ACC 100 Chapter Notes - Chapter 1: Subledger, Retained Earnings, Accounts Receivable

44 views3 pages

salmonwalrus985

23 Feb 2014

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Capital stock- indicates the owners" contributions to a corporation(sold to the public) Common shares- is the term used to describe the amount paid by investors for shares of ownership in a company. Dividends- are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. [1] when a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend. Many corporations retain a portion of their earnings and pay the remainder as a dividend. Assets-investing activities involve the purchase of the long lived resources. Account receivable- is one of a series of accounting transactions dealing with the billing of a customer for goods and services they have ordered. (right to receive money in the future)

Related Questions

TRUE OR FALSE?

1. Bondholders are crditors of the issuing corporation.

2. bondholders claims on the assets of the corporation rank aheadof stockholders

3. the prices of bonds are quoted as a percentage of the bonds'market value

4. when the market rate of interest is less than the contract ratefor a bond, the
bond will sell for a premium.

5. an equal stream of periodic payments is called an annuity.

6.one reason a dollar today is worth more than a dollar 1 year fromtoday is the time
value of money.

7. if the straight-line method of amortization is used, the amountof unamortization
premium on bonds payable will decrease as the bonds approachmaturity.

8. if the amount of a bond premium on an issued 11% 4-year,$100,000 bond is $12,928, the amiannual straight-line amortizationof the premium is $1,416.

9. The issue price of zero-coupon bonds is the present value oftheir face amount.

10. if sinking fund cash is used to purchase investments,thoseinvestments are
reported on the balance sheet as marketable securities.

11. callable bonds can be redeemed by the issuing corporation atthe fair market
price of the bonds.

12. if bonds of $1,000,000 with unamortized discount if $10,000 areredeemed at 98,
the gain on redemption of bonds is $10,000

13. Amortization is the allocation process of writing off bondpremiums and discounts to interest expense over the life of thebond issue.

14. the amortization of a premium on bonds payable decreses bondinterest expense.

15. the balance in premium on bonds payable should be reported as adeduction from bonds payable on the balance sheet.

Multiple Choice:
16. one potential advantage of financing corportations through theuse of bonds rather than common stock is
a.the interest on bonds must be paid when due
b.the corporation must pay the bonds at maturity
c.the interest expense is deductable for tax purposes by thecorporation
d.a higher earnings per share is guarenteed for existing commonshareholders

17. when the corporation issuing the bonds has the right torepurchase the bonds prior to the maturity date for a specificprice, the bonds are
a. convertible bonds
b.unsecured bonds
c.debenture bonds
d.callable bonds

18.the present value of $30,000 to be received in 2 years, at 12%compounded annually is (rounded to nearest dollar)
a. $23,916
b.$37,632
c.23,700
d.30,000

19. An unsecured bons is the same as a
a. debenture bond
b. zero coupon bond
c. term bond
d. bond indenture

20. if $1,000,000 of 8% bonds are issued at 102 1/2, the amount ofcash recieved from the sale is
a.$1,080,000
b.$975,000
c.$1,000,000
d.$1,025,000

21. A corporation issues for cash $1,000,000 of 8%,20-year bonds,interest payable annually, at a time when the market rate ofinterest is 7%. the straight-line method is adopted for theamortization of bond discount or premium. which of the following istrue?
a. the carrying amount increases from its amount at issuance dateto $1,000,000 at maturity.
b. the carrying amount decreases from its amount at issuance dateto $1,000,000 at maturity.
c.the amount of annual interest paid to bondholders increases overthe 20-year life of the bonds
d.the amount of annual interest expense decreases as the bondsapproach maturity.

