Exam 8: Liabilities and Stockholders Equity

If $1,000,000 of 8% bonds are issued at 102, the amount of cash received from the sale is:

Bonds payable due in 2020 are reported on the balance sheet as long-term liabilities.

In order to record a contingent liability, the liability must be probable and reasonably estimated.

What options does a business have while financing its operations?

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 gross pay for the employee?

A current liability is a debt that is reasonably expected to be paid:

The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split.

On which of the following dates, a company incurs liability for a dividend?

A bond indenture is:

During the first year of operations, employees earned vacation pay of $50,000. The vacations will be taken during the second year. The vacation pay expense should be recorded in the first year of operations.

Federal unemployment compensation tax is a tax that is paid only by employers.

In which section of the balance sheet would treasury stock be reported?

When the market rate of interest on bonds is equal to the contract rate, the bonds will sell at:

Which statement below is not a reason for a corporation to buy back its own stock?

Prior to the last weekly payroll period of the calendar year, the cumulative earnings of employees A and B are $106,150 and $91,000, respectively. Their earnings for the last completed payroll period of the year are $850 each. Social security tax rate is 6% on maximum of $106,800. All earnings are subject to Medicare tax of 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer's total FICA tax for this payroll period on the two salary amounts of $850 each?

If the market rate of interest is 6% and a corporation's bonds bear interest at 7%, the bonds will sell at a discount.

The par value per share of common stock represents:

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

Paid-in capital and retained earnings are the two major categories of stockholders' equity for a corporation.

If $4,000,000 of 12% bonds are issued at 103 1/4, the amount of cash received from the sale is: