Fill in the blanks below with the correct answer per your textbook

ACCT 223 – Financial Accounting

Exam 3 – Chapters 7 & 8

Fill in the blanks below with the correct answer per your textbook (1 pt each).

1. A ________________________________ is a distribution of additional shares of stock to existing stockholders in proportion to their existing holdings, often done when a cash dividend cannot be distributed, and expressed as a percentage.
2. An arbitrary, usually nominal value assigned to a share of stock when a corporation is organized is called the _________________________.
3. _____________________________________ is the excess of the amount received from the sale of stock over the par (stated) value of the shares sold.
4. The maximum number of shares of a class of stock allowed to be issued are called the __________________________________.
5. The number of shares of a class of stock that have been sold to stockholders is called the __________________________, which may be reduced if treasury stock is reacquired by the corporation.
6. The number of shares of a class of stock currently held by stockholders is called the _______________________________, and if no treasury stock has been issued, this will be the same number as the shares issued.
7. Issued shares of stock less _________________________________ equals outstanding shares of stock.
8. Once a dividend is declared and approved by the board of directors, it becomes a legal liability and is booked as _________________________________ on the balance sheet until it is actually paid to the stockholders.
9. A _________________________________ is a distribution of additional shares of stock to existing stockholders in proportion to their existing holdings, often done in a 2:1, 3:1, or 3:2 manner.
10. Partners and sole proprietors use the term ______________________ (similar to owners’ equity) when they invest in their company, and they use the term _______________________ when they make distributions to themselves.
11. The two types of equity are ________________________________ and _______________________________.
12. The two types of paid-in capital are ____________________________ and _______________________________.
13. Cumulative net income/losses that has not been distributed to the owners/shareholders of a corporation in the form of dividends is called ____________________________.
14. The class of stock that represents residual ownership of the corporation, and provides its stockholders with voting rights is called _________________________.
15. __________________________________ is the class of stock representing an ownership interest with certain preferences relative to common stock, usually including priority claim to dividends, but has no voting rights for its owners.
16. The current liability ____________________________________ represents amounts owed to suppliers for goods and services that have been provided to the entity on credit.
17. The current liability ________________________________ represents cash collected in advance of earning the related revenue, where the goods or services are still owed to the customer.
18. A short-term debt resulting from a loan arrangement which is a formal promise to pay a stated amount on a stated date, usually with interest and sometimes secured by collateral, is called ______________________________.
19. The portion of the long-term borrowing that is to be repaid within one year of the balance sheet date is called _________________________________________.
20. Total wages earned by employees, including bonuses and overtime, is called ________________________; from this amount several deductions are subtracted to arrive at the _________________________, which represents the employer’s amount due to the employees and is reported as a current liability on the balance sheet.
21. If a bond’s stated rate is less than the market rate, the bond is issued at a ________________________; if the stated rate is higher than the market rate, it is issued at a __________________________.
22. A _________________________________________ is a potential claim on a company’s assets arising from such things as pending litigation, environmental hazards, casualty loss to property, and product warranties. They must be booked as a liability on the balance sheet if the potential loss is both _________________________ and _______________________________.

Complete the problems below.  Show your work! (2 pts each)

24. On 1/1/22, $20 million face amount bonds were issued at 6% for 10 years.

Interest is paid out on 6/30 and 12/31 each year.  Market rate was 3%.

1. How much interest will be paid just on 6/30 each year?

1. How much interest will be paid out annually (both payments combined)?

1. Were the bonds issued at a discount or a premium?

28. Justin owns 600 shares of $4 par value common stock with a market value of $20 per share. The stock’s company just issued a 4-for-1 stock split.

1. What was the total par value of the common stock before the split?
2. How many shares of stock would Justin own after the stock split?
3. What would the new total par value likely be after the stock split?

29. Scott owns 2,000 shares of $1 par value common stock. The stock’s company just issued a 5% stock dividend in lieu of a cash dividend.
30. How many shares of common stock would Scott own after the stock dividend?

30. Badgers Co. has common stock with $1 par value; 100,000 shares are authorized, 75,000 shares are issued, and 70,000 shares are outstanding.
31. What is the total par value of the common stock as presented on the balance sheet?
32. How many shares of treasury stock are there?
33. If a $2 dividend was declared by the board of directors, what would the total dividend payment be?

31. Corona Co. sold 55,000 shares of its $2 par value common stock at a market price of $10 per share.
32. How much cash was received by Corona Co. from the stock sale?
33. What would the total par value of the common stock be listed as on the balance sheet?
34. How much additional paid-in capital was created by the sale?

32. Anderson Inc. had the below account balances as of 12/31/22. Net income for the year ending 12/31/22 was $56,000, and dividends paid were $26,000.  Beginning Retained Earnings as of 1/1/22 were $130,000.

22. Calculate the Ending Retained Earnings Balance as of 12/31/22.
23. Prepare a Balance Sheet as of 12/31/22 in proper format. Use the Balance Sheet tab in the “F-S Example – 2 Yrs” in Canvas as a guide for proper formatting.  Your balance sheet must balance (A=L+E) to be correct. (10 pts total)