ACC 577 ACC577 Week 4 Quiz (STRAYER)
ACC 577 Week 4 Quiz
- Treasury stock was acquired for cash at a price in excess of its original issue price. The treasury stock was subsequently reissued for cash at a price in excess of its acquisition price. Assuming that the par value method of accounting for treasury stock transactions is used, what is the effect on total stockholders' equity of each of the following events?
Murphy Co. had 200,000 shares outstanding of $10 par common stock on March 30 of the current year. Murphy reacquired 30,000 of those shares at a cost of $15 per share and recorded the transaction using the cost method on April 15. Murphy reissued the 30,000 shares at $20 per share and recognized a $50,000 gain on its income statement on May 20.
Which of the following statements is correct?
On January 1, 2005, Celt Corp. issued 9% bonds in the face amount of $1,000,000, which mature on January 1, 2015.
The bonds were issued for $939,000 to yield 10%, resulting in a bond discount of $61,000. Celt uses the effective interest method of amortizing bond discount. Interest is payable annually on December 31.
At December 31, 2005, Celt's unamortized bond discount should be
- In 2000, May Corp. acquired land by paying $75,000 down and signing a note with a maturity value of $1,000,000. On the note's due date, December 31, 2005, May owed $40,000 of accrued interest and $1,000,000 principal on the note. May was in financial difficulty and was unable to make any payments. May and the bank agreed to amend the note as follows:
- The $40,000 of interest due on December 31, 2005 was forgiven.
- The principal of the note was reduced from $1,000,000 to $950,000 and the maturity date extended 1 year to December 31, 2006.
- May would be required to make one interest payment totaling $30,000 on December 31, 2006.
At December 31, 2005, Wolf's adjusted unamortized bond premium should be
As a result of this transaction, additional paid-in capital should increase by
On July 1, 2005, the interest was paid to bondholders and the bonds were converted into common stock, which had a fair market value of $75 per share. The unamortized premium on these bonds was $12,000 at the date of conversion.
Under the book value method, this conversion increased the following elements of the stockholders' equity section by
Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitled the bondholder to purchase one share of $5 par common stock for $25. Immediately after issuance, the market value of each warrant was $4.
On December 31, 2003, what amount should Moss record as discount or premium on issuance of bonds?
One share of preferred stock can be converted into three shares of Brad's $25 par common stock at the option of the preferred shareholder. On December 31, 2006, when the market value of the common stock was $40 per share, all of the preferred stock was converted.
What amount should Brad credit to Common Stock and to Additional Paid-in Capital -- Common Stock as a result of the conversion?
How is the carrying amount of the bonds affected by the error?
According to the FASB's conceptual framework, the amount of deferred gross profit relating to collections 12 months beyond the balance sheet date should be reported in the
During the first year of operations, revenues from sales and consulting amounted to $82,000, and operating costs and expenses totaled $64,000. On December 15, Mirr declared a $3,000 cash dividend, payable to stockholders on January 15, 2006.
No additional activities affected owners' equity in 2005. Mirr's liabilities increased to $120,000 by December 31, 2005.
On Mirr's December 31, 2005 balance sheet, total assets should be reported at
- Dividends on its 1,000 shares of 6%, $10 par value cumulative preferred stock have not been declared or paid for 3 years.
- Treasury stock that cost $15,000 was reissued for $8,000.