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Exam 8: Liabilities and Stockholders Equity

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Question 61

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What are current liabilities?

A) Liabilities that are due and payable within two years.
B) Liabilities that are due and to be paid out of current assets within one year.
C) Liabilities that are due but not payable for more than one year.
D) Liabilities that are payable if a possible subsequent event occurs.

E) A) and B)
F) A) and C)

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Question 62

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The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

A) 5,000
B) 35,000
C) 45,000
D) 55,000

E) B) and D)
F) B) and C)

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Question 63

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The following information is for employee William Heedy for the week ended March 15. Total hours worked: 48 Rate: $16 per hour, with double time for all hours in excess of 40 Federal income tax withheld: $200 United Fund deduction: $50 Cumulative earnings prior to current week: $6,400 Tax rates: Social security: 6% on maximum earnings of $106,800 Medicare tax: 1.5% on all earnings; on both employer and employee State unemployment: 4.2% on maximum earnings of $7,000; on employer Federal unemployment: 0.8% on maximum earnings of $7,000; on employer (a)Determine (1) total eanings, (2) total dechuctions, and (3) cash paid. (b) Detemine each of the employer's payroll taxes related to the eanings of William Heedy for the week ended Mach 15 .

When the contract rate of interest on bonds is less than the market rate of interest, the bonds sell at:

Bonds are sold at face value when the contract rate is equal to the market rate of interest.

When the contract rate of interest on bonds is higher than the market rate of interest, the bonds sell at:

A corporation purchases 5,000 shares of its own $20 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity?

When the market rate of interest is less than the contract rate of a bond, the bond will sell for a discount.

One of the conditions for paying a cash dividend is sufficient retained earnings.

The total earnings of an employee for a payroll period is referred to as the net pay.

A corporation has 50,000 shares of $100 par value stock outstanding that has a current market value of $180. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately:

Cash dividends are not paid on shares of treasury stock.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 75,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are reacquired, the number of outstanding shares is 19,500.

The market interest rate related to a bond is also called the:

For the year that just ended, a company reports net income of $1,500,000. There are 500,000 shares authorized, 300,000 shares issued, and 250,000 shares of common stock outstanding. What is the earnings per share?

For proper matching of revenues and expenses, the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

Preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends.

Earnings per common share is one factor that influences the decision to use debt financing or equity financing.

The following accounts and their balances appear in the ledger on December 31 of the current year: $\begin{array}{ll}\$ 400,000 & \text { CommonStock, } \$ 20 \text { par } \\44,000 & \text { Paid-In Capital in Excess of Par } \\265,000 & \text { RetainedEarnings } \\20,000 & \text { Treasuy Stock }\end{array}$ Prepare the Stockholders' Equity section of the balance sheet as of December 31. Twenty five thousand shares of common stock are authorized, and 1,000 shares have been reacquired.