ACC 2 Unit 3.00

On May 20, Dixie Company paid cash to the bond trustee for the annual deposit to the bond sinking fund, $30,000, and recorded interest earned on the bond sinking fund, $2,000. The correct way to record this transaction is:

• debit Cash, $30,000, Interest Income, $2,000; credit Bond Sinking Fund, $32,000.

• debit Bond Sinking Fund, $32,000; credit Cash, $30,000, Interest Income, $2,000.

• debit Bond Payable, $32,000; credit Bond Sinking Fund, $32,000.

• debit Bond Sinking Fund, $32,000; credit Bond Payable, $32,000.

Lindsey Corporation received cash on account from Darla's Shoe Shop, $49, covering Sales Invoice No. 22, $80 ($65 plus sales tax $15), less Credit Memo No. 34 for $30 ($25 plus sales tax $5), less 2% discount, $1, Receipt No. 5. The journal entry to record the transaction is:

• debit Sales, $49; credit Cash, $49.

• debit Sales, $80; credit Cash, $80.

• debit Accounts Receivable/Darla's Shoe Shop, $50; credit Cash, $49, Sales Discount-Shoes, $1.

• debit Cash, $49, Sales Discount-Shoes, $1; credit Accounts Receivable/Darla's Shoe Shop, $50.

Sandra Lee Corporation received cash from Bre Hampton for 100 shares of $60 par value preferred stock at $70 per share for a total of $7,000. The journal entry to record this transaction is:

• debit Capital Stock-Preferred, $6,000, Paid-in Capital in Excess of Par Value-Preferred, $1,000; credit Cash, $7,000.

• debit Cash, $7,000; credit Capital Stock-Preferred, $6,000, Paid-in Capital in Excess of Par Value-Preferred, $1,000.

• debit Capital Stock-Preferred, $7,000; credit Cash, $7,000.

• debit Cash, $7,000; credit Capital Stock-Preferred, $7,000.

On November 7, Blue Duck Corporation bought back 700 shares of its $11 stated value common stock at $17 per share for a total of $11,900. The correct entry to record this transaction is:

• debit Treasury Stock, $11,900; credit Cash, $11,900.

• debit Cash, $11,900; credit Treasury Stock, $11,900.

• debit Treasury Stock, $7,700; credit Cash, $7,700.

• debit Cash, $7,700; credit Treasury Stock, $7,700.

On March 4, Sadie Morgan subscribed for 4,000 shares of BeanBaggie Corporation's common stock at $10 per share. She agreed to pay $20,000 on June 4 and $20,000 on September 4. The correct journal entry for issuing Stock Certificate No. 10 to Sadie Morgan for 4,000 shares of $10 stated value common stock on September 4 for issuance of stock previously subscribed is:

• debit Stock Subscribed-Common, $40,000; credit Capital Stock-Common, $40,000.

• debit Capital Stock-Common, $40,000; credit Stock Subscribed-Common, $40,000.

• debit Cash, $20,000; credit Stock Subscribed-Common, $20,000.

• debit Stock Subscribed-Common, $20,000; credit Cash, $20,000.

On October 15, Cooper Corporation received cash from Robbie Lefler for 100 shares of Treasury Stock at $13 per share for a total of $1,300. Treasury Stock was originally bought for $18 per share. The correct entry to record this transaction is:

• debit Cash, $1,800; credit Treasury Stock, $1,800.

• debit Treasury Stock, $1,800; credit Cash, $1,800.

• debit Treasury Stock, $1,800; credit Cash, $1,300, Paid-in Capital from Sale of Treasury Stock, $500.

• debit Cash, $1,300, Paid-in Capital from Sale of Treasury Stock, $500; credit Treasury Stock, $1,800.

On December 15, Jones Corporation paid cash to a bond trustee for the annual interest on a bond issue for $1,200. The correct transaction to record paying interest on a bond is:

• debit Cash, $1,200; credit Bond Payable, $1,200.

• debit Bond Payable, $1,200; credit Cash, $1,200.

• debit Cash, $1,200; credit Interest Expense, $1,200.

• debit Interest Expense, $1,200; credit Cash, $1,200.

Davis Corporation sold audio equipment on account to Hear All Corporation, $500, plus sales tax, $45, totaling $545, Sales Invoice No. 54. The correct entry to record the transaction is:

• debit Cash, $545; credit Sales, $545.

• debit Sales, $545; credit Cash, $545.

• debit Accounts Receivable/Hear All Corporation, $545; credit Sales-Audio, $500, Sales Tax Payable, $45.

• debit Sales-Audio, $500, Sales Tax Payable, $45; credit Accounts Receivable/Hear All Corporation, $545.

On February 14, Steffi Wallace subscribed for 2,000 shares of Barefoot Barn Corporation's common stock at $12 per share. She agreed to pay $12,000 on May 14 and $12,000 on August 14. What is the correct journal entry for receiving cash from Steffi Wallace in payment of stock subscription, $12,000, on May 14?

• debit Subscriptions Receivable, $24,000; credit Stock Subscribed-Common, $24,000

• debit Stock Subscribed-Common, $24,000; credit Subscriptions Receivable, $24,000

• debit Subscriptions Receivable, $12,000; credit Cash, $12,000

• debit Cash, $12,000; credit Subscriptions Receivable, $12,000

How does a positive net income affect the ending balance of Retained Earnings?

• It causes the Retained Earnings balance to decrease.

• It causes the Retained Earnings balance to increase.

• There is no effect on Retained Earnings.

• It causes Cash to decrease.