I. Which of the following statements is incorreet? A. The normal balance of acco
ID: 2390547 • Letter: I
Question
I. Which of the following statements is incorreet? A. The normal balance of accounts receivable is a debit B. The normal balanee of dividends is a debit. C. The normal balance of unearned revenues is a credit. D. The normal balance of an expense account is a credit. E. The normal balance of common stock is a credit. A corporation issued 6,000 shares of its $10 par value common stock in exchange for land th 2. market value of $84,000. The entry to record this transaction would include A. A debit to Common Stock for $60,000. B. A debit to Land for $60,000. C. A credit to Land for $60,000. D. A credit to Contributed Capital in Excess of Par Value, Common Stock for $24,000. E. A credit to Common Stock for $84,000. 3. A discount on bonds payable: A. Occurs when a company issues bonds with a contract rate less than the market rate. B. Occurs when a company issues bonds with a contract rate more than the market rate C. Increases the Bond Payable account. D. Decreases the total bond interest expense. E. Is not allowed in many states to protect creditors. 4. On September 1, a corporation had 50,000 shares of S5 par value common stock and S1 retained carnings. On that date, when the market price of the stock is $15 per share, the issues a 2-for-1 stock split. The general journal entry to record this transaction is: A. %media:image044.png% B. Retained Earnings 750,000 Common Stock 750,000 C. I Retained Earnings 250,000 Common Stock 250,000 D. Retained Earnings 250,000 Stook split payable 250,000 E. No entry is made for this transaction. 5. The assets of a company total $700,000; the liabilities, $200,000. What are the tota owners? A. $900,000 B. $700,000 C. $500,000 D. $200,000 E. It is impossible to determine unless the amount of owners' investment is knoExplanation / Answer
1). The answer is D). The normal balance of expense account is a credit.
All the expense accounts have a debit balance. Basis rule of accounts is " Debit all expenses, credit all incomes and gains".
2). The answer is D). The credit to contributed capital in excess of par value, common stock for $24,000.
Entry includes debiting the Land for $84000 and Credit to Common stock at par for $60000.
3). The answer is A). occurs when a company issues bonds with a contract rate less than the market rate.
4). The answer is E).No entry is made for this transaction.
While splitting the stock, only the par value decreases and no. of share increases. The value of common stock remains the same.
5). The answer is C). $500,000.
Total Assets $700,000 - Liabilities $200,000 = Owner's Equity $500,000
6). The answer is D). The left hand side of T account.
7). The answer is B). Debt Equity Ratio = Total Debt or Liabilities / Total Equity
8). The answer is A). Going Concern Priciple = means business will carry on forever and have no objective of closing down after completion of a goal.