Details of this Paper

ACC610 multiple choice




Question;1.;Auerbach Inc. issued 10% bonds on;October 1, 2013. The bonds have a maturity date of September 30, 2023 and a;face value of $600 million. The bonds pay interest each March 31 and;September 30, beginning March 31, 2014. The effective interest rate;established by the market was 12%.;Assuming that Auerbach issued the;bonds for $531,180,000, what would the company report for its net bond;liability balance at December 31, 2013, rounded to the nearest thousand? (Do;not round your intermediate calculation.);$532,115,000;$516,180,000;$546,180,000;$599,000,000;2.;On June 30, 2013, Hardy Corporation;issued $9.0 million of its 12% bonds for $8.2 million. The bonds were priced;to yield 14%. The bonds are dated June 30, 2013, and mature on June 30, 2020.;Interest is payable semiannually on December 31 and July 1. If the effective;interest method is used, by how much should the bond discount be reduced for;the six months ended December 31, 2013?;$23,000;$34,000;$32,500;$40,500;3.;On January 1, 2013, Zebra Corporation;issued 1,800 of its 11%, $1,000 bonds at 97.7. Interest is payable;semiannually on January 1 and July 1. The bonds mature on January 1, 2023.;Zebra paid $52,000 in bond issue costs. Zebra uses the straight-line amortization;method. What is the bond carrying value reported in the December 31, 2013;balance sheet?;$1,762,740.;$1,782,740.;$3,292,000.;$3,240,000.;4.;On January 1, 2013, an investor paid;$298,000 for bonds with a face amount of $318,000. The contract rate of interest;is 11% while the current market rate of interest is 14%. Using the effective;interest method, how much interest income is recognized by the investor in;2014 (assume annual interest payments and amortization)? (Round your answer;to the nearest dollar amount.);$32,780.;$38,804.;$42,664.;$41,720.;5.;On April 1, 2013, Austere Corporation;issued $350,000 of 13% bonds at 107. Each $1,000 bond was sold with 50;detachable stock warrants, each permitting the investor to purchase one share;of common stock for $16. On that date, the market value of the common stock;was $12 per share and the market value of each warrant was $4. Austere should;record what amount of the proceeds from the bond issue as an increase in;liabilities?;rev;04_15_2013_QC_29302;$229,000;$0;$429,800;$304,500;6.;Nickel Inc. bought $500,000 of;3-year, 8% bonds as an investment on December 31, 2012 for $540,000. Nickel;uses straight-line amortization. On May 1, 2013, $100,000 of the bonds were;redeemed at 116. How much, and what type of gain or loss, most likely results;from this redemption? (Do not round your intermediate calculation.);rev: 11_28_2012;$8,889 ordinary loss.;$8,889 ordinary gain.;$8,889 extraordinary gain.;$8,889 extraordinary loss.;7.;On March 1, 2013, E Corp. issued;$1,000,000 of 9% nonconvertible bonds at 101, due on February 28, 2023. Each;$1,000 bond was issued with 25 detachable stock warrants, each of which;entitled the holder to purchase, for $80, one share of Evan's $20 par common;stock. On March 1, 2013, the market price of each warrant was $6. By what;amount should the bond issue proceeds increase shareholders' equity?;$0.;$150,000.;$166,000.;$10,000.;8.;On January 1, 2008, F Corp. issued;2,500 of its 9%, $1,000 bonds for $2,596,000. These bonds were to mature on;January 1, 2018, but were callable at 101 any time after December 31, 2011.;Interest was payable semiannually on July 1 and January 1. On July 1, 2013, F;called all of the bonds and retired them. The bond premium was amortized on a;straight-line basis. Before income taxes, F's gain or loss in 2013 on this;early extinguishment of debt was;$25,000 loss.;$73,000 gain.;$18,200 gain.;$27,800 gain.;9.;During 2013 Marquis Company was;encountering financial difficulties and seemed likely to default on a $320,000;9%, four-year note dated January 1, 2011, payable to Third Bank. Interest was;last paid on December 31, 2012. On December 31, 2013, Third Bank accepted;$260,000 in settlement of the note. Ignoring income taxes, what amount should;Marquis report as a gain from the debt restructuring in its 2013 income;statement?;$31,200.;$88,800.;$0.;$60,000.;10.;What;is the effective interest rate (rounded) on a 3-month, non interest-bearing;note with a stated rate of 12.7% and a maturity value of $208,000?;13.1%;3.18%;12.2%;12.7 %;11.;On June 1, 2013, Dirty Harry Co.;borrowed