a. VT did not record interest of $50,000 incurred on its outstanding zero coupon
ID: 2525665 • Letter: A
Question
a. VT did not record interest of $50,000 incurred on its outstanding zero coupon bond for this period VT recorded a gain of $10,000 when it sold its treasury stock for $110,000. VT had repurchased the treasury stock at $100,000 a month carlier. VT collected $75,000 of sales tax in the month of March 2015 on items that it sold to customers. When VT collected this sales tax, it debited cash for $75,000 and credited revenue for $75,000. VT recorded a 50% stock dividend on its $10 par common stock by debiting retained carnings by $1,000,000 and crediting common stock for $400,000 and additional paid-in capital from common stock for $600,000. At the time of the dividend, VT had 100,000 shares of common stock issued and 80,000 outstanding. The market value was $25 per share. b. c? d. Transaction Total Assets Total Liabilities Total Shareholders' Equity Net Incor a. b. d. 18 Ctrl AliExplanation / Answer
Transaction Total Assets Total Liabilities Total Shareholder's Equity Net income Remarks a) $ - $ 50,000 $ -50,000 The liability should be recorded and expenses should be booked B) $ 1,10,000 $ 1,10,000 Cash will generated and increase in total sharehodlers equity c) $ 75,000 $ 75,000 Entry should be rectify - This is not a revenue so it will be transfer from the revenue to liability os reduced from net income and added in total liability d) $ - $ - $ 10,00,000 $ - There is increase in sharecapital and additional paid in capital and reduce in retained earning so net impact is Zero. We can show the alternatively Zero figure in place of + & - d) $ - $ - $ -10,00,000 $ -
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