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Question
On January 23, Bennington Corporation, for the first time in its short history, purchased 200 shares of its own common stock for $40 a share. On March 31, it sold 100 of those shares for $45 a share. Prepare the journal entry recording the March 31st transaction.
Answer
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Related questions
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A machine was purchased on January 1 for $100,000. The machine has an estimated useful life of 5 years with a salvage value of $20,000. Under the straight-line method, the book value and the accumulated depreciation of the machine at the end of year two is respectively,
a. $60,000 and $40,000
b. $68,000 and $32,000
c. $40,000 and $60,000
d. $48,000 and $32,000
Q:
A machine was purchased on January 1 for $50,000. The machine has an estimated useful life of 10 years with a salvage value of $2,000. Under the double-declining-balance, depreciation expense for each of the first two years is, respectively,
a. $12,000 and $12,000.
b. $10,000 and $8,000.
c. $12,000 and $9,500.
d. $12,500 and $12,500.
Solution: $50,000 x 2/10 and ($50,000 - $10,000) x 2/10
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Sandeep Inc. uses double-declining-balance depreciation for an asset with a 4-year life expectancy and no salvage value. Depreciation expense for the second year of the asset's life is calculated by:
a. [2 x Book Value]/4
b. [2 x (Cost Salvage Value]/4
c. [(2 x Book Value)/4] Accumulated Depreciation
d. [2 x Cost]/4
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Which one of the following depreciation methods will typically result in the smallest earnings per share during the early periods of an asset's life?
a. 150% declining balance method.
b. Units of production method.
c. Double-declining-balance method.
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An increase in accumulated depreciation:
a. increases total assets.
b. decreases total assets.
c. decreases the current ratio.
d. increases the quick ratio.
Q:
Accumulated depreciation is an account which:
a. adjusts plant and equipment so that its balance sheet value approximates its replacement cost.
b. is a long-term liability.
c. is equal to total depreciation expense recorded and decreases total plant and equipment.
d. reduces intangible assets.
Q:
Which one of the following actions will help solve a cash shortage problem?
a. Issue common stock in exchange for plant assets
b. Recognize depreciation expense
c. Purchased long-lived asset by issuing long-term debt
d Retire plant assets at salvage value
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Which one of the following should be classified as land on the balance sheet?
a. A shed that houses the companys equipment.
b. Mineral rights representing gold in the soil
c. Two tracts of property that houses the companys backup computer site
d. Sidewalks and driveways which lead to the companys office building
Q:
A significant difference in depreciation accounting between US GAAP and IFRS accounting is that in IFRS:
a. Management has the option of periodically revaluing property, plant and equipment to market value
b. Management is mandated to revaluing property, plant and equipment to market value
c. Management may use hypothetical future value in depreciating assets
d. There are no differences in depreciation accounting between US GAAP and IFRS
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How do intangible assets differ from long-lived plant assets?
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What problems are inherent in recording trade-ins of plant assets?
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3. Beginning and ending balances for relevant balance sheet accounts are as follows: 12/31/15 1/01/15 Merchandise inventory $32,000 $21,000 Accounts payable 15,000 8,000 During 2015, cost of goods sold was $102,000. Calculate the amount of cash paid to suppliers of merchandise inventory.
Q:
4. Bradley Corporation began business on January 1. During January, Bradley reported the following: January 1 purchase: 100 units @ $10 = $1,000 January 10 purchase: 150 units @ $14 = $2,100 January sales: 200 units Determine the amount of the inventory valuation on January 31 under the averaging cost flow assumption.
Q:
2. Bradley Corporation began business on January 1. During January, Bradley reported the following: January 1 purchase: 100 units @ $10 = $1,000 January 10 purchase: 150 units @ $14 = $2,100 January sales: 200 units Determine the amount of inventory to report on Bradleys balance sheet at January 31 under the FIFO cost flow assumption.
Q:
2. Before adjusting entries, Dormont Corps accounts receivable and allowance for doubtful accounts are $800,000 and $7,000 (credit balance), respectively. Using an aging schedule of accounts receivable, it is determined that $44,000 of the accounts receivable would probably be uncollectible. Calculate the net realizable value of Dormonts receivables at year end.
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On December 31, 2015, total assets and liabilities are measured at $18,000 and $12,000, respectively. The total market value of the company's common stock is $7,000. At what amount would shareholders' equity be measured on the December 31, 2015 balance sheet?
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During January of 2015, Barry Corporation purchased five acres of land for cash of $120,000 from Foley Company. On December 31, 2015, after Barry built its plant, it was estimated that the land's fair market value was $140,000. At what amount would land be measured on Barrys December 31, 2015 balance sheet?
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Why might corporate management want to lobby the FASB?
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Immediately before a $4,000 cash dividend was declared on 20,000 shares of par $80 stock, Sea Breeze Corporation has total liabilities of $220,000 and total shareholders equity of $180,000. Calculate Sea Breezes debt/equity ratio before and after the declaration of the cash dividend and indicate the effect the declaration had on this ratio.
Q:
A sequence of events affecting the shareholders' equity section of Malabar Corporation follows:
A. On January 21, 8,000 shares of $10 par value common stock were issued for $160,000.
B. On May 16, a 3-for-1 stock split was distributed.
C. On December 23, $8,000 of cash dividends on outstanding common stock were declared. The dividends will be paid in 30 days.
For each entry, state how the event changed assets, liabilities, and shareholders' equity.
