15 Wrong Answers Flashcards
What is the journal entry under the cost method for a company to resell shares of their treasury stock at a gain?
Cash. Xxx
T/S. Xxx
PiC- T/S transactions. Xxx
What is the journal entry under the cost method for a company to buy there own stock?
Treasury stock. Xxx
Cash. Xxx
What is the journal entry under the cost method for a company to resell shares of their treasury stock at a loss?
Cash. Xxx
Retained earnings Xxx
Treasury Stock. Xxx
What is the journal entry under the par value method for a company to repurchase shares of their stock at a loss?
Treasury Stock. Xxx
PiC- excess of par value. Xxx
Retained Earnings. Xxx
Cash. Xxx
What is the journal entry under the par value method for a company to repurchase shares of their common stock at a gain?
Treasury stock. Xxx
PiC- excess of par. Xxx
PiC- from T/S transactions. Xxx
Cash. Xxx
What is the journal entry under the par value method for a company to resell shares of their treasury stock at a gain?
Cash. Xxx
Treasury stock. Xxx
PiC- excess of par value. Xxx
What is the journal entry under the par value method for a company to resell shares of their treasury stock at a loss?
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)
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?
R/E. Xxx
Script dividends payable. Xxx
2) 12/31/yx
Interest exp. Xxx
Interest. Payable. Xxx
Dividend payout ratio calculation
Dividend payout = Dividends per share/EPS
What kind of ratio is book value of common stock?
Liquidation ratio
Book value of common stock ratio calculation
BV common stock =
Common stockholder’s equity/Common shares outstanding
Rate of return on common stockholder’s equity calculation
Rate of return on common stockholder’s equity =
Net income available to common stockholder’s/
avg. common stockholder’s equity
Debt to equity ratio calculation
Debt to equity = total liabilities/stockholder’s equity
What is the journal entry to exercise stock rights?
Cash. Xxx
Common stock Xxx
PiC. Xxx
What is the journal entry to appropriate retained earnings?
RE (or unappropriated RE). Xxx
Reserve for RE (or appropriated RE). Xxx
Journal entry How are assets written down in a quasi reorganization?
Retained earnings. Xxx
Assets. Xxx
The journal entry to eliminate the deficit in quasi reorganization?
PiC. Xxx
R/E. Xxx
Journal entry in quasi reorganization when PiC is insufficient to eliminate the retained earnings deficit?
Existing PiC. Xxx
Common stock. Xxx
Retained earnings. Xxx
PiC from quasi reorganization Xxx
Paid in capital from quasi reorganization, where does it come from?
Reduction of common stock par value
When converting from the preferred stock to common stock, using the book value method…
2) what is PiC- common stock based on?
The market value is ignored
2) the plug of preferred stock (par and PiC) - common stock at par
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…
Separability of the stock and detachable warrants
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…
The relative fair values of both the debt and the warrants
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…
Be used to allocate proceeds to the security where the fair
Value is determinable
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…
The full subscription price is received
Journal entry for par common stock sold on subscription basis on subscription contract date (include how amounts are determined)
Cash. (Amount received if any)
Subscription receivable. (Balance due)
Common stock subscribed (Stated value)
Additional paid in capital. (Plug)
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)
Cash. (Balance due)
Common stock subscribed (Stated value)
Common stock. (Stated value)
Subscriptions receivable. (Balance due)
Under the cost method, what is the journal entry to reissue 3,000 shares at $50, when they had been previously purchased for $36?
Cash. (3,000 x $50)
T/S. (3,000 x $36)
PiC. (3000 x (50-36))
Treasury stock is not a current asset, but a…
Reduction in stockholder’s equity
What is the journal entry for a stock dividend of less that 20%?
Retained earnings. Xxx
CS dividend distr. Xxx
Paid in Capital. Xxx
When a stock dividend is declared…
No asset or liability has been affected
The rate of interest used to discount both the exercise price and dividends is…
The risk free rate of interest
How is dividend in arrears reported?
Disclosure (not an accrued liability)
Bankruptcy law requires that the claims of secured creditors be satisfied before…
Any unsecured claims are paid
Amounts of claims exceeding the liquidation amounts are…
Unsecured claims
The if converted method of computing earnings per share assumes conversion of convertible security as of the…
Beginning of earliest period reported or at time of issuance to if later
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?
Yes
