12. Your company sells $49,000 of one-year, 10% bonds for an issue price of $43,
ID: 2473669 • Letter: 1
Question
12. Your company sells $49,000 of one-year, 10% bonds for an issue price of $43,500. The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:
A. $49,000.
B. $53,900.
C. $48,400.
D. $43,500.
13. On February 16, a company declares a 45¢ dividend to be paid on April 5. There are 2,110,000 shares of common stock issued and outstanding. The entry recorded by the company on February 16 includes a debit to:
A. Dividends and a credit to Dividends Payable for $899,550.
B. Dividends Payable and a credit to Cash for $949,500.
C. Dividends and a credit to Dividends Payable for $949,500
D. Dividends Payable and a credit to Cash for $899,550.
14. Holders of common stock receive certain benefits, such as a residual claim, which is the:
A. right to share in any remaining assets after creditors have been paid off, should the company cease operations.
B. right of stockholders to be paid back for their investment before anyone else if the company ceases operation.
C. right to oversee management of the company.
D. continuing right to receive a share of the company's profits in the form of dividends.
15. To analyze changes in a company's sales over the last five years, you should perform:
A. horizontal analysis.
B. cross-sectional analysis.
C. vertical analysis.
D. ratio analysis.
Explanation / Answer
Answer:
12) Correct Answer is A. $49,000
Bonds Payable Account is always recorded with the Par / Face Value of the bonds issued.
13) Correct Answer is C. Dividends and a credit to Dividends Payable for $949,500
Dividend Amount = 2,110,000 shares x $0.45 = $949,500
Since Dividend is declared but not paid so, to record the declaration of dividend company will pass following journal entry
DIvidend A/c Dr. $949,500
To Dividend Payable $949,500
14) Correct Answer is A. right to share in any remaining assets after creditors have been paid off, should the company cease operations.
Residual Claim in this context means that if the company is liquidated then the companies assests are applied to satisfy the claim of debt, employees salaries, taxes etc..Shareholders have resudual claim on assets, any asset left over belongs to shareholders..
15) Correct Answer is A. horizontal analysis.
Horizontal Analysis is used to look change within a category like sales over a given time frame.
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