Exam 4

Question 1

Calculating price of bond

Answer 1

N=yr x 2, I= market%/2= PV factor
Par value x PV of 1= PV
Interest x PV of ann.= PV interest

Question 2

Record discount bond issuance

Answer 2

Discount= contract<market
Deb. Cash
Deb. Discount
Cred. Bonds Payable

Question 3

Record premium bond issuance

Answer 3

Premium= contract>market
Deb. Cash
Cred. Premium
Cred. Bonds Payable

Question 4

Record interest expense for discount

Answer 4

Deb. Bond interest expense (total BIE/periods)
Cred. Discount (discount/periods)
Cred. Cash (par x 1/2 x contract)

Question 5

Record interest expense for premium

Answer 5

Deb. Bond interest expense (total BIE/periods)
Deb. Premium (premium/periods)
Cred. Cash (par x 1/2 x contract)

Question 6

Calculate life of bond based on discount/premium amortization

Answer 6

Period, unamortized discount/premium, carrying value (cash)
Discount/premium counts down to 0,
Carrying value adjusted to par

Question 7

Gain or loss on retirement

Answer 7

Carrying value>retirement price=gain
CV<retirement= loss

Question 8

Times interest earned ratio

Answer 8

Income before interest expense and income taxes/Interest expense

Question 9

Debt to equity ratio

Answer 9

total liabilities/total equity

Question 10

Dividend yield

Answer 10

Annual cash dividends per share/Market value per share

Question 11

Earnings per share

Answer 11

net income-preferred dividends/weighted average common shares outstanding

Question 12

Price to earnings ratio

Answer 12

Market value (price) per share/earnings per share

Question 13

Interest expense on note

Answer 13

Price x % x days/360

Question 14

Employee payroll deductions

Answer 14

Deb. Salaries Expense
C. FICA- Social
C. FICA- Medicare
C. Employee Federal
C. Employee Medical insurance
C. Employee Union Dues
C. Salaries Payable

Question 15

Employer payroll expenses

Answer 15

D. Payroll taxes expense
C. FICA- Social
C. FICA- Medicare
C. SUTA
C. FUTA

Question 16

Warranty liabilities entry

Answer 16

D. Warranty expense
C. Estimated Warranty Liability

D. Estimated Warranty Liability
C. Auto Parts Inventory

Question 17

Contingent liabilities

Answer 17

Probable-> Estimable->record liability
Probable-> nonestimable-> disclose in notes
Possible-> disclose in notes
Remote-> no disclosure

Question 18

Issue par value stock for cash

Answer 18

D. Cash
C. Common Stock, $10 par value

Question 19

Stock for org. Expenses

Answer 19

D. Org expenses
C. Common stock
C. PIC

Question 20

Cash dividend entries

Answer 20

Declaration:
D. Retained Earnings
C. Common Dividend Payable

Payment:
D. Common Dividend Payable
C. Cash

Question 21

Stock dividends

Answer 21

Record:
D. Retained Earnings
C. Common Stock Dividend Distributable
C. PIC

Payment:
D. Common Stock Dividend Distributable
C. Common Stock, $10 par

Question 22

Carrying value

Answer 22

Par+-premium/discount