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ACT 311 Fall 2014 QUIZ TWO (chapters 4,5,6,7)- Silver Gym had two different kinds of business under operation




Question;1;ACT 311 Fall 2014 QUIZ TWO (chapters 4,5,6,7);1. Silver Gym had two different kinds of business under;operation. One kind of business was;discontinued and sold at a gain. How should this gain be;reported?;A. As "extraordinary gain.;B. As "gain from discontinued operation;C. Both of the above;D. None of the above.;2. The Robinson suffered damage from a hurricane and had an;extraordinary loss of $10,000. Assuming;a tax rate of 10%, what is the effect the loss net-of-tax?;A. $1,000 gain B. $9,000 gain C. $11,000 gain D. $9,000;loss.;3. A company had Service Revenue of $120,000, wages expense;of $40,000, interest revenue of $3,000;loss on discontinued operations of $8,000, extraordinary;loss of $4,000 and a tax rate of 20%. What is;the amount of income from continuing operations (After tax)?;A. $56,800 B. $60,000 C. $66,400 D. $83,000 E. 80,000;4. A company changed its inventory costing method from;weighted average to FIFO inventory. Identify;the appropriate treatment for this situation.;A. Prospective treatment C. Retrospective treatment;B. Discontinued operations D. Extraordinary item;5. The MacGruber Co. sold equipment that it was not using;for $21,000 cash. In what section of the;Statement of Cash Flows should the transaction be reported?;A. Operating activities. C. Investing activities;B. Liquidity activities. D. Financing activities;6. The O'Malley Corp. paid cash dividends to stockholders.;In what section of the Statement of Cash;Flows should it be reported?;A. operating;activities. B. investing activities C. financing activities D. Should not be;reported.;7. The Sylvia Co. has an investment portfolio consisting;trading securities, held-to-maturity securities;and available-for-sale securities. Which of those;investments is (are) NOT reported at fair value?;A. Trading securities B. Held-to-maturity securities C.;Available-for-sale securities D. Both A & C;8. Which of the following investments in never an equity;security?;A. Held-to-maturity security B. Trading securities C.;Available-for-sale security D. Both B&C2;9. Which of the following assets of the Santos Co. would not;be classified as a current asset?;A. goodwill;B. property, plant and equipment;C. notes receivable due in 18 months;D. All of the above;10. You are asked to rank five assets in the order of;liquidity. These assets are accounts receivable;short-term investment in stocks, goodwill, machinery, and;inventory. Which asset is most liquid?;A. Goodwill B. inventory C. Accounts receivable D.;short-term investment in stocks;11. The following information is available for Criminy;Company: Accounts Receivable, 12/31/10 =;$83,000, Allowance for doubtful accounts at 12/31/10: $3,000;(credit balance). As a result of a review;and aging of accounts receivable, it has been estimated that;10% of the accounts receivable will never;be collected. There is no write-off of A/R. Grover is;getting ready to record its 12/31/10 adjusting;journal entries. By what amount should it debit "bad;debt expense"?;A. $3,000 B. $5,300 C. $8,300 D. $11,300;12. Which of the following is true?;A. When an account is written off, Allowance for Doubtful;Accounts is credited.;B. When an account is written off, bad debt expense is;credited.;C. When an account is written off, Allowance for Doubtful;Accounts is debited.;D. When an account is written off, Bad debt expense is;debited.;13. Which of the following entry is correct for estimating;bad debt expense under the allowance;method?;A. Debit bad debt expense, credit accounts receivable.;B. Debit bad debt expense, credit allowance for doubtful;accounts.;C. Debit Allowance for doubtful accounts, credit accounts;receivable.;D. Debit accounts receivable, credit allowance for doubtful;accounts.;14. Tom Grouper will need $360,000 four years from today;how much must he invest today, assuming;an earnings rate of 10%. Choose the closest answer.;A. $327,273 B. $527,076 C. $245,885 D. $693,0003;15. What is the present value of a 100,000 (face value) bond;issued at coupon rate 20%, due in 3 years;interest payable annually. Assume the effective market;interest rate is 12%.;A. 100,000 B. 71,178 C. 119,215 D. 48,037;16. What is the present value of a 200,000 (face value) bond;issued at coupon rate 10%, due in 3 years;interest payable semi-annually. Assume the effective market;interest rate is 12%.;A. 200,000 B. 140,992 C. 190,165 D. 49,173;17. The Showman Co. issued a bond with the following;characteristics: $60,000 principal, four-year;duration, 10% annual coupon rate., interest paid;semi-annually. The effective market rate at the time;of issue was 8% annually. What should be the market price of;this bond on the date of issue?;A. $49,656 B. 50,491 C. $60,000 D. $64,040 E. 56,769;18. Joseph will start school on 9/1/14. He is expected to;attend school for four years and will need to;pay tuition of $50,000 on September 1st of each year. His;uncle wants to make an investment on;9/1/10 that will provide sufficient funds for four years of;tuition. Assuming he can earn 5% annually;how much must invest on 9/1/10. Choose the closest answer;A. $27,282 B. $37,976 C. $104,167 D. $200,000 E. $153,1564;19. Quanto Co. is evaluating a contingent liability. For;which case below, may the company make no;disclosure;A. The likelihood of the liability is ?probable?;B. The liability is ?reasonably possible?;C. The liability is remote.;D. Both A & C;20. In preparing its bank reconciliation for the month of;April 2010, Johnson, Inc. has available the;following information.;Balance per bank statement, 4/30/10 $30,140;NSF check returned with April 2010 bank statement 450;Deposits in transit, 4/30/10 4,000;Outstanding checks, 4/30/10 5,200;Bank service charges for April 20;What should be the "true cash balance" at April;30, 2010? Hint: you can solve this problem without;knowing the balance per books.;A. $28,470 B. $31,340 C. $28,940 D.$30,870


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