cash by issuing a 6-month noninterest-bearing note with a maturity;value of $480,000 and a discount rate of 9%. Assuming straight-line;amortization of the discount, what is the carrying value of the note as of;September 30, 2013? (Round all calculations to the nearest whole dollar;amount.);$472,800.;$444,000.;$458,400.;$516,000.;12.;On January 1, 2013, G Corporation;agreed to grant all its employees two weeks paid vacation each year, with the;stipulation that vacations earned each year can be taken the following year.;For the year ended December 31, 2013, G's employees each earned an average of;$770 per week. A total of 590 vacation weeks earned in 2013 were not;taken during 2013. Wage rates for employees rose by an average of 8 percent;by the time vacations actually were taken in 2014. What is the amount of G's;2014 wages expense related to 2013 vacation time?;$36,344;$0;$454,300;$490,644;13.;Peterson;Photoshop sold $1,400 in gift cards on a special promotion on October 15;2013, and sold $2,100 in gift cards on another special promotion on November;15, 2013. Of the cards sold in October, $140 were redeemed in October, $350;in November, and $420 in December. Of the cards sold in November, $210 were;redeemed in November and $490 were redeemed in December. Peterson views the;probability of redemption of a gift card as remote if the card has not been;redeemed within two months. At 12/31/2013, Peterson would show an unearned;revenue account for the gift cards with a balance of;$0;$2,100;$1,400;$1,890;14.;Clark's Chemical Company received;customer deposits on returnable containers in the amount of $101,000 during;2013. Eleven percent of the containers were not returned. The deposits are;based on the container cost marked up 15%. What is cost of goods sold;relative to this forfeiture? (Round your final answer to the nearest whole;dollar amount.);$9,661.;$74,067.;$1,449.;$0.;15.;Slotnick Chemical received customer;deposits on returnable containers in the amount of $230,000 during 2013.;Fifteen percent of the containers were not returned. The deposits are based;on the container cost marked up 15%. How much profit did Slotnick realize on;the forfeited deposits? (Round your final answer to the nearest whole dollar;amount.);$4,500.;$34,500.;$0.;$5,175.;16.;Funzy Cereal includes one coupon in;each package of Wheatos that it sells and offers a toy car in exchange for;$2.00 and 4 coupons. The cars cost Funzy $2.50 each. Experience indicates;that 30% of the coupons eventually will be redeemed. During the last month of;2013, the first month of the offer, Funzy sold 10.50 million boxes of Wheatos;and 2.50 million of the coupons were redeemed. What amount should Funzy;report as a promotional expense for coupons on its December 31, 2013, income;statement?;$1,575,000.;$ 0.;$393,750.;$196,875.;17.;Captain Cook Cereal includes one;coupon in each package of Granola that it sells and offers a puzzle in exchange;for $2.70 and 2 coupons. The puzzles cost Captain Cook $3.30 each. Experience;indicates that 25% of the coupons eventually will be redeemed. During the;last month of 2013, the first month of the offer, Captain Cook sold 7.30;million boxes of Granola and 710,000 of the coupons were redeemed. What;amount should Captain Cook report as a liability for coupons on its December;31, 2013, balance sheet? (Round your answer to the nearest whole dollar;amount.);$669,000.;$ 0.;$334,500.;$1,839,750.;18.;Barbara;Muller Services (BMS) pays its employees monthly. The payroll information;listed below is for January 2013, the first month of BMS's fiscal year.;Assume none of the employees' earnings reached $7,000 during the month.;Salaries;$108,000;Federal;income taxes to be withheld;36,000;Federal;unemployment tax rate;.80%;State;unemployment tax rate (after FUTA deduction);5.40%;Social;security tax rate;6.2%;Medicare;tax rate;1.45%;The;journal entry to record payroll for the January 2013 pay period will include;a debit to payroll tax expense of;$14,958;$63,738;$6,696;$8,262;19.;On January 1, 2013, Gibson;Corporation entered into a four-year operating lease. The payments were as;follows: $24,000 for 2013, $20,000 for 2014, $17,000 for 2015, and $14,000;for 2016. What is the correct amount of lease expense for 2014?;$24,000.;$20,000.;$18,750.;$22,000.;20.;On January 1, 2013, Wellburn;Corporation leased an asset from Tabitha Company. The asset originally cost Tabitha;$340,000. The