Final Exam Practice - Stocks & Bonds Bond Issuance & Interest Payments 1. ABC Company issued $1,000,000 in 5 year, 5% bonds at a discount for $930,000. Bonds pay interes semi-annually. The market rate of Interest is 8%. a) Write the journal entry ABC will make to record the bond issuance. b) Write the journal entry ABC will make to record the first semi-annual interest payment to bond holders. (Hint: Record the interest expense, the cash pold, and the amortization of the discount! 2.XYZ Company issued $2,000,000 in 8 vear, 6% bonds at a premium for $2,060,000. Bonds pay interest semi-annually. The market interest rate is 4%. a) Write the journal entry XYZ will make to record the bond issuance. c) Write the journal entry XYZ will make to record the first semi-annual interest payment to bond holders. (Hint: Record the interest expense, the cash pald, and the amortization of the premium Stock Issuance & Dividends 1. ABC Company issued 10,000 shares of $1 par common stock at $5 per share. Write the journal entry ABC will make to record issuing the shares. Pal Exam Practice - Stocks & Bonds Pro Company issued 10,000 shares of $1 par common stock in exchange for a corporate jet appraised at $400,000. Write the journal entry Pro will make to record issuing the shares 3. XYZ Company issued 5,000 shares of 5%, $100 par cumulative preferred stock at $150 per share Write the journal entry XYZ will make to record issuing the shares. 4. On April 1, 2013 ABC Company declared that they would pay a $2 per share dividend to its 20,000 outstanding shares, to stockholders on record as of April 15, 2013. The dividends will be paid on April 30 h. Prepare the journal entries related to this cash dividend. April 1, 2013 April 15, 2013 April 30, 2013 5. Zap Company has 50,000 shares of 5%, $100 par cumulative preferred stock outstanding. Zap also has 300,000 shares of $2 par common stock. They paid no dividends in 2014. In 2015 they declared a cash dividend to shareholders totaling $800,000. a) How much is the total annual dividend for the cumulative preferred stock? Show your calculation b) How much of the $800,000 to be paid in 2015 will go to preferred shareholders? c) How much will common shareholders receive in dividends Per Share of stock? Page 2 of 2 Final Exam Practice - Stocks & Bonds Bond Issuance & Interest Payments 1. ABC Company issued $1,000,000 in 5 year, 5% bonds at a discount for $930,000. Bonds pay interes semi-annually. The market rate of Interest is 8%. a) Write the journal entry ABC will make to record the bond issuance. b) Write the journal entry ABC will make to record the first semi-annual interest payment to bond holders. (Hint: Record the interest expense, the cash pold, and the amortization of the discount! 2.XYZ Company issued $2,000,000 in 8 vear, 6% bonds at a premium for $2,060,000. Bonds pay interest semi-annually. The market interest rate is 4%. a) Write the journal entry XYZ will make to record the bond issuance. c) Write the journal entry XYZ will make to record the first semi-annual interest payment to bond holders. (Hint: Record the interest expense, the cash pald, and the amortization of the premium Stock Issuance & Dividends 1. ABC Company issued 10,000 shares of $1 par common stock at $5 per share. Write the journal entry ABC will make to record issuing the shares. Pal Exam Practice - Stocks & Bonds Pro Company issued 10,000 shares of $1 par common stock in exchange for a corporate jet appraised at $400,000. Write the journal entry Pro will make to record issuing the shares 3. XYZ Company issued 5,000 shares of 5%, $100 par cumulative preferred stock at $150 per share Write the journal entry XYZ will make to record issuing the shares. 4. On April 1, 2013 ABC Company declared that they would pay a $2 per share dividend to its 20,000 outstanding shares, to stockholders on record as of April 15, 2013. The dividends will be paid on April 30 h. Prepare the journal entries related to this cash dividend. April 1, 2013 April 15, 2013 April 30, 2013 5. Zap Company has 50,000 shares of 5%, $100 par cumulative preferred stock outstanding. Zap also has 300,000 shares of $2 par common stock. They paid no dividends in 2014. In 2015 they declared a cash dividend to shareholders totaling $800,000. a) How much is the total annual dividend for the cumulative preferred stock? Show your calculation b) How much of the $800,000 to be paid in 2015 will go to preferred shareholders? c) How much will common shareholders receive in dividends Per Share of stock? Page 2 of 2