Q:
The shareholders' equity section of Maven Corporation's balance sheet as of December 31, 2014 is as follows: Common stock, $1 par; authorized, 6,000 shares; 2,000 shares issued
$ 2,000 Additional paid-in capital
60,000 Retained earnings
58,000 Total shareholders equity
$120,000 The following events occurred during 2015:
February 1 - 400 shares of authorized and unissued common stock were sold for $4 per share.
June 16 - A 15% stock dividend was declared and issued. Market value per share is currently $18.
October 11 - A three-for-one split was carried out. Market value was $21 per share.
November 4 - A cash dividend of $4.20 per share was declared, payable January 12 to shareholders of record on November 30.
How many shares of common stock are outstanding at December 31, 2015? Determine the balance in the common stock account at December 31, 2015.
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Immediately before Cayman Corporation issued 2,000 shares of its common stock for $15 a share, it had total liabilities of $150,000 and total shareholders' equity of $300,000. Cayman had 10,000 shares of common stock outstanding prior to the new issuance. Calculate Caymans debt/equity ratio immediately after the new issuance.
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Canton Corporation shareholders' equity section of its balance sheet as of December 31, 2014 is as follows: Common stock, $5 par value; 40,000 shares authorized
$50,000 Additional paid-in capital
100,000 Retained earnings
180,000 Total
$330,000 The following events occurred during 2015:
March 3 - 5,000 shares of authorized and unissued common stock were sold for $22 per share.
March 16 - Declared a cash dividend of $3 per share payable May 15 to holders of record on May 5.
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Identify the effect of the accounting equation (a through k) of each transaction in 1 through 9 below. You may use each letter more than once or not at all. Accounting Effects a.
A and L b.
+ A and + SE (Contributed Capital) c.
+ A and + SE (Retained Earnings) d.
+ A and A e.
+ A and + L f.
A and SE (Contributed Capital) g.
A and SE (Retained Earnings) h.
+ L and SE (Retained Earnings) i.
L and + SE (Retained Earnings) j.
+ SE (Contributed Capital) and SE (Retained Earnings) k.
No journal entry or effect 1. Issued debt to finance the purchase of property 2. Issued common stock to finance the purchase of property 3. Used money resulting from retained earnings to finance the purchase of property 4. Declared cash dividends to shareholders 5. Paid the previously declared dividends 6. Skipped dividends on cumulative preferred stock 7. Declared and distributed a 10% stock dividend 8. Declared a 3:1 stock split 9. The market value of common stock doubled during the year
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The shareholders equity section of Samuels Company were reported on the balance sheets for December 31: 2015 2014 Preferred stock (9%, $50 par value) $200,000 $120,000 Common stock ($6 par value, 750,000 shares authorized, 90,000 issued and 5,000 held in treasury) 540,000 396,000 Additional paid-in capital: Preferred stock 155,000 55,000 Common stock 336,000 300,000 Retained earnings 575,000 495,000 Less: Treasury stock (110,000) -------- Total shareholders equity $2,180,000 $1,688,000 Based on this information, how many shares of common stock were issued in 2015 and what was the average issue price? a. 21,000 shares and $7.82 per share b. 30,000 share and $6.00 per share c. 85,000 shares and $9.73 per share d. 24,000 shares and $7.50 per share
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The shareholders equity section of Winters Company contained the following balances as of December 31, 2015: Preferred stock (10%, $15 par value, cumulative) $1,500 Preferred stock (12%, $10 par value , noncumulative) 1,500 Common stock ($1 par value, 5,000 shares authorized, 3,500 issued and 400 held in treasury) 3,500 Additional paid-in capital: Preferred stock (10%) 1,050 Preferred stock (12%) 1,275 Common stock 2,345 Retained earnings 4,256 Less: Treasury stock (5,750) Total shareholders equity $9,676 During 2016, Winters entered into the following transaction: On December 2, the company declared a cash dividend of $1,050, which was paid on December 27. Winters did not declare or pay any dividends during 2015. Based on this information, what amount of dividends should be declared and paid to shareholders with common stock? a. $350 b. $420 c. $570 d. $385
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The shareholders equity section of the Jason Company as of December 31, 2015 is as follows: Common stock $180,000 Additional paid-in capital (Common stock) 110,000 Retained earnings 160,000 Total shareholders equity $450,000 On January 15, the company repurchased 1,500 shares of its own stock at $60 for treasury stock. On January 16, as part of a compensation package, the company reissued half of the treasury shares to executives who exercised stock options for $20 per share. On January 28, the company reissued the remainder of the treasury stock on the open market for $65 per share. Which of the following would be included in the journal entry recorded on January 28? a. a credit to Treasury Stock for $48,750. b. a credit to Additional Paid-In Capital, Treasury Stock for $48,750. c. a debit to Cash for $45,000. d. a credit to Additional Paid-In Capital, Treasury Stock for $3,750.
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On January 1, 2014, Enron Corporation issued a 4-year, 7%, $9,000 bond payable. Beginning in 2015, interest is payable annually every January 1. The market rate of interest at issuance is 9%. How much are the interest payments by Enron? Why is the amount of interest expense different than the cash payments?
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On January 1, 2014, Mango Corporation issued a 3-year, 4%, $3,000 bond payable. Beginning in 2015, interest is payable every year on January 1 over the life of the bond. The market rate of interest on January 1, 2014 is 6%. What are the proceeds received by Mercer from the issue of this bond on January 1, 2014?