15 Wrong Answers

Question 0

What is the journal entry under the cost method for a company to resell shares of their treasury stock at a gain?

Answer 0

Cash. Xxx
T/S. Xxx
PiC- T/S transactions. Xxx

Question 1

What is the journal entry under the cost method for a company to buy there own stock?

Answer 1

Treasury stock. Xxx

Cash. Xxx

Question 2

What is the journal entry under the cost method for a company to resell shares of their treasury stock at a loss?

Answer 2

Cash. Xxx
Retained earnings Xxx
Treasury Stock. Xxx

Question 3

What is the journal entry under the par value method for a company to repurchase shares of their stock at a loss?

Answer 3

Treasury Stock. Xxx
PiC- excess of par value. Xxx
Retained Earnings. Xxx
Cash. Xxx

Question 4

What is the journal entry under the par value method for a company to repurchase shares of their common stock at a gain?

Answer 4

Treasury stock. Xxx
PiC- excess of par. Xxx
PiC- from T/S transactions. Xxx
Cash. Xxx

Question 5

What is the journal entry under the par value method for a company to resell shares of their treasury stock at a gain?

Answer 5

Cash. Xxx
Treasury stock. Xxx
PiC- excess of par value. Xxx

Question 6

What is the journal entry under the par value method for a company to resell shares of their treasury stock at a loss?

Answer 6

Cash. Xxx
Treasury stock Xxx
PiC- excess par value. (Up to amount dr. When T/S where purchased, if loss is larger than debit R/E)

Question 7

What is the entry to record scrip dividends, that will be paid in the future?

2) if the dividends are due a year later in June, when is the first entry to accrue interest expense?

Answer 7

R/E. Xxx
Script dividends payable. Xxx

2) 12/31/yx

Interest exp. Xxx
Interest. Payable. Xxx

Question 8

Dividend payout ratio calculation

Answer 8

Dividend payout = Dividends per share/EPS

Question 9

What kind of ratio is book value of common stock?

Answer 9

Liquidation ratio

Question 10

Book value of common stock ratio calculation

Answer 10

BV common stock =

Common stockholder’s equity/Common shares outstanding

Question 11

Rate of return on common stockholder’s equity calculation

Answer 11

Rate of return on common stockholder’s equity =

Net income available to common stockholder’s/
avg. common stockholder’s equity

Question 12

Debt to equity ratio calculation

Answer 12

Debt to equity = total liabilities/stockholder’s equity

Question 13

What is the journal entry to exercise stock rights?

Answer 13

Cash. Xxx
Common stock Xxx
PiC. Xxx

Question 14

What is the journal entry to appropriate retained earnings?

Answer 14

RE (or unappropriated RE). Xxx

Reserve for RE (or appropriated RE). Xxx

Question 15

Journal entry How are assets written down in a quasi reorganization?

Answer 15

Retained earnings. Xxx

Assets. Xxx

Question 16

The journal entry to eliminate the deficit in quasi reorganization?

Answer 16

PiC. Xxx

R/E. Xxx

Question 17

Journal entry in quasi reorganization when PiC is insufficient to eliminate the retained earnings deficit?

Answer 17

Existing PiC. Xxx
Common stock. Xxx
Retained earnings. Xxx
PiC from quasi reorganization Xxx

Question 18

Paid in capital from quasi reorganization, where does it come from?

Answer 18

Reduction of common stock par value

Question 19

When converting from the preferred stock to common stock, using the book value method…

2) what is PiC- common stock based on?

Answer 19

The market value is ignored

2) the plug of preferred stock (par and PiC) - common stock at par

Question 20

When an issuance of debt contains detachable warrants, the total proceeds from sale should be allocated to Beth debt and detachable warrant, this treatment arises due to…

Answer 20

Separability of the stock and detachable warrants

Question 21

When an issuance of debt contains detachable warrants, the total proceeds from sale should be allocated to Beth debt and detachable warrant, the allocation of proceeds is based on…

Answer 21

The relative fair values of both the debt and the warrants

Question 22

When an issuance of debt contains detachable warrants, the total proceeds from sale should be allocated to Both debt and detachable warrant. However, in instances where only one of the fair values is known, the known fair value will…

Answer 22

Be used to allocate proceeds to the security where the fair

Value is determinable

Question 23

When no par common stock is sold on subscription basis at a price above the stock’s stated value, the stock is not issued until…

Answer 23

The full subscription price is received

Question 24

Journal entry for par common stock sold on subscription basis on subscription contract date (include how amounts are determined)

Answer 24

Cash. (Amount received if any) Subscription receivable. (Balance due) Common stock subscribed (Stated value) Additional paid in capital. (Plug)

Question 25

Journal entry for par common stock sold on subscription basis on date balance subscription is collected and the common stock is issued (include how amounts are determined)

Answer 25

Cash. (Balance due) Common stock subscribed (Stated value) Common stock. (Stated value) Subscriptions receivable. (Balance due)

Question 26

Under the cost method, what is the journal entry to reissue 3,000 shares at $50, when they had been previously purchased for $36?

Answer 26

Cash. (3,000 x $50) T/S. (3,000 x $36) PiC. (3000 x (50-36))

Question 27

Treasury stock is not a current asset, but a...

Answer 27

Reduction in stockholder's equity

Question 28

What is the journal entry for a stock dividend of less that 20%?

Answer 28

Retained earnings. Xxx CS dividend distr. Xxx Paid in Capital. Xxx

Question 29

When a stock dividend is declared...

Answer 29

No asset or liability has been affected

Question 30

The rate of interest used to discount both the exercise price and dividends is...

Answer 30

The risk free rate of interest

Question 31

How is dividend in arrears reported?

Answer 31

Disclosure (not an accrued liability)

Question 32

Bankruptcy law requires that the claims of secured creditors be satisfied before...

Answer 32

Any unsecured claims are paid

Question 33

Amounts of claims exceeding the liquidation amounts are...

Answer 33

Unsecured claims

Question 34

The if converted method of computing earnings per share assumes conversion of convertible security as of the...

Answer 34

Beginning of earliest period reported or at time of issuance to if later

Question 35

If shares (contingent common shares) are required to be issued in a business deal 18 months later, should they be included in the weighted avg. of shares in the diluted EPS equation?

Answer 35

Yes