Accounting Midterm Exam



Midterm Problems

Answer 1

1. Albert Corporation

Date

Particulars

Debit

Credit

Jan. 15

Cash

5,500,000

Common Stock 2,000,000

Additional Paid-In Capital

3,500,000

Jan. 30

Common Stock 28,000 Legal services

28,000

Jul. 2

Land - 100000*14

1,400,000

Common stock

400,000

Additional Paid-In Capital

1,800,000

Answer 2

2. Vero Corporation has the following stockholders' equity accounts on January 1, 2013:

1-Mar

Treasury Stock

216000

Cash

216000

1-Jul

Cash

73500

Treasury Stock - (3,500 × $18)

63000

Paid-in Capital from Treasury Stock (3,500 × $3)

10500

1-Sep

Cash

43400

Paid-in Capital from Treasury Stock (3,100 × $4)

12400

Treasury Stock (3,100 × $18)

55800

Stockholders' equity

Paid-in capital

Capital Stock:

Common stock, $10 par

$1,500,000

Additional paid-in capital In excess of par value

200,000

From treasury stock

5400

Total paid-in capital

$1,705,400

Retained earnings

500,000

Total paid-in capital and retained earnings

$2,205,400

Less: Treasury stock (5400 shares)

97200

Net income

$2,108,200

Answer 3

(a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 8% and cumulative.

Year

Preferred

Common  

Total

2011

5000

-

5000

2012

11,000

4,000

15000

2013

8,000

27000

35000

20000*5*8% = 8000

(b) Journalize the declaration of the cash dividend at December 31, 2013

 

2008

2009

2010

Dividends declared

$ 5,000 $ 15,000 $35,000

Dividends in arrears

 

3,000

 

Allocation to preferred

5,000 12,000 8,000

Remainder to common

$ - $ - $27,000

Retained earnings

35,000

Dividends payable

35,000

Answer 4

Journalize the issuance of stock on July 1, the declaration of the stock dividend on December 15, 2013, and the issuance of the stock dividend on January 15, 2014

Issuance of stock on July 1,

1-Jul

Retained Earnings

3,500,000

Common Stock 

1,250,000

Contributed capital 

2,250,000

Declaration of the stock dividend on December 15

15-Dec

Retained Earnings (37500 shares X $ 18)

675,000

Common Stock Dividend Distributable

675,000

Issuance of the stock dividend on January 15, 2014

Stock Dividends Distributable 675,000

Common Stock

187500

Addition Paid-In Capital

487500

Answer 5

A)

January 1,

Cash

$291,780

Discount on Bonds Payable

$8,220

Bonds Payable

$300,000

B)

Cash

500,000

Discount on Bonds Payable

6,500

Bonds Payable

493,500

Interest Expense

XXXX

Interest Payable

XXXX

Cash

XXXX

Bond payable

493,500

Interest Payable

XXXX

Loss on Bond Retirement

6500

Discount on Bonds Payable

6,500

Cash

500,000

Answer 6

(a) Prepare the journal entries ...