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Time Value of Money
Long-Term Liabilities
Corporations
Dividends
Miscellaneous
100
Which table would you use to calculate how much a single deposit of 4500 is made at the beginning of period 1 would grow to how much at the end of three years?
What is Future value of a Lump-Sum
100
If a bond's stated interest rate is lower than the market rate than the bond will be issued at a....
What is a Discount
100
What is an advantage of common stock over debt?
issuing stock is less risky than financing with debt: investments from stockholders do not have to be repaid
100
what are the entries related to the declaration and payment of common stock dividends?
Declaration: DR. Retained earnings (___per share *shares), CR. Dividends payable- Common Payment: DR. Dividends payable- common CR. Cash
100
What determines if a stock dividend is small or large?
If the percentage is less than 20 than small and if higher than 25 it is large.
200
Compound interest is computed quarterly on $500 for seven years at 16% annual interest. The future value table is used by multiplying the $500 by which factor?
What is 28 periods at 4%
200
what is the journal entry to record the issuance of a bond at Face Value? What is the entry to record the semiannual interest payment of a bond?
1.) DR. Cash CR. Bonds Payable 2.) DR. Bond interest expense CR. Cash
200
What are the following advantages and disadvantages to? Advantage: stockholders have limited liability, owner transfer is easy, have continuous life, no mutual agency.. Disadvantages: ownership and management, and double taxation
What is advantages and disadvantages of corporations
200
What are the entries related to the declaration and payment of preferred stock dividends?
Declaration: DR. Retained earnings, CR. Dividends payable Payment: DR. Dividends payable- Preferred, CR. Cash
200
What will occur if a corporation issues a 2 for 1 stock split on 40,000 outstanding shares of $20 par common stock?
What is Outstanding shares increases to 80,000 and par value decreases to $10
300
What is the difference between an annuity and a lump-sum amount?
An annuity is a stream of equal payments made at equal time intervals, whereas a lump sum amount is a one-time amount
300
What is the journal entry to record bond interest expense and payment of interest for both a discount and premium?
Discount: DR. Bond interest expense, CR. Cash, CR. Discount on bonds payable Premium: DR. Bond interest expense, DR. Premium on bonds payable, CR. Cash
300
What would the journal entry be to record the issuance of 15,000 shares of $5 par value common stock sold at $15 per share on the market?
What is Debit cash $225,000 credit common stock $5 par value $75,000 and credit Paid in Excess of Par- Common $150,000
300
How do you account for small stock dividends? declaration and distribution?
declaration: DR. Retained earnings (___per share * shares* %) CR. Common Stock dividend distributable (Par value *Shares * %) CR. Paid in capital in excess of par-common (Retained-CSDD) Distribution: DR. Common stock dividend distributable CR. Common stock - $ par value
300
what are 3 relevant dates when announcing a stock dividend and are they the same dates as cash dividends?
Declaration date, Record date (no entry needed), distribution date
400
What is the present value of receiving $300 at the end of each year for 4 years at 8% interest and which table did you use to calculate it?
300*3.312=944 Present value of an ordinary annuity
400
What is the entry to record the issuance of a bond at a discount?
DR. Cash, DR. Discount on bonds payable, CR. Bonds payable
400
What are these advantages and disadvantages of? common stock, debt, or corporations? -company still has ownership when debt is issued -creditors are not owners and do not get a vote -tax effects ( interest is tax deductible) - disadvantages: cash is required and high levels of debt exposes a company to financial risk
What is advantages and disadvantages of long term debt
400
How do you account for large stock dividend? declaration and distribution?
declaration: DR. Retained earnings (Par value * shares*%) CR. Common stock dividend distributable (Par value *shares*%) Distributing: Dr. Common Stock dividend distributable CR. Common stock - $ par value
400
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500
What is the difference between simple interest and compound interest?
compound interest is interest that is calculated on principal and previously accumulated interest, whereas simple interest is only on the original principal amount.
500
What is the journal entry to record the issuance of a bond at a premium? What does this entry do?
DR. Cash, CR. Premium on bonds payable, CR. Bonds payable It cuts cost of borrowing and reduces interest expense
500
What happens in the accounting equation when a shareholder invests cash in a corporation in exchange for stock?
What is both assets and stockholder's equity increase
500
What is Earnings Per Share? and how do you calculate it?
Measures the amount of net income earned for each share of common stock outstanding ** Issued stock - Treasury stock = outstanding shares** EPS= (Net Income (loss) - Preferred dividends) / Avg. # of common shares outstanding
500
Bob’s Landscaping issues a 10% common stock dividend on 200,000 shares issued and outstanding when the market value of its common stock is $25 per share and the par value of common stock is $15. Record the journal entry on the declaration date.
DR. Retained Earnings (25 per share x 200,000 shares x 0.1) 500,000 CR. Common stock Distributable (15 par x 200,000 x .1) 300,000 CR. Paid in Excess of par- common (500000-300000) 200,000 reasoning: Debit retained earnings because it goes down with a debit and credit common stock distributable because it is a liability account similar to dividends payable.