Question 1

A company that has 25,000 shares of $5.00 par value common stock issued and outstanding paid a dividend of $0.40 per share. The market value of the stock is $16 per share. The company's dividend yield is

Accepted Answer

The company paid a total of $0.40 x 25,000 = $10,000 in dividends.
The dividend yield is calculated by dividing the annual dividend per share by the market value per share:
($0.40 per share x 4 quarters) / $16 per share = $1.60 / $16 = 0.10 or 10%
Therefore, the correct answer is choice A) 2.5%, which is 10% of the market value per share.

Question 2

Financial statements include assets listed at

Accepted Answer

Financial statements can include assets listed at their fair value, their historical cost, and their market value, depending on the accounting standards being applied (such as GAAP or IFRS) and the specific circumstances of the asset.

Question 3

On May 1, Cedar Inc. purchases $100,000 of 10-year, Madison Corporation 6% bonds dated March 1 at 100 plus accrued interest. What entry would Cedar record when receiving its semiannual interest on September 1?

Accepted Answer

The answer of On May 1, Cedar Inc. purchases $100,000...

Question 4

Albright Company purchased as a long-term investment $500,000 of Benton Corporation 10-year, 9% bonds. Present entries to record the following selected transactions:
a) Purchased bonds at 93 for $465,000.
b) Sold half the bonds at 98 plus accrued interest of $4,000. The broker deducted $200 for brokerage fees and taxes, remitting the balance. The bonds were carried at $479,000 at the time of the sale.

Accepted Answer

The answer of Albright Company purchased as a long-term investment...

Question 5

On May 1, Knox Inc. purchases $100,000 of 10-year, 6% Madison Corporation bonds dated March 1 at 100 plus accrued interest. What entry would Knox record when purchasing the bonds?

Accepted Answer

The answer of On May 1, Knox Inc. purchases $100,000...

Question 6

Journalize the entries to record the following selected bond investment transactions for Southwest Bank:
a) Purchased $400,000 of Daytona Beach 5% bonds at 100 plus accrued interest of $4,500.
b) Received the first semiannual interest.
c) Sold $250,000 of the bonds at 97, plus accrued interest of $1,800.

Accepted Answer

The answer of Journalize the entries to record the following...

Question 7

Changes in the value of available­for­sale securities

Accepted Answer

Changes in the value of available-for-sale securities are reported as part of other comprehensive income, which is a component of stockholders' equity, rather than being recognized on the income statement. This allows for the unrealized gains or losses on these securities to be accounted for without affecting net income until they are actually realized.

Question 8

Define debt securities and equity securities. Include their similarities and differences in your discussion.

Accepted Answer

The answer of Define debt securities and equity securities. Include...

Question 9

All of the following are disadvantages of fair value use except

Accepted Answer

Fair values do not only affect balance sheet accounts, but also income statement accounts.

Question 10

Companies may report comprehensive income on each of the statements below except

Accepted Answer

The answer of Companies may report comprehensive income on each...

Question 11

Edison Corporation paid a dividend of $10 per share on its $100 par preferred stock and $4 per share on its $20 par common stock. The market value of the common stock is $80 per share. Edison's dividend yield is

Accepted Answer

The answer of Edison Corporation paid a dividend of $10...

Question 12

On July 5, Winter Company had a market price of $58 per share of common stock. For the prior year, Winter Co. had paid an annual dividend of $3.48 per share. What is the dividend yield for Winter Company?

Accepted Answer

The answer of On July 5, Winter Company had a...

Question 13

All of the following are factors contributing to the trend for regulators to adopt accounting principles using fair value concepts except

Accepted Answer

The answer of All of the following are factors contributing...

Question 14

The dividend yield is measured as

Accepted Answer

Dividend yield is calculated by dividing the dividends per share of common stock by the market price per share of common stock. Preferred stock is not considered in the calculation of dividend yield. Therefore, option A is the correct choice.

Question 15

Which of the following is not a part of comprehensive income?

Accepted Answer

Cash flows from stock investments are not a part of comprehensive income as they belong to the investing activities section of the cash flow statement. The other options, such as foreign currency items, unrealized gains and losses on available-for-sale securities, and pension liability adjustments, are all part of comprehensive income.

Question 16

Which of the following would be considered an "other comprehensive income" item?

Accepted Answer

An unrealized loss on available-for-sale securities is considered an "other comprehensive income" item because it is a gain or loss that has not yet been realized by the company. Net income (A) is not an "other comprehensive income" item. An extraordinary loss related to a flood (B) and gain on disposal of discontinued operations (C) are not "other comprehensive income" items; they are both considered extraordinary items that are reported separately on the income statement.

Question 17

GAAP requires trading and available­for­sale investments to be recorded

Accepted Answer

GAAP requires both trading and available-for-sale investments to be recorded at their fair value. Historical cost or market value may not accurately reflect the current value of these investments. Net realizable value is typically used for valuing inventory, not investments.

Question 18

On October 1, Marcus Corporation purchased $20,000 of 6% bonds of Roberts Corporation, due in 8 1/2 years. The bonds were purchased at a price of $17,561 plus interest of $300 accrued from July 1, the date of the last semiannual interest payments. Journalize the purchase.

Accepted Answer

The answer of On October 1, Marcus Corporation purchased $20,000...

Question 19

Compare and contrast why companies invest cash in short-term temporary investments vs. long-term investments.

Accepted Answer

The answer of Compare and contrast why companies invest cash...

Question 20

On May 1, Cedar Inc. purchases $150,000 of 10-year, Knox Corporation 8% bonds dated March 1 at 100 plus accrued interest. What entry would Cedar record when receiving its semiannual interest on March 1?

Accepted Answer

The answer of On May 1, Cedar Inc. purchases $150,000...

Quiz 13: Investments and Fair Value Accounting

A company that has 25,000 shares of $5.00 par value common stock issued and outstanding paid a dividend of $0.40 per share. The market value of the stock is $16 per share. The company's dividend yield is

Financial statements include assets listed at

On May 1, Cedar Inc. purchases $100,000 of 10-year, Madison Corporation 6% bonds dated March 1 at 100 plus accrued interest. What entry would Cedar record when receiving its semiannual interest on September 1?

On May 1, Knox Inc. purchases $100,000 of 10-year, 6% Madison Corporation bonds dated March 1 at 100 plus accrued interest. What entry would Knox record when purchasing the bonds?

Changes in the value of availableforsale securities

Define debt securities and equity securities. Include their similarities and differences in your discussion.

All of the following are disadvantages of fair value use except

Companies may report comprehensive income on each of the statements below except

Edison Corporation paid a dividend of $10 per share on its $100 par preferred stock and $4 per share on its $20 par common stock. The market value of the common stock is $80 per share. Edison's dividend yield is

On July 5, Winter Company had a market price of $58 per share of common stock. For the prior year, Winter Co. had paid an annual dividend of $3.48 per share. What is the dividend yield for Winter Company?

All of the following are factors contributing to the trend for regulators to adopt accounting principles using fair value concepts except

The dividend yield is measured as

Which of the following is not a part of comprehensive income?

Which of the following would be considered an "other comprehensive income" item?

GAAP requires trading and availableforsale investments to be recorded

On October 1, Marcus Corporation purchased $20,000 of 6% bonds of Roberts Corporation, due in 8 1/2 years. The bonds were purchased at a price of $17,561 plus interest of $300 accrued from July 1, the date of the last semiannual interest payments. Journalize the purchase.

Compare and contrast why companies invest cash in short-term temporary investments vs. long-term investments.

On May 1, Cedar Inc. purchases $150,000 of 10-year, Knox Corporation 8% bonds dated March 1 at 100 plus accrued interest. What entry would Cedar record when receiving its semiannual interest on March 1?

Quiz 13: Investments and Fair Value Accounting

A company that has 25,000 shares of $5.00 par value common stock issued and outstanding paid a dividend of $0.40 per share. The market value of the stock is $16 per share. The company's dividend yield is

Financial statements include assets listed at

On May 1, Cedar Inc. purchases $100,000 of 10-year, Madison Corporation 6% bonds dated March 1 at 100 plus accrued interest. What entry would Cedar record when receiving its semiannual interest on September 1?

On May 1, Knox Inc. purchases $100,000 of 10-year, 6% Madison Corporation bonds dated March 1 at 100 plus accrued interest. What entry would Knox record when purchasing the bonds?

Changes in the value of available­for­sale securities

Define debt securities and equity securities. Include their similarities and differences in your discussion.

All of the following are disadvantages of fair value use except

Companies may report comprehensive income on each of the statements below except

Edison Corporation paid a dividend of $10 per share on its $100 par preferred stock and $4 per share on its $20 par common stock. The market value of the common stock is $80 per share. Edison's dividend yield is

On July 5, Winter Company had a market price of $58 per share of common stock. For the prior year, Winter Co. had paid an annual dividend of $3.48 per share. What is the dividend yield for Winter Company?

All of the following are factors contributing to the trend for regulators to adopt accounting principles using fair value concepts except

The dividend yield is measured as

Which of the following is not a part of comprehensive income?

Which of the following would be considered an "other comprehensive income" item?

GAAP requires trading and available­for­sale investments to be recorded

On October 1, Marcus Corporation purchased $20,000 of 6% bonds of Roberts Corporation, due in 8 1/2 years. The bonds were purchased at a price of $17,561 plus interest of $300 accrued from July 1, the date of the last semiannual interest payments. Journalize the purchase.

Compare and contrast why companies invest cash in short-term temporary investments vs. long-term investments.

On May 1, Cedar Inc. purchases $150,000 of 10-year, Knox Corporation 8% bonds dated March 1 at 100 plus accrued interest. What entry would Cedar record when receiving its semiannual interest on March 1?

Changes in the value of availableforsale securities

GAAP requires trading and availableforsale investments to be recorded