how does it effect the accounting equation?
GirlMath Financials issues 3,200 shares of its $0.02 par value common stock to raise funds for new product development. Assume the issue price is $15 per share.
Determine the financial statement effects of the issuance of common stock.
increase in assets (cash), increase in stockholders equity
is accounting fun?
the only correct answer is yes
StayPressed Inc. issues 3,900 shares of its $0.5 par value common stock to raise funds for new product development. Assume the issue price is $17 per share.
whats the journal entry for this question
Cash ............................................ 66,300
Common Stock ................................. 1,950
Additional Paid-In Capital ................. 64,350
Is “Unearned Revenue” a current liability, long-term liability, or equity?
Current liability.
what is the formula for horizontal analysis?
(Current year - Last year)/Last year
What is an installment note?
A loan repaid in equal periodic payments that include both interest and principal.
Declaring a cash dividend has what effect on total stockholders’ equity?
A decrease in total stockholders’ equity.
what is the name of the next accounting class after Principles of Accounting 1 (2101)?
Managerial Accounting (2102)
IdiotsRus issues 1,000 shares of its $0.01 par value preferred stock for cash at $29 per share.
Record the issuance of the preferred shares.
Dr. Cash ................................................ 29,000
Cr. Preferred Stock ..................................... 10
Cr. Additional Paid-In Capital.................. 28,990
PickMe Pet Supplies signs a note payable that is due in 8 months. What kind of liability is this
*there are two categories of liabilities*
(30 seconds)
current liability
What does a high receivables turnover ratio mean?
It means the company is really good at collecting money from customers fast!
Interest on most bonds is paid how often?
Semiannually (twice per year)
What kind of account is treasury stock, and what is the effect on the accounting equation when a company issues treasury stock?
contra equity account; assets increase, and stockholders' equity increases
This U.S. state is known as the “Sunshine State"
Florida
Fiscally Feral Inc. issues 4,000 shares of $1 par value common stock at $49 per share. Later in the year, the company decides to purchase 140 shares at a cost of $52 per share.
Record the transaction if Fiscally Feral Inc. resells the 130 shares of treasury stock at $49 per share.
Cash ...................................... 6,370
Additional Paid-In Capital ........... 390
Treasury Stock .................................... 6,760
UrMom Clothing Co. borrows $12,000 on a 10%, 3-month note. How much interest will accrue by the end of the 3 months?
Answer: $300
(12,000 × 10% × 3/12)
What does the inventory turnover ratio tell us?
Indicates how quickly a company is selling inventory efficiently
Delulu designs issues $500,000 of 6% bonds. How much interest is paid each semiannual period?
whats the journal entry?
Answer: $15,000
(500,000 × 6% × 1/2)
interest expense. 15,000
cash 15,000
what effect does purchasing treasury stock have on the income statement?
Purchasing treasury stock has no effect on the income statement because treasury stock is a balance sheet move, not an income statement one.
What does "SI" in SI sessions stand for?
Supplemental Instruction
SendHelp Studios issued 700,000 of its 1 million shares of authorized common stock. At the end of the accounting period, 450,000 shares are outstanding. How many shares of treasury stock does SendHelp Studios have?
Treasury stock=Issued shares−Outstanding shares
700,000−450,000=250,000 shares
You buy a hoodie for $42 plus 5% sales tax at TouchGrass Apparel.
1. What is the total sales tax the store owes?
2. And what is the total amount you (the customer) pays?
Answer: $2.10, $44.10
(THEY WILL ASK YOU ABOUT SALES TAX ON YOUR EXAM)
- all you need to know is that sales tax is a liability that is owed to the government
How is vertical analysis different from horizontal analysis?
Vertical analysis shows each item in the balance sheet as a percentage of a base amount (like sales) while horizontal analysis compares balance sheet items over time
SlayNow PayLater Co. borrows $24,000 on January 1 on a 6%, 12-month installment note.
The loan will be repaid in 12 equal monthly payments of $2,070, with the first payment on January 31.
Record the establishment of the note on January 1.
Record the first monthly payment on January 31.
*USE THE FORMULA*
Interest = 24,000 × 6% × 1/12 = $120
note payable
interest expense
cash
What is the effect of a 2-for-1 stock split on total stockholders’ equity?
Stockholders’ equity does not change
what is the CPA in terms of accounting?
Certified Public Accountant (CPA) license
Gaslight & Gatekeep CPA Firm has two classes of stock authorized: 9%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2024, its first year of operations
September 10: Purchases 11,000 shares of its own common stock for $34 per share
December 15: Resells 5,500 shares of treasury stock at $39 per share.
Record both transactions
Treasury Stock .......................... 374,000
Cash ............................................... 374,000
Cash ........................................ 214,500
Treasury Stock .................................... 187,000
Additional Paid-In Capital ...................... 27,500
On Sept 1, IRUNTHIS inc. signs a $60,000, 8%, 9-month note.
Calculate interest:
At Dec 31 (adjusting entry)
At maturity
(1 MINUTE 30 SECONDS)
EXTRA 200 POINTS IF YOU DO THE JOURNAL ENTRIES
Interest to Dec 31:
60,000 × 8% × 4/12 = $1,600
Remaining interest to maturity:
60,000 × 8% × 5/12 = $2,000
DEC 31:
Interest expense 1,600
Interest Payable 1,600
maturity
notes payable 60,000
interest expense 2,000
interest payable 1600
cash 63,600
What does it typically mean when a company has a high price-earnings (P/E) ratio?
A high price-earnings (P/E) ratio usually means that investors expect the company to grow and earn more money in the future, People are willing to pay more for the stock because they believe the company is going to do well later.
NoCrumbsLeft Bakery borrows $9,000 on January 1 on an 8%, 24-month installment note.
The monthly payment is $430.
Question:
After the first monthly payment, what is the new carrying value of the note?
*USE THE FORMULA*
8,630