ACCT221 Quiz 1 3 6 7 8 9 Solved

Question: #1679

ACCT 221 Quiz 1

1. The date on which a cash dividend becomes a binding legal obligation is on the

a. declaration date.

b. date of record.

c. payment date.

d. last day of the fiscal year-end.

2. Dividends are predominantly paid in

a. earnings.

b. property.

c. cash.

d. stock.

3. Solaris, Inc. has 2,000 shares of 5%, $10 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock?

a. $5 per share

b. $1,000 in total

c. $10,000 in total

d. $.05 per share

4. If a corporation issued $3,000,000 in bonds which pay 5% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%?

a. $3,000,000

b. $45,000

c. $150,000

d. $105,000

5. A bond with a face value of $200,000 and a quoted price of 102⅛ has a selling price of

a. $240,225.

b. $204,025.

c. $200,225.

d. $204,250.

6. On January 1, 2014, Meeks Corporation issued $5,000,000, 10-year, 4% bonds at 102. Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2014 is

a. Cash.................................................................................................................... 5,000,000

Bonds Payable................................................................................. 5,000,000

b. Cash.................................................................................................................... 5,100,000

Bonds Payable................................................................................. 5,100,000

c. Premium on Bonds Payable............................................................... 100,000

Cash.................................................................................................................... 5,000,000

Bonds Payable................................................................................. 5,100,000

d. Cash.................................................................................................................... 5,100,000

Bonds Payable................................................................................. 5,000,000

Premium on Bonds Payable................................................... 100,000

7. Bay Company acquires 60, 8%, 5 year, $1,000 Community bonds on January 1, 2014 for $60,000.

The journal entry to record this investment includes a debit to

a. Debt Investments for $64,800.

b. Debt Investments for $60,000.

c. Cash for $60,000.

d. Stock Investments for $60,000.

8. Bay Company acquires 60, 8%, 5 year, $1,000 Community bonds on January 1, 2014 for $60,000.

Assume Community pays interest on January 1 and July 1, and the July 1 entry was done correctly. The journal entry at December 31, 2014 would include a credit to

a. Interest Receivable for $2,400.

b. Interest Revenue for $4,800.

c. Accrued Expense for $4,800.

d. Interest Revenue for $2,400.

9. Mize Company owns 30% interest in the stock of Lyte Corporation. During the year, Lyte pays $20,000 in dividends to Mize, and reports $300,000 in net income. Mize Company’s investment in Lyte will increase Mize¢s net income by

a. $6,000.

b. $90,000.

c. $96,000.

d. $10,000.

10. In accounting for stock investments between 20% and 50%, the _______ method is used.

a. consolidated statements

b. controlling interest

c. cost

d. equity

Solution: #1665

ACCT221 Quiz 1 3 6 7 8 9 Solved

Solaris, Inc. has 2,000 shares of 5%, $10 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock? a. $5 per share b. $1,000 in total c. $10,000 in total d....