On May 1, Howard Corporation purchased 2,000 shares of its $10 par value common
stock at a cash price of $15/share. On July 15, 900 shares of the treasury stock were
sold for cash at $17/share.
Instructions
Journalize the two transactions.
Answer:
Once cost is established for a plant asset, it becomes the basis of accounting for the
asset unless the asset appreciates in value, in which case, market value becomes the
basis for accountability.
Answer:
CVS leases a building for 20 years. The lease requires 20 annual payments of $10,000
each, with the first payment due immediately. The interest rate in the lease is 10%.
What is the present value of the cost of leasing the building?
Answer:
The normal balance of an expense is a credit.
Answer:
Retained earnings represents the amount of cash available for dividends.
Answer:
If a retailer assesses a finance charge on the amount owed by a customer, Accounts
Receivable is debited for the amount of the interest.
Answer:
On November 1, 2015, Nate Corporation’s stockholders’ equity section is as follows:
On November 1, Nate declares and distributes a 15% stock dividend when the market
value of the stock is $14 per share.
Instructions
Indicate the balances in the stockholders’ equity accounts after the stock dividend has
been distributed.
Answer: