Question

web... ACFI-100 Final Exam Winter 2019()-Compatibility Mode-Saved to this PC References Mailings Review View Help Tell me what you want to Layout !·-·12-g. | i Emphasis ! Heading 1 t Heading 211 Normal! Strong 出x, xi | A. ρ . A. | Font Paragraph Styles Indicate the best answer to each question on the answer sheet provided The balance sheet of Werther Company showed the following data about its common stock, par $1: authorized shares, 10,000,000; outstanding shares, 4,300,000; and issued shares 4,700,000. Therefore, the number of treasury stock shares was a. 0 b. 4,700,000 c. 4,300,000 d. 400,000 1. 2. Which of the following is a "contra" stockholders' equity account? a. Retained earnings b. Preferred Stock c Treasury stock d Capital in excess of par value 3 If bonds are issued at 101, this means that a a $1,000 bond sold for $1.010 b. the bonds sold at a discount c a $1,000 bond sold for $101 d the bond rate of interest is 101% of the market rate of interest 4 The Discount on Bonds Payable account is shown on the balance sheet as a an asset b an expense c a long-term liability d. a contra long term liability rch ip #0*

Answer 1

Question 1

Correct answer-----(D) 400000

A	Issued shares	4700000
B	Outstanding shares	4300000
C=A-B	Treasury stares	400000

Treasury shares are shares purchased by the company from market. Treasury stock act as a contra equity account and that’s why issued shares are more than outstanding shares.

Question 2

Correct answer-----(c) Treasury Stock.

As already stated in question treasury stock is a contra account.

Question 3

Correct answer-----(a) a $1000 bond sold for $1010

.

Verify as Bond of 1000 sold at 101 (1000/100 x 101)= $1010

The bond in this situation is sold at premium.

Question 4

Correct answer-----(d) A contra long term liability.

Discount of bonds payable is a part of long term liability and is written after bonds payable. Discount on bonds payable reduces the carrying value of bond payable.