22. When the market rate of interest was 11%, Waverly corporationissued $1,000,000,12%,8-year bonds that pay interest semiannually.the selling price of this bond issue was
a. $1,052,310
b. $1,154,387
c.$1,000,000
d.720,495

23. The journal entry a company records for the issuance of bondswhen the contract rate is less than the market rate would be
a.debit bonds payable, credit cash
b.debit cash and discount on bonds payable, credit bondspayable
c.debit cash, credit premium on bonds payable and bondspayable
d.debit cash, credit bonds payable

24. On januaray 1,2007 the kings corporation issued 10% bonds witha face value of $100,000. the bonds are sold for $96,000. The bondspay interest semiannually on june 30 and december 31 and thematuritydate is december 31,2011. kings records straight-lineamortization of the bond discount. the bond interest expense forthe year ended dec 31,2007 is
a. $9,200
b.$9,800
c.$10,400
d.$10,800

25.If the market rate of interest is 10%, a $10,000, 12%, 10-yearbond that pays interest semiannually would sell at an amount
a.less tha face value
b.equal to face valur
c.greater thand face value
d.that cannot be determined

26. the torrez corporation issue a $1,000, 10-year bonds, 8%,$1,000 bonds dated jan 1,2007 at 97. the journal entry to recordthe issuance will show a
a.credit to discount on bonds payable for $30,000
b.debit to cash of $1,000,000
c.credit to bonds payable for $1,000,000
d.credit to cash for $970,000

27.bonds with a face amount $1,000,000 are sold at 97. the entry torecord the issuance is
a.Cash $1,000,000
Premium on bonds payable $30,000
Bonds Payable &nbÃµns?x.?H?mnbsp;$970,000
b.Cash $970,000
Premium on bonds payable $30,000
bonds payable $1,000,000
c.Cash $970,000
Discount on bonds payable $30,000
Bonds payable $1,000,000
d.Cash $970,000
Bonds Payable $970,000

28. the cash and securities comprising a sinking fund establishedto redeem bonds at maturity in 2015 should be classified on thebalance sheet as
a.fixed asset
b.current asset
c.intangable assets
d.investments

29. when callable bonds are redeemed below carrying value
a. gain on redemption of bonds is credited
b.loss on redemption of bonds is debited
c.retained earnings is credited
d.retained earnings is debited

silverbee836

Ristoni Company is in the process of emerging from a Chapter 11 bankruptcy. It will apply fresh start accounting as of December 31, 2017. The company currently has 37,000 shares of common stock outstanding with a $259,000 par value. As part of the reorganization, the owners will contribute 21,000 shares of this stock back to the company. A retained earnings deficit balance of $372,000 exists at the time of this reorganization. The company has the following asset accounts: Book Value Fair Value Accounts receivable $ 74,000 $ 52,000 Inventory 101,000 79,000 Land and buildings 503,000 550,000 Equipment 81,000 70,000 The company's liabilities will be settled as follows. Assume that all notes will be issued at reasonable interest rates. Accounts payable of $87,000 will be settled with a note for $12,000. These creditors will also get 2,000 shares of the stock contributed by the owners. Accrued expenses of $42,000 will be settled with a note for $11,000. Note payable of $107,000 (due 2021) was fully secured and has not been renegotiated. Note payable of $202,000 (due 2020) will be settled with a note for $57,000 and 11,000 shares of the stock contributed by the owners. Note payable of $192,000 (due 2018) will be settled with a note for $78,000 and 8,000 shares of the stock contributed by the owners. Note payable of $242,000 (due 2019) will be settled with a note for $117,000. The company has a reorganization value of $826,000. Prepare all journal entries for Ristoni so that the company can emerge from the bankruptcy proceeding. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

Record the adjustment entry to change asset values to fair value.

Record the forfeiture of shares according to the reorganization plan.

Record the settlement of accounts payable as per reorganization plan.

Record the settlement of accrued expenses.

Record the settlement of notes payable due in 2020.

Record the settlement of notes payable due in 2018.

Record the settlement of notes payable due in 2019.

Record the closing entry of gain on debt discharge account.

peachdeer288

June	3.	Paid the treasurer of the union the amount of union dues withheld from workers' earnings during May.
	15.	Payroll: $6,380. All wages and salaries taxable, except only $5,000 is taxable under FUTA and SUTA. Withheld $549 for federal income taxes, $128.70 for state income taxes, and $50 for union dues.
	15.	Electronically transferred funds to remove the liability for FICA taxes and federal income taxes withheld on the May payrolls.
	30.	Payroll: $6,250. All wages and salaries taxable, except only $4,770 is taxable under FUTA and SUTA. Withheld $538 for federal income taxes, $127.60 for state income taxes, and $50 for union dues.

