Question

5. mary nelson contributed the following to form a partnership cash-22,000 equipment 40,000 vehicle 28,000 and the partnership assumed the apyments on a 20,000 note payable of nelsons. How much should be credited to mary nelson, capital to show her investment in the partnership?

a. 50,000

b. 70,000

c. 22,000

d. 90,000

6. a corporation has 300,000 shares of $6 per value common stock authorized, and issued and outstanding. if the corporation declares a 3 for 1 stock split, how many shares will be outstanding after the split?

a. 300,000 shares

b. 900,000 shares

c. 100,000 shares

d. 1,200,000 shares

7. a company issues 5%, 5 year bonds w a par value of 1,000,000 and semiannual interest payments. On the issue date the annual market rate for these bonds is 6%. what is the bonds issue (selling) price, assuming the present value of $1 factor for 3% and 10 semi annual periods is .7441 and the present value of an annuity factor for the same rate and period is 8.302?

a. $957,355

b. $1,000,000

c. $1,250,000

d. $786,745

8. When a partnership is liquidated:

a. noncash assets are converted to cash

b. libailities are paid or settles

c. any remaining cash is distributred to partnersy based on their capital balances

d. All choices are correct

9. On june 20, Blaney company purchased 2,000 shares of ABC company common stock for $32 per share plus a $75 brokerage fee. These shares are categorized as a short term investment in trading securities. On september 8, blaney company receives $0.60 per share in dividends from ABC company. A correct entry to record the receipt of the dividend is:

a. Debit cash for $1,200

b. debit dividend revenue for $1,200

c. debit common stock for $38,400

d. debit interest revenue for $1,200

10. A company declared a $0.50 per share cash dividend. The company has 20,000 shares authroized, 9,000 shares issued and 8,000 shares of common stock outstanding.the journal entry to record the dividend declaration is

a. debit common dividends payable $4500; credit cash $4500

b. debit common dividends payable $4000; credit cash $4000

c. debit retained earnings $4500; redit common dividends payable $4500

d. Debit retained earnings $4,000; credit common dividends payable $4,000

11. A bond with a face amount of 400,000 was sold at 105. How much cash will be received when the bonds are sold?

a. 420,000

b. $380,000

c. $400,000

d. $405,000

12. chase and hatch are partners and share equally in income or loss. chases current capital balance is $135,000 and Hatchs is $120,000. chase and hatch agree to accept flax with a 30% interest in the partnership. Flax invests $115,000 in the partnership. The amount credited to Flax's capital account is:

a. $111,000

b. $115,000

c. $92,500

d. $120,000

Answer 1

Solution 5:

Amount to be credited to Nelson capital = Fair value of assets contributed - Liabilities assumed

= $22,000 + $40,000 + $28,000 - $20,000 = $70,000

Hence option b is correct.

Solution 6:

Nos of shares outstanding after split = 300000*3 = 900000 shares

Hence option b is correct.

Solution 7:

Computation of bond price
Table values are based on:
n=	10
i=	3%
Cash flow	Table Value	Amount	Present Value
Par (Maturity) Value	0.74410	$1,000,000	$744,100
Interest (Annuity)	8.53020	$25,000	$213,255
Price of bonds			$957,355

Hence option a is correct.

Solution 8:

When a partnership is liquidated:

• noncash assets are converted to cash
• libailities are paid or settled
• any remaining cash is distributred to partnersy based on their capital balances

Hence option d "All choices are correct"

Solution 9:

To record receipt of dividend, cash account will be debited by $1,200 (2000*$0.60)

Hence option a is correct.

Solution 10:

Amount of dividend declared = 8000 * $0.50 = $4,000

Therefore to record dividend, "Debit retained earnings $4,000; credit common dividends payable $4,000"

Hence option d is correct.

Solution 11:

Cash received on issue of bond = $400,000 * 105% = $420,000

Hence option a is correct.

Solution 12:

Total partnership capital after admission of Flax = $135,000 + $120,000 + $115,000 = $370,000

Flax share in partnership = 30%

Required capital contribution from Flax = $370,000*30% = $111,000

Hence amount credited to Flax capital is $111,000. Bonus capital contributed by flax will be credited to remaining partner capital in their profit sharing ratio.

Hence option a is correct.