Exam 8: Liabilities and Stockholders Equity

Illustrate the effects on the accounts and the financial statements of each of the following transactions: Apr.30 ..........Issued a $70,000, 60-day, 6% note dated April 30 to Goldman Co.on account. June 29........ Paid Goldman Co.the amount owed on note dated April 30.

If bonds are issued at a premium, the stated interest rate is:

The total earnings of an employee for a payroll period is referred to as gross pay.

The cost of a product warranty should be included as an expense in the:

The major subdivisions of the Stockholders' Equity section of the balance sheet are:

Most employers are levied a tax on payrolls for:

A corporation has 10,000 shares of $100 par value stock outstanding that has a current market value of $160.If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately $32.

The debt ratio of Jade Co.and Emerald Inc.are 30% and 51% respectively.This information indicates that:

Current liabilities are:

The amount of capital paid-in by the stockholders of the corporation is called legal capital.

An employee receives an hourly rate of $27, with time and a half for all hours worked in excess of 40 during a week.Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings.What is the net pay for the employee?

June Co.is considering the following alternative plans for financing the company: Plan I Plan II Issue 10\% Bonds (at face) - \ 3,000,000 Issue \ 10 Common Stock \ 4,000,000 \ 1,000,000 Income tax is estimated at 40\% of income. Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.

Which of the following is a reason for a corporation to buy back its own stock?

Nico Inc., which had 60,000 shares of common stock outstanding, declared a 4-for-1 stock split. (a)What will be the number of shares outstanding after the split? (b)If the common stock had a market price of $160 per share before the stock split, what would be an approximate market price per share after the split?

When a corporation issues bonds, it executes a contract with the bondholders known as a bond indenture.