Reference no: EM132042515

Questions -

Q1. On January 1, 2014, Hannigan Company issued bonds with a face value of $600,000. The bonds carry a stated interest of 7% payable each January 1.

a. Prepare the journal entry for the issuance assuming the bonds are issued at 97.

b. Prepare the journal entry for the issuance assuming the bonds are issued at 102.

Q2. Frye Company issued $700,000, 10%, 10-year bonds on January 1, 2014, at 105. Interest is payable annually. Frye uses the effective-interest method of amortization and has a calendar year end and the bonds were issued for an effective interest rate of 8%.

Instructions - Prepare all journal entries made in 2014 related to the bond issue.

Q3. Morten Corporation purchased $480,000 of its bonds on June 30, 2014, at 102 and immediately retired them. The carrying value of the bonds on the retirement date was $431,100. The bonds pay annual interest and the interest payment due on June 30, 2014, has been made and recorded.

Prepare the journal entry to record the retirement or conversion of the bonds.

Q4. McEvoy, Inc., purchased $330,000 of its bonds at 96 on June 30, 2014, and immediately retired them. The carrying value of the bonds on the retirement date was $321,000. The bonds pay annual interest and the interest payment due on June 30, 2014, has been made and recorded.

Prepare the journal entry to record the retirement or conversion of the bonds.

Q5. Wynne Company issued $900,000 of 10%, 5-year bonds at 108. Interest is paid annually, and the effective interest method is used for amortization. Assume that the market rate for similar investments is 8%. The bonds are issued on the date of the bonds.

a. What amount was received for the bonds?

b. How much interest is paid each interest period?

c. What is the premium amortization for the first interest period?

d. How much interest expense is recorded on the first interest date?

e. What is the carrying value of the bonds after the first interest date?

Q6. Warner Company issued $4,000,000 of 6%, 10-year bonds on one of its interest dates for $3,454,800 to yield an effective annual rate of 8%. The effective-interest method of amortization is to be used. How much bond interest expense (to the nearest dollar) should be reported on the income statement for the end of the first year?

a. $277,110

b. $276,384

c. $275,655

d. $240,000

Q7. Patrick Corporation is authorized to issue 1,000,000 shares of $1 par value common stock. During 2014, the company has the following stock transactions.

Jan. 15 Issued 700,000 shares of stock at $7 per share.

Sept. 5 Purchased 20,000 shares of common stock for the treasury at $8 per share.

Dec. 6 Declared a $0.50 per share dividend to stockholders of record on December 20, payable January 3, 2015.

Instructions - Journalize the transactions for Patrick Corporation.

Q8. On November 1, 2014, Kalen Corporation's stockholders' equity section is as follows:

Common stock, $10 par value $600,000

Paid-in capital in excess of par value-Common Stock 180,000

Retained earnings 200,000

Total stockholders' equity $980,000

On November 1, Kalen declares and distributes a 15% stock dividend when the market value of the stock is $16 per share.

Instructions - Indicate the balances in the stockholders' equity accounts after the stock dividend has been distributed.

Q9. Racer Corporation's December 31, 2014 balance sheet showed the following:

8% preferred stock, $20 par value, cumulative,

40,000 shares authorized; 20,000 shares issued 400,000

Common stock, $10 par value, 4,000,000 shares authorized;

2,600,000 shares issued, 2,560,000 shares outstanding 26,000,000

Paid-in capital in excess of par value - preferred stock 80,000

Paid-in capital in excess of par value - common stock 36,000,000

Retained earnings 10,200,000

Treasury stock (30,000 shares) 840,000

Racer declared and paid a $100,000 cash dividend on December 15, 2014. If the company's dividends in arrears prior to that date were $24,000, Racer's common stockholders received

a. $76,000.

b. $36,000.

c. $44,000.

d. no dividend.

Q10. Outstanding stock of the Hall Corporation included 40,000 shares of $5 par common stock and 20,000 shares of 6%, $10 par non-cumulative preferred stock. In 2013, Hall declared and paid dividends of $8,000. In 2014, Hall declared and paid dividends of $24,000. How much of the 2014 dividend was distributed to preferred shareholders?

a. $16,000.

b. $28,000.

c. $12,000.

d. None of these answer choices are correct.

Q11. The board of directors of Benson Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2014. The dividend is to be paid on August 15, 2014, to stockholders of record on July 31, 2014. The effects of the journal entry to record the payment of the dividend on August 15, 2014, are to

a. decrease stockholders' equity and decrease liabilities.

b. decrease liabilities and decrease assets.

c. increase stockholders' equity and increase liabilities.

d. increase stockholders' equity and decrease assets.

Q12. The net income reported on the income statement for the current year was $440,000. Depreciation was $62,000. Accounts receivable and inventories decreased by $20,000 and $32,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $2,000 and $16,000. How much cash was provided by operating activities?

a. $496,000.

b. $568,000.

c. $536,000.

d. $436,000.

Q13. Brad Ford Company reports a $32,000 increase in inventory and a $8,000 increase in accounts payable during the year. Cost of goods sold for the year was $190,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

a. $190,000.

b. $214,000.

c. $166,000.

d. $166,000.

Q14. The general ledger of the Summer Company provides the following information:

	End of Year	Beginning of Year
Accounts Receivable	$64,000	$84,000
Inventory	240,000	205,000
Accounts Payable	42,000	62,000

The company's net sales for the year was $2,000,000 and cost of goods sold amounted to $1,700,000.

Compute the following:

A) Cash receipts from customers

B) Cash payments to suppliers

Q15. If a gain of $13,500 is incurred in selling (for cash) office equipment having a book value of $100,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

a. $86,500.

b. $113,500.

c. $100,000.

d. $13,500.