Multiple Choice Questions
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Select the best answer for the following questions. Each question is worth 5 points.
5 / 5 points
A corporation has the following account balances: Common Stock, $10 par value, $740,000; Paid-in
Capital in Excess of Par, $1,850,000. Based on this information, the _______________.
5 / 5 points
On January 2, 2015, Easton Corporation issued 50,000 shares of 5% cumulative preferred stock at $100
par value. No dividends have been paid to any shareholders since the formation of the corporation.
Management wants to issue a dividend to common shareholders on December 31, 2016. What dividend
amount, if any, must be paid to the preferred stockholders entitled before any distribution is made to
common stockholders? Answers available here: http://bit.ly/3ciLIVG
5 / 5 points
The Frederick Company has 100,000 shares of $5 par common stock outstanding. Management declares
(not pays) a 10% stock dividend. The market value of a share of common stock was $32 immediately
prior to the stock dividend declaration. The journal entry is: Answers available here: http://bit.ly/3ciLIVG
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The Frederick Company has 100,000 shares of $5 par common stock outstanding. Management PAYS
(not declares) a 10% stock dividend. The market value of a share of common stock was $32 immediately
prior to the stock dividend declaration. The journal entry is:
5 / 5 points
Cambridge Hat Company previously purchased 20,000 shares of treasury stock on the open market for
$12 per share. Later, the company resells 10,000 shares for $14 per share. What is the journal entry for
the sale?
5 / 5 points
Smith Ventures Inc. purchased 10% of the outstanding stock of Jones Company. Smith paid $15 per
share to acquire 8,000 shares and will treat this purchase as available-for-sale securities. Par value of the
stock is 50 cents. Smith uses a calendar year, and on December 31, the market value of Jones stock is
$17 per share. What is the entry Smith needs to make on December 31? Answers available here:
http://bit.ly/3ciLIVG
5 / 5 points
Richmond Corporation has issued an outstanding common stock of 50,000 shares, $5 par value. On July
1, the company pays a 2-for-1 stock split. What are the legal capital and the par value of the stock
immediately after the split?
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On January 10, Acme Ventures Inc. purchased 30% of the outstanding stock of Gamma Ray
Manufacturing Corp. The purchase was 30,000 shares at $10 per share. Acme received dividends from
Gamma Ray in the amount of $15,000 on June 15 and again on December 15. Gamma reported net
income for the year ended December 31 in the amount of $250,000. What is the journal entry, if any, that
Acme needs to make dated December 31? Answers available here: http://bit.ly/3ciLIVG
Question 9
High Adventure Corp. issues $100,000 of 7%, 10-year bonds for 98. High Adventure uses the straight-line
method to amortize any bond discounts or premiums. The bonds pay interest semiannually. On the
maturity date of the bond, what is the journal entry for the final interest payment and the redemption of the
bonds?
5 / 5 points
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On January 1, 2016, Towson Inc. issued $500,000, 20-year, 6% bonds at 101. Interest is payable
semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2016, is:
Entries
For this part of the quiz, you will be uploading your work through answer sheets. The instructions for how
to upload your answer sheets are provided within each question. Answers available here:
http://bit.ly/3ciLIVG
Salisbury Corporation formed a corporation on January 3, 2016, and is authorized to issue 500,000
shares of $10 par value common stock. The company has the following stock transactions.
Instructions: Journalize the above transactions for Salisbury Corporation.
Problem 1 Answer Sheet Instructions
To submit your answers for this part of the exam, fill in the answer sheet and upload it to the
exam. Download: Quiz 1 Problem 1 Answer Sheet
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To upload your answer sheet, follow these instructions:
Click the Insert Stuff icon (first on the left).
Click Upload to retrieve the file from your computer and upload it.
For Link Text: (Your Name) Final Exam Answer Sheet
Click Add. (Ignore the Choose Destination prompt.)
Click OK.
Question 11
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This problem is worth 15 points. On July 1, 2016 Alpha Company sells $1,000,000 face value of 10% five
year bonds which call for semiannual interest payments. The bonds are dated April 1, 2016 so these
bonds are issued between interest dates. The market rate at the date of issue is also 10%. For
simplicity, use a 360-day year and 30 day months for all calculations.
1. Record the journal entries for the issuance of the bonds
2. Record the journal entries for the first interest payment due on October 1, 2016. Assume that
interest has not been accrued at each month end. Answers available here: http://bit.ly/3ciLIVG
Click here to download the Question 2 Answer Sheet.
Question 12
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On April 1, 2016 Alpha Company sells $1,000,000 face value of 10% five year bonds which call for
semiannual interest payments. The bonds are dated April 1, 2016 so these bonds are issued on an
interest date. The market rate at the date of issue is 8%. Use the straight line method of amortization of
any bond premium or discount. For simplicity, use a 360-day year and 30 day months for all calculations.
1. Record the journal entries for the issuance of the bonds
2. Record the journal entries for the first interest payment due on October 1, 2016. Assume that
interest has not been accrued at each month end. Answers available here: http://bit.ly/3ciLIVG