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Exam 8: Liabilities and Stockholders Equity

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Question 61

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For the year that just ended,a company reports net income of $1,500,000.There are 500,000 shares authorized,300,000 shares issued,and 250,000 shares of common stock outstanding.What is the earnings per share?

A) $5.00
B) $2.50
C) $6.00
D) $3.00

E) A) and B)
F) C) and D)

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Question 62

Multiple Choice

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When the contract rate of interest on bonds is higher than the market rate of interest,the bonds sell at

A) a premium.
B) their face value.
C) their maturity value.
D) a discount.

E) C) and D)
F) A) and B)

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Question 63

Multiple Choice

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A corporation has 50,000 shares of $100 par value stock outstanding.If the corporation issues a 4-for-1 stock split,the number of shares outstanding after the split will be

The declaration and issuance of a stock dividend does NOT affect the total amount of a corporation's assets,liabilities,or stockholders' equity.

If the market rate of interest is 7% and a corporation's bonds bear interest at 8%,the bonds will sell at a premium.

The total earnings of an employee for a payroll period is referred to as the net pay.

The declaration of a stock dividend decreases a corporation's stockholders' equity and decreases its liabilities.

The major subdivisions of the Stockholders' Equity section of the balance sheet are

Illustrate the effects on the accounts and the financial statements of each of the following transactions:

The interest rate specified in the bond indenture is called the

A company sold 200 shares of common stock with a par value of $5 at a price of $13 per share.What is the effect on the accounts of this transaction?

The primary purpose of a stock split is to

In order to record a contingent liability,the liability must be probable and reasonably estimated.

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 60,000 shares were originally issued and 5,000 were subsequently reacquired.What is the number of shares outstanding?

The excess of issue price over par of common stock is termed a(n)

An employee receives an hourly rate of $30,with time and a half for all hours worked in excess of 40 during a week.Payroll data for the current week are as follows: hours worked,46;federal income tax withheld,$300;cumulative earnings for year prior to current week,$90,700;social security tax rate,6.0% on maximum of $106,800;and Medicare tax rate,1.5% on all earnings.What is the net pay for the employee?

When are contingent liabilities required to be recorded?

If 20,000 shares are authorized,14,000 shares are issued,and 500 shares are held as treasury stock,a cash dividend of $1 per share would amount to $13,500.

When the market rate of interest on bonds is equal to the contract rate,the bonds will sell at

On June 5 Glover Co.issued a $60,000,6%,120-day note payable to Jones Co.How much will Glover Co.have to pay at maturity?