The following are the account balances forwarded as of June 1:
(1) Union Due Payable: $105
(2) Employees SIT Payable: $480.27
(3) FICA Taxes Payable - OASDI: $1,471.88
(4) FICA Taxes Payable - HI: $344.24
(5) Employees FIT Payable: $1,040.00
(6) FUTA Taxes Payable: $292.11
(7) SUTA Taxes Payable: $547.98
(8) Cash: $31,805.77
(9) Wages and Salaries: $95,185.00
(10) Payroll taxes: $9,360.29

Note: The SUTA tax rate is 2.3%.

a. Analyze and journalize the transactions described in the narrative above. If an amount box does not require an entry, leave it blank. If required, round your answers to the nearest cent.

GENERAL JOURNAL			PAGE 21
DATE	DESCRIPTION	DEBIT	CREDIT
20--
Jun. 3	Union Dues Payable
	Cash

Jun. 15-Payroll	Wages and Salaries
	FICA Taxes Payable-OASDI
	FICA Taxes Payable-HI
	Employees FIT Payable
	Employees SIT Payable
	Union Dues Payable
	Cash

Jun. 15-Taxes	Payroll Taxes
	FICA Taxes Payable-OASDI
	FICA Taxes Payable-HI
	FUTA Taxes Payable
	SUTA Taxes Payable

Jun. 15-Federal Taxes	FICA Taxes Payable-OASDI
	FICA Taxes Payable-HI
	Employees FIT Payable
	Cash

Jun. 30-Payroll	Wages and Salaries
	FICA Taxes Payable-OASDI
	FICA Taxes Payable-HI
	Employees FIT Payable
	Employees SIT Payable
	Union Dues Payable
	Cash

Jun. 30-Taxes	Payroll Taxes
	FICA Taxes Payable-OASDI
	FICA Taxes Payable-HI
	FUTA Taxes Payable
	SUTA Taxes Payable

b. Post the June journal entries in chronological order to the general ledger accounts in the attached spreadsheet. When finished, enter the final June 30 balance of each account below.

1. Cash	$
2. FICA Taxes Payable-OASDI	$
3. FICA Taxes Payable-HI	$
4. FUTA Taxes Payable	$
5. SUTA Taxes Payable	$
6. Employees FIT Payable	$
7. Employees SIT Payable	$
8. Union Dues Payable	$
9. Wages and Salaries	$
10. Payroll Taxes	$

c. Answer the following questions:

Enter your answers to the nearest cent. If an amount is zero, enter "0".

1. The total amount of the liability for FICA taxes and federal income taxes withheld as of June 30 is:

2. The total amount of the liability for state income taxes withheld as of June 30 is:

3. The amount of FUTA taxes that must be paid to the federal government on or before August 1 (July 31 is a Sunday) is:

4. The amount of contributions that must be paid into the state unemployment compensation fund on or before August 1 is:

5. The total amount due the treasurer of the union is:

6. The total amount of wages and salaries expense since the beginning of the fiscal year is:

7. The total amount of payroll taxes expense since the beginning of the fiscal year is:

8. Using the partial journal below, journalize the entry to record the vacation accrual at the end of the company's fiscal year. The amount of Brookins Company's vacation accrual for the fiscal year is $15,000.

Account	Debit	Credit
Vacation Benefits Expense
Vacation Benefits Payable

blushcheetah321

ACC 100 Chapter Notes - Chapter 1: Subledger, Retained Earnings, Accounts Receivable

Document Summary

Get access

Related Documents

ACC 100 Chapter Notes - Chapter 1: Accounts Payable, Current Liability, Sole Proprietorship

ACC 100 Study Guide - Midterm Guide: Accounts Receivable

ACC 100 Chapter Notes - Chapter 1: Sole Proprietorship, Retained Earnings, Standard Cost Accounting

Related Questions