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Exam 8: Liabilities and Stockholders Equity

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Question 31

Multiple Choice

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Which of the following will be classified as a current liability?

A) Two-year notes payable
B) Bonds payable
C) Mortgage loan
D) Unearned rent

E) C) and D)
F) B) and C)

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Question 32

Multiple Choice

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As interest is recorded on an interest-bearing note, the Interest Expense account is:

A) decreased; the Interest Payable account is increased.
B) increased; the Interest Payable account is increased.
C) increased; the Notes Payable account is decreased.
D) increased; the Notes Payable account is increased.

E) A) and B)
F) A) and C)

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Question 33

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If 50,000 shares are authorized, 35,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 33,000.

The main source of paid-in capital is from issuing stock.

Treasury stock is a contra-equity account.

The prices of bonds are quoted on bond exchanges as a percentage of the bonds' face value.

What is the effect of a stock dividend on the balance sheet?

A bond is simply a form of an interest-bearing note.

The total earnings of an employee during a payroll period, including bonuses and overtime pay, is referred to as:

Medicare taxes are paid by both the employee and the employer.

Obligations that depend on past events and that are based on future transactions are contingent liabilities.

A corporation has the following stockholders' equity accounts at the end of the current fiscal year, after the closing entries have been posted: Common Stock, $5 par, $2,000,000; Paid-In Capital in Excess of Par--Common Stock, $375,000; Retained Earnings, $1,285,000. The earnings for the current year, during which there were no unusual items, were $300,000. Compute the earnings per share of common stock.

A company sold 200 shares of common stock with a par value of $5 at a price of $13 per share. What is the effect on the accounts of this transaction?

FICA tax is a payroll tax that is paid only by employers.

The declaration of a stock dividend decreases a corporation's stockholders' equity and decreases its liabilities.

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

Most employers are levied a tax on payrolls for:

A corporation, which had 20,000 shares of common stock outstanding, declared a 3-for-1 stock split. (a)What will be the number of shares outstancing after the split? (b)If the common stock had a market price of $\$ 240$ per share before the stock split, what would be an approximate market price per share after the split?

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?

A corporation has 50,000 shares of $100 par value stock outstanding. If the corporation issues a 4-for-1 stock split, the number of shares outstanding after the split will be: