Show:
What's the Debt
What's the Credit
Chapter 10 & 11 Fun Facts
100

Issued 3,000 shares, $2 par value, common stock for $20/share

What is the debit?

Dr: Cash (3,000 x 20) = 60,000

100

On May 1, Company purchased equipment, $50,000 signing a 12 month 12% note. 

What is the credit for recording the signing of the note?

Cr: Notes Payable 50,000

100

What is the difference between stated value and par value?

No difference 

200

The corporation purchased 2,000 shares of its own stock for $50 a share. 

What is the debit?

Dr: Treasury Stock 100,000

200

The corporation purchased 2,000 shares of its own stock for $50 a share.

What is the Credit?

Cr: Cash 100,000

200

What are the two things you add together to get the total cost of employing someone?

Salaries and wages expense + payroll tax expense 

300

During the week ending May 15, Ed worked 60 hours. He earns $60 per hour and time and a half for hours above 40. Income tax (10%) and FICA tax (7.65%) are withheld from Ed's pay. Company also pays the company's portion for FICA tax and State/Federal Unemployment taxes (5.4% and 0.8%).

What is debit for Salary expense?  

Dr: Salary Expense (40*60)+(20*90) 4200

300

On Jan 31, Company records weekly cash sales of $100,000, plus a 6% sales tax collected for the State of WI.

What are the credits?

Cr: Sales Tax Payable 6,000

Cr: Sales Revenue 100,000

300

What is one corporate characteristic? 

  • Limited liability - only liable for what you invest

  • Shareholders are owners

  • Transferability of ownership - can sell stock

  • Centralized management

  • More heavily regulated to protect investors

400

During the week ending May 15, Ed worked 60 hours. He earns $60 per hour and time and a half for hours above 40. Income tax (10%) and FICA tax (7.65%) are withheld from Ed's pay. Company also pays the company's portion for FICA tax and State/Federal Unemployment taxes (5.4% and 0.8%).

What is the debit for Payroll Tax Expense 

Dr: Payroll Tax Expense (4200*.0765)+(4200*.054)+(4200*.008) 581.7


400

Issued 3,000 shares, $2 par value, common stock for $20/share.

What are the Credits?

Cr: Common Stock 6,000

Cr: PIC > Par value 54,000

400

What is the difference between common and preferred stock?

  • Preferred Stock

    • May have priority over common stock in…

      • Dividend distribution

      • Assets in event of liquidation

      • Cumulative dividend features

  • Common Stock

    • Can vote with every share

    • If company only has one class of stock = common stock