Accounting

Anonymous
timer Asked: Apr 8th, 2018

Question description

Blatt, Inc. was incorporated on 01/01/2017. Blatt's article of incorporation specified that the corporation's par value of common stock was $10 per share. When Blatt sold common stock to its initial shareholders on 01/10/2017, it did so for $50 per common share. 10,000 shares were sold in this initial offering. The correct journal entry for Blatt to make when these shares were sold was

debit cash $500,000, credit common stock $500,000.

debit common stock $100,000, debit paid-in capital $400,000, credit cash $500,000.

debit cash $500,000, credit common stock $100,000, credit paid-in capital $400,000.

debit common stock $500,000, credit cash $500,000.


Damion Enterprises, Inc. has the following stockholders' equity section:

Common stock, $10 par, 100,000 shares authorized, 20,000 shares

issued and outstanding $200,000

Paid-in capital-common stock 700,000

Retained earnings 3,600,000

Total stockholders' equity $4,500,000


Damion split its stock 4-for-1 on 08/31/2017 when the value of its stock on the open market was $60 per share. The entry that Damion should have made when this transaction took place is as follows:

Debit Stock Dividend Distributable $4,800,000, credit Common Stock $800,000, credit paid-in capital $4,000,000

Debit Cash $800,000, credit Common Stock $800,000

Debit Common Stock $800,000, credit Cash $800,000

No journal entry is necessary for a stock split.


When a corporation is in default and is forced into bankruptcy, bondholder claims on corporate assets for satisfaction of amounts due them are ranked

ahead of common stockholders but after preferred stockholders' claims are satisfied.

ahead of preferred stockholder claims but after common stockholders' claims are satisfied.

ahead of both common stockholders' claims and preferred stockholders' claims.

after both common stockholders' claims and preferred stockholders' claims are satisfied.


Rawl Company issues a 10-year, $4,000,000 bond on 01/01/2017 with a premium of $100,000. The coupon rate of the bond is 10%, and interest is to be paid to the bondholders semiannually on 06/30 and 12/31. The journal entry that Rawl should make on 12/31/2017 with regard to this bond is

Debit cash $4,100,000, credit premium on bonds payable $100,000, credit bonds payable $4,000,000.

Debit cash $5,000, debit interest expense $195,000, credit bonds payable $200,000.

Debit premium on bonds payable $5,000, debit interest expense $195,000, credit bonds payable $200,000.

Deb it premium on bonds payable $5,000, debit interest expense $195,000, credit cash $200,000.


RoughRider Corporation owns $60,000 of the common stock of Pistola, Inc. This investment has been properly classified by RoughRider as a trading security. The $60,000 ownership of Pistola stock

should be classified as a current asset, and any unrealized gain/loss on the Pistola stock investment should be reported in the stockholders' equity section of RoughRider's balance sheet.

should be classified as a current asset, and any unrealized gain/loss on the Pistola stock investment should be reported on RoughRider's income statement for the period.

should be classified as a current asset, and any unrealized gain/loss on the Pistola stock investment should be reported on Pistola's income statement for the period.

should be reported as a non-current asset on RoughRider's balance sheet.


On 03/01/2017 ABC Company purchased 30% of the stock of XYZ Corporation for $6,000,000. How will ABC treat a 2017 cash dividend paid by XYZ to its shareholders?

ABC will record the dividend using the equity method. The dividend will therefore be reported as a reduction in the amount of the investment in XYZ.

ABC will record the dividend using the equity method. The dividend will therefore be reported as an increase in the amount of the investment in XYZ.

ABC will record the dividend using the equity method. The dividend will therefore be reported as dividend revenue.

ABC will record the dividend using the equity method. The dividend will therefore be reported as an increase in current assets.


On 01/01/2017, Hanny Company acquired 60,000 shares of the 400,000 outstanding shares of Edwards Company common stock for $240,000. The investment was properly classified as an available-for-sale investment by Hanny. During 2017, Edwards declared a total of $100,000 cash dividends to its common shareholders. Edwards earned $200,000 in net income for the year ended 12/31/2017. The year-end valuation of Edwards Company on the stock market was $4.50 per share. What is the total valuation of the investment on Hanny's balance sheet at 12/31/2017?

$240,000

$255,000

$270,000

$340,000

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