What effect does stock dividends have on contributed capital and retained earnings?

increase contributed capital;decrease retained earnings

increase contributed capital;no effect on retained earnings

no effect on contributed capital;decrease retained aernings

decrease contributed capital; decrease retained earnings

Finland Corporation issues a $100,000bond at 4%paid semiannually due in 5years. The market rate is 6%. The price investors are willing to pay is:

2% 10 periods3% 10 periodspresent value of a single sum.82035.74409present value of an annuity8.982598.53020

$91,470

$100,000

$97,140

$94,710

When the market rate is less than the stated rate a bond is issued at a:

term

discount

premium

par

When bonds are issued at a discount the discount amortized has what effect on interest expense?

no effect on interest expense

only premiums are amortized

decrease interest expense

increase interest expense

When using the effective rate method the interest expense is calculated by multiplying:

carrying value times market rate

principal times stated rate

principal times market rate

carrying value times stated rate

Which of the following is a disadvantage of issuing bonds instead of stocks?

bonds dilute ownership control

stocks dilute ownership control

stocks have an interest expense

Bonds have an interest expense

Common stock $10 par 2,000 shares

$20,000

Additional paid in capital-common stock

100,000

Preferred stock 6% $100 par 550 shares

55,000

Additional paid in capital-preferred stock

175,000

Retained Earnings

450,000

Treasury stock, 300 shares

25,000

Total stockholders' equity is:

$775,000

$350,000

$800,000

$825,000

Willis Corp. purchased its own par value stock on January 1, for $20,000 and debited the treasury stock account for the purchase price. The stock was subsequently sold for $12,000. The $8,000 difference between the cost and sales price should be recorded as a deduction from

additional paid-in capital if previous sales of treasury stock exist; otherwise, from retained earnings.

additional paid-in capital even if there are no previous sales of treasury stock.

retained earnings

net income.

Crab Corporation has 100,000sharesauthorized,25,000sharesissued,and 22,000shares outstanding.The board of directors declare a $1per share cash dividend.The amount of cash to be distributed is:

$100,000

$25,000

$22,000

$47,000