds Payable 300 After the first interest payment on June 30, 2015, what will be the balance in the Discount Account? A) Debit of $325 B ) Credit of $25 Debit of $300 D ) Debit of $275 23) Which of the following is true of the accounting entries for debt securities? A) Investments in debt securities are recorded at cost, including any brokerage fees pald B) The receipt of interest revenue is recorded with a debit to Interest Revenue and a credit to Cash The receipt of interest revenue is recorded with a debit to Cash and acredit to Long-term Securities-Held-to-Maturity. D) Debt securities disposed of at maturity are recorded with a debit to the short-term or Long-term Investments account and a credit to Cash 24) Accruex Corporation has excess cash of $25,000 and invests the same amount in corporate bonds on March 30, 2015. The bonds will mature in two years from the date of purchase. The company plans to use the cash from the bonds for its business expansion after the bonds mature in 2017. Based on the information provided, which of the following will be included in the journal entry on March 30, 2015? A) a debit to Long-term Investments-Available for Sale for $25,000 B) a credit to Long-term Investments Available-for-Sale for $25,000 Qa debit to Long-term Investments-Held-to-Maturity for $25,000 D) a debit to Short-term Investments - US Treasury Notes for $25,000 Alexander Corp. has the following balances as on December 31, 2015 Total Assets SR9. Total abilities S4000 Tot Equity 25.000 Calculate the debt to equity catio. A) 1.65 BN 1,54 Q0.64 D) 0.04 x Debit Retained Barrel in Beces of Parcerit Paid-in Capital in 25) Happy Holiday, Inc. has 100,000 shares of common stock issued and outstanding with a par value of $0.01 per share. They declared a 15% common stock dividend market value is $12 per share. Which of the following is the correct journal entry to record the transaction? A) Debit Retained Earnings $180,000. Credit Common Stock Dividend Distributable $150 and credit Paid-In Capital in Excess of Par-Common $179,850 B) Debit Retained Earnings $180,000 and credit Paid-in Capital in of Par-Common $180,000 Debit Retained amings $180,000 and credit Cash $180,000 D) Debit Common Stock Dividend Distributable $150, debit Paid-in Capital in Excess of Par -Common $179,850 and credit Retained Earnings $180,000 * 26 Trek Company signed a 9%, 10-year note for $150,000. The company paid $1,900 as the installment for the first month. What portion of the first monthly payment is interest expense? A) $16,000 | B) 800 9 0m D) $1,125 MIT -) The balance in the Bonde Puyable Account is a fredit of $68.09. The balance in the Premium on Bonds Payable Account is a gpdit of $900. How much is the bond carrying amount? A) 663600 B) $900 R $68.000 D /667,100 OMTT Which of the following is trub of available for sale (APS) investments? A) They are reported as long-ter/assets on the balang sheet only if they are planned to be held for longer than a year. X B) They ary always reported trent assets in the balance sheet They afe always reported as long term assets in the balance sheet D) They are reported as current ses on the balance sheet of the business expects to sell that within the first two years ) Moretove Company had the following transactions in 2015, first year of operations . Inued 30,chares of common stock Stock has par value of $1. bepershape and was foued at $18.00 persone Eamed net income of $70,000 Paid y dividends At the end of 2015, what is the total amount of stockholders equity A) $610,000 B) SS4.000 950.000 D) SJ,000 . Which of the following occurs when a 2-for-1 stock split is declared? A) The balance in paid-in capital doubles B) The balance in common stock remains the same. The balance in common stock doubles D) The balance in common stock is reduced to half the original amount MTT The interest rate on which cash payments to bndholders are boards the A) discount rate. B) amortization rate. market sabe. D) statedate. When a bood is sold at a price higher than the face value the difference is known as a A) majarity value. B) premium. discount. phface value. OMIT 28) Aurum Services acquired 100,000 shares of Gamma Metals on January 1, 2015. Gamma pays a cash dividend of $0.25 per share on March 2, 2015. With the current investment, Aurum Services holds 8% of Gamma. In the journal entry on March 2, 2015: A) Long-term Investments - Available-for-Sale will be credited. B) Dividend Revenue will be credited. Long-term Investments-Available-for-Sale will be debited. D) Long-term Investments-Held-to-Maturity will be debited. M A UMTI Which of the following is trye of the distribition of stock diyidends? ) lidecreases assets and increase liabilities B ) A increases both dividends payable and cash. It affects only stockholder's equity accounts. b) It decreases both assets and liabilities. OMTT On January 1, 2015, Bratios Coghpany purchases equipment and signs a 6-year mortgage pote for $80.000 at 15%. The note will be paid in equal ainual installments of $21,13, beginning Jaquary, 2016. Calculate the balancs of the Mortgage Rayable account after the payment the first v installment Af $58,81 /B) $60,351 / 99$17.000 D1570.866 * 29 Revival Corporation's annual report is as follows. March 31, 2014 $350,000 0 S4L200,000 March 31, 2015 $123,500 Net Income Preferred Dividends Total Stockholders' Equity Stockholders' Equity attributable to Preferred Stock Number of Common Shares Outstanding $5,082,000 275,464 1 92.168 Based on the information provided above, find the earnings per share of Revival Corporation as of March 31, 2015 A) $2.20 B) S(2.20) $1.49 D) $1.81 * 30) On January 1, 2014, Zing Services issued $165,000 of 6-year bonds with a stated rate of 12%. The market rate at time of issue was 11%, so the bonds were issued with a premium and sold for $172.110. Zing uses the effective interest method to amortize bond premium. Semiannual interest payments are made on June 30 and December 31 of each year. How much Interest Expense will be recorded when the first interest payment is made? A) $10,139 B) $9,075 $9,900 D) $9,466