Question

Use the following to answer question 4: Presented below is information related to Hal Common Stock, S1 par Paid-in Capital in Excess of Par-Common Stock Preferred 8 1/2% Stock, S50 par Paid-in Capital in Excess of Par-Preferred Stock Retained Earnings Treasury Common Stock (at cost) related to Hale Corporation: $3,500,000 550,000 2,000,000 400,000 1,500,000 150,000 on is 4. The total stockholders' equity of Hale Corporation is A) $7,800,000. B) $7,950,000. C) $6,300,000. D) $6,450,000. 5. Kant Corporation retires its $500,000 face value bonds at 102 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $481,250. The entry to record the redemption will include a A) credit of $18,750 to Loss on Bond Redemption. B) credit of $18,750 to Discount on Bonds Payable. C) debit of $28,750 to Gain on Bond Redemption. D) debit of $10,000 to Premium on Bonds Payable.

Answer 1

Ans. 4	Option   A
	Common stock	$3,500,000
	Additional paid in capital - Common	$550,000
	Preferred stock	$2,000,000
	Additional paid in capital - Preferred	$400,000
	Total paid in capital	$6,450,000
	Retained earnings	$1,500,000
	Less: Treasury stock	-$150,000
	Total Stockholder's Equity	$7,800,000
Ans. 5	Option   B
	Let's say the par value of the bonds is $100.
	Now we need to calculate the number of bonds issued/sold.
	Number of bonds issued (sold) = Face value / Par value of the bonds
		$500,000 / $100
		5,000 bonds
	Discount on bonds payable   =   Face value of bonds - Carrying value of bonds on redemption date
	$500,000 - $481,250
	$18,750