ACCT 212 Exam 1

The rate of interest interest investors demand for loaning funds to a corporation is the - Answer- market interest rate Karson Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a premium, this indicates that: - Answer- the contractual interest rate exceeds the market interest rate Selling the bonds at a premium has the effect of - Answer- causing the total cost of borrowing to be higher than the bond interest paid Lopez Corporation issues 500, 10-year, 8%, $1,000 bonds dated January 1, 2007, at 96. The journal entry to record the issuance will show a - Answer- debit to Cash for $480,000 A corporation has the following account balances: Common Stock, $1 par value, $40,000; Paid-in Capital in Excess of Par Value, $1,800,000. Based on this information, the - Answer- number of shares issued is 40,000 Does the purchase of treasury stock affect the number of share outstanding? - Answer- Yes Does the purchase of treasury stock affect total paid in capital? - Answer- No Does the purchase of treasury stock affect total stockholder' equity? - Answer- Yes Foley Manufacturing Corporation purchased 3,000 shares of its own previously issued $10 par common stock for $69,000. As a result of this event, - Answer- Foley's total stockholders' equity decreased $69,000 Sun Inc. has 5,000 shares of 6%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2007. What is the annual dividend on the preferred stock? - Answer- $30,000 in total M-Bot Corporation has 10,000 shares of 8%, $100 par value, cumulative preferred stock outstanding at December 31, 2010. No dividends were declared in 2008 or 2009. If M-Bot wants to pay $375,000 of dividends in 2010, common stockholders will receive: - Answer- $135,000 Entries for cash dividends are required on the: - Answer- declaration date and the payment date A