Assuming effective interest amortization is used what is the 2011 interest

Assuming effective interest amortization is used what

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interest rate. Assuming effective-interest amortization is used, what is the 2011 interest expense (to the nearest dollar)? A. $779 B. $796 C. $677 D. $700 1 st year interest expense = BV*ER=$9,668*0.08= $773.44 1 st year amortization = $773.44 - $700 = $73.44 2 nd year interest expense = ($9,668 +$73.44)*0.08=$779.31 Carter Co. disposed of an asset at the end of year 8 of the asset's life originally estimated to be 10 years. The original cost was $50,000 with an estimated residual value of $5,000 and it was being depreciated under the straight-line method. It was sold for $10,000 cash. What was the gain or loss on the disposal at the end of year 8? • A. $1,000 gain • B. $4,000 loss • C. No gain or loss • D. $10,000 gain Depreciation expense per year: ($50,000 - $5,000)/10 = $4,500 Cash 10,000 Accumulated depreciation ($4,500 * 8 years) 36,000 Loss on sale 4,000 PPE 50,000 Halbur Company reported the following for its recent year of operation: No new equipment was purchased during the year. What was the selling price of the equipment? A. $3,900 B. $1,000 C. $900 D. $600 E. $1,500 Equipment Beg. Bal. = 12,500 Disposals = 4,500 Purchases 0 End. Bal. 8,000 Accumulated Depreciation Disposals = 600 Beg. Bal. = 2,000 Depr. Expense = 1000 End. Bal.= 2,400 Cash 900 Accumulated depreciation 600 Loss on sale 3,000 Equipment 4,500 Wendell Company provided the following pertaining to its recent year of operation: (1) Common stock with a $10,000 par value was sold for $50,000 cash. (2) Cash dividends totaling $20,000 were declared, of which $15,000 were paid. (3) Net income was $70,000. (4) A 50% stock dividend resulted in a common stock distribution, which had a $5,000 par value and a $23,000 market value. (5) Treasury stock costing $9,000 was sold for $7,000. How much did Wendell's total stockholders' equity increase during the recent year of operation?
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(1) Increased stockholder’s equity by $50,000 Cash 50,000 Common stock 10,000 Capital in excess of par 40,000 (2) Decreased stockholder’s equity by $20,000 Dividends 20,000 Dividends payable 20,000 Dividends payable 15,000 Cash 15,000 (3) Increased stockholder’s equity by $70,000 (4) Did NOT affect stockholder’s equity Stock dividends 5,000 Common stock 5,000 (5) Increased stockholder’s equity by $7,000 Cash 7,000 Capital in excess of par 2,000 Treasury stock 9,000 Total change in stockholder’s equity: increase by $107,000 Multi-Stock Company founded in 1991 has two different classes of stock outstanding. There are 1,000,000 shares of common stock issued and outstanding with a “par value” of $ 1 per share. Multi-Stock has also issued 100,000 shares of 5% cumulative preferred stock with $5 par value. Multi-Stock paid dividends each year through 90’s and including 2000. 2001 was not a great year, and Multi-Stock Company did not pay any dividends, nor were any dividends paid in 2002, 2003, or 2004. The business turned around in 2005, and Multi-Stock’s board has decided to pay dividends in the amount of $ 200,000. If you owned 50,000 shares of Multi-Stock Common Stock, what is the amount of the “Dividend Check” that you will receive from Multi-Stock in 2005? Preferred dividends per year: 100,000*0.05*$5=$25,000 or $0.25 per share How much will preferred shareholders get: $25,000 * 5 years = $125,000 How much common shareholders get: $200,000 - $125,000 = $75,000
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