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Exam 8: Liabilities and Stockholders Equity

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Question 1

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On March 15,Silver Co.issued a $80,000,5%,90-day note payable to Gold Co.How much will Silver Co.have to pay at maturity? (Assume 360 days in a year)

A) $84,000
B) $79,000
C) $80,000
D) $81,000

E) All of the above
F) A) and B)

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Question 2

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If prior to the last weekly payroll period of the calendar year,the cumulative earnings for an employee are $75,200,earnings subject to social security tax are $106,800,and the tax rate is 7.5%,the employer's social security tax on the $800 gross earnings paid on the last day of the year is $60.

A) True
B) False

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Question 3

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If the market rate of interest is 6% and a corporation's bonds bear interest at 7%,the bonds will sell at a discount.

If $4,000,000 of 12% bonds are issued at 103 1/4,the amount of cash received from the sale is:

The declaration of a stock dividend decreases a corporation's stockholders' equity and decreases its liabilities.

As interest is recorded on an interest-bearing note,the Interest Expense account is:

An employee receives an hourly rate of $30,with time and a half for all hours worked in excess of 40 during a week.Payroll data for the current week are as follows: hours worked,46; federal income tax withheld,$300; cumulative earnings for year prior to current week,$90,700; social security tax rate,6.0% on maximum of $106,800; and Medicare tax rate,1.5% on all earnings.What is the net pay for the employee?

Federal unemployment compensation tax is a tax that is paid only by employers.

If $1,000,000 of 10% bonds are issued at 98,the amount of cash received from the sale is:

The following information is for employee William Heedy for the week ended March 15.

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

A bond is simply a form of an interest-bearing note.

liabilities may arise from past transactions if certain events occur in the future.

If $500,000 of 8% bonds are issued at 102,the amount of cash received from the sale is:

During the first year of operations,employees earned vacation pay of $50,000.The vacations will be taken during the second year.The vacation pay expense should be recorded in the first year of operations.

Ratio of liabilities to total assets is computed by:

Which of the following will be classified as a current liability?

The summary of the payroll for the monthly pay period ending July 15 indicated the following:

For accounting purposes,stated value is treated the same way as par value.

The main source of paid-in capital is from issuing stock.