WGU D104 STOCKHOLDERS EQUITY AND
DILUTIVE SECURITIES EXAMINATION 2026
COMPLETE Q AND A STUDY PACK
◉ How are gain contingencies recorded?
Answer: They are not recorded / accrued until realized. However,
they are disclosed in the notes when a high probability exists they
will be realized.
◉ How to record a contingent warranty liability that is probably and
estimable, but not fulfilled?
Answer: Debit warranty expense and credit warranty liability.
◉ Journal entry to record warranty liability at the point of sale
Answer: Debit warrant expense, credit warranty liability
◉ Journal entry to record warranty costs incurred
Answer: Debit warranty liability, credit cash, inventory, accrued
payroll
◉ Journal entry to record the revenue recognized on the service
type warranty
,Answer: Debit unearned warranty revenue, credit warranty revenue
◉ Service type warranty
Answer: Sold separately from the product. It's recorded as a
separate performance obligation in an unearned warranty revenue
account. It's recognized on a straight line basis over the warranty
period.
◉ Journal entry to record bond issuance at par/face/ maturity value
Answer: Debit cash, credit bonds payable.
◉ Journal entry to record issuance of bond at discount
Answer: Debit cash, debit discount, credit bonds payable
◉ Journal entry to record issuance of bond at premium
Answer: Debit cash, credit premium, credit bonds payable
◉ Journal entry to record bond interest payment mid-year
Answer: Debit interest expense, credit cash
◉ Journal entry to record bond interest payment end of the year
Answer: Debit interest expense, credit interest payable
, ◉ Journal entry to record bond interest payment end of the year
with a discount
Answer: Debit Interest expense, credit discount on bonds payable,
credit interest payable
◉ How is a discount on a bond amortized?
Answer: Calculate discount rate by multiplying the percent discount
by face value of bond. Divide by term and calculate the current
portion during bond interest payment.
◉ Journal entry to record bond interest payment mid year with a
discount
Answer: Debit interest expense, credit discount on bonds payable,
credit cash.
◉ Journal entry to record interest expense on a bond at premium
mid year
Answer: Debit interest expense, debit premium on bonds payable,
credit cash.
◉ Journal entry to record interest expense on a bond at a premium
at the end of the year
DILUTIVE SECURITIES EXAMINATION 2026
COMPLETE Q AND A STUDY PACK
◉ How are gain contingencies recorded?
Answer: They are not recorded / accrued until realized. However,
they are disclosed in the notes when a high probability exists they
will be realized.
◉ How to record a contingent warranty liability that is probably and
estimable, but not fulfilled?
Answer: Debit warranty expense and credit warranty liability.
◉ Journal entry to record warranty liability at the point of sale
Answer: Debit warrant expense, credit warranty liability
◉ Journal entry to record warranty costs incurred
Answer: Debit warranty liability, credit cash, inventory, accrued
payroll
◉ Journal entry to record the revenue recognized on the service
type warranty
,Answer: Debit unearned warranty revenue, credit warranty revenue
◉ Service type warranty
Answer: Sold separately from the product. It's recorded as a
separate performance obligation in an unearned warranty revenue
account. It's recognized on a straight line basis over the warranty
period.
◉ Journal entry to record bond issuance at par/face/ maturity value
Answer: Debit cash, credit bonds payable.
◉ Journal entry to record issuance of bond at discount
Answer: Debit cash, debit discount, credit bonds payable
◉ Journal entry to record issuance of bond at premium
Answer: Debit cash, credit premium, credit bonds payable
◉ Journal entry to record bond interest payment mid-year
Answer: Debit interest expense, credit cash
◉ Journal entry to record bond interest payment end of the year
Answer: Debit interest expense, credit interest payable
, ◉ Journal entry to record bond interest payment end of the year
with a discount
Answer: Debit Interest expense, credit discount on bonds payable,
credit interest payable
◉ How is a discount on a bond amortized?
Answer: Calculate discount rate by multiplying the percent discount
by face value of bond. Divide by term and calculate the current
portion during bond interest payment.
◉ Journal entry to record bond interest payment mid year with a
discount
Answer: Debit interest expense, credit discount on bonds payable,
credit cash.
◉ Journal entry to record interest expense on a bond at premium
mid year
Answer: Debit interest expense, debit premium on bonds payable,
credit cash.
◉ Journal entry to record interest expense on a bond at a premium
at the end of the year