lease agreement is an operating lease that calls for four;annual payments beginning on January 1, 2013, in the amount of $43,000. The;other three remaining payments will be made on January 1 of each subsequent;year. Which of the following journal entries should Tabitha record on January;1, 2013?;Cash;43,000;Lease receivable;43,000;Cash;43,000;Unearned rent revenue;43,000;Cash;43,000;Rent revenue;43,000;Cash;43,000;Rent expense;43,000;21.;Refer to the following lease;amortization schedule. The 10 payments are made annually starting with the;inception of the lease. Title does not transfer to the lessee and there is no;bargain purchase option or guaranteed residual value. The asset has an;expected economic life of 12 years. The lease is noncancelable.;Payment;Cash;Payment;Effective;Interest;Decrease;in balance;Balance;101,456;1;14,000;14,000;87,456;2;14,000;6,997;7,003;80,453;3;14,000;6,436;7,564;72,889;4;14,000;5,831;8,169;64,720;5;14,000;5,178;8,822;55,898;6;14,000;4,472;9,528;46,370;7;14,000;3,710;10,290;36,079;8;14,000;2,886;11,114;24,966;9;14,000;?;?;?;10;14,000;?;?;?;What;would the lessee record as annual depreciation on the asset using the;straight-line method? (Round your answer to the nearest dollar.);$14,000.;$10,146.;$10,210.;$8,746.;22.;Refer to the following lease;amortization schedule. The 10 payments are made annually starting with the;inception of the lease. Title does not transfer to the lessee and there is no;bargain purchase option or guaranteed residual value. The asset has an;expected economic life of 12 years. The lease is noncancelable.;Payment;Cash;Payment;Effective;Interest;Decrease;in balance;Balance;63,282;1;10,000;10,000;53,282;2;10,000;6,394;3,606;49,676;3;10,000;5,961;4,039;45,638;4;10,000;5,477;4,523;41,114;5;10,000;4,934;5,066;36,048;6;10,000;4,326;5,674;30,373;7;10,000;3,645;6,355;24,018;8;10,000;2,882;7,118;16,901;9;10,000;?;?;?;10;10,000;?;?;?;What;is the total effective interest paid over the term of the lease?;$36,718.;$63,282.;$100,000.;$53,282.;23.;On January 1, 2013, Calloway Company;leased a machine to Zone Corporation. The lease qualifies as a direct;financing lease. Calloway paid $230,000 for the machine and is leasing it to;Zone for $31,000 per year, an amount that will return 9% to Calloway. The;present value of the minimum lease payments is $230,000. The lease payments;are due each January 1, beginning in 2013. What is the appropriate interest;entry on December 31, 2013?;Interest receivable;17,910;Interest revenue;17,910;Cash;17,910;Interest receivable;17,910;Interest receivable;20,700;Interest revenue;20,700;Cash;20,700;Interest revenue;20,700;24.;ABC Company leased equipment to Best;Corporation under a lease agreement that qualifies as a direct financing;lease. The cost of the asset is $124,000. The lease contains a bargain;purchase option that is effective at the end of the fifth year. The expected;economic life of the asset is 10 years. The lease term is five years. The asset;is expected to have a residual value of $2,600 at the end of 10 years. Using;the straight-line method, what would Best record as annual depreciation?;$24,280.;$12,400.;$12,660.;$12,140.;25.;N Corp. entered into a nine-year;capital lease on a warehouse on December 31, 2013. Lease payments of $29,000;which includes real estate taxes of $1,400, are due annually, beginning on;December 31, 2014, and every December 31 thereafter. N Corp. does not know;the interest rate implicit in the lease, N's incremental borrowing rate is;10%. The rounded present value of an ordinary annuity for nine years at 10%;is 6. What amount should N report as capitalized lease liability at December;31, 2013?;$165,600.;$174,000.;$248,400.;$261,000.;26.;On;December 31, 2013, B Corp. sold a machine to Royal and simultaneously leased;it back for one year. Pertinent information at this date follows;Sales;price;$729,000;Carrying;amount;666,000;Present;value of lease rentals;72,700;($6,300;for 12 months at 12%);Estimated;remaining useful life;12 years;In B's;December 31, 2013, balance sheet, the deferred revenue from the sale of this;machine should be;$0.;$72,700.;$663,000.;$9,700.;27.;Warren Co. recorded a right-of-use;asset of $860,000 in a 10-year lease under which no profit was recorded at;commencement by the lessor. The interest rate charged the lessee was 10%.;Under the new ASU, the balance in the right-of-use asset after 2 years will;be;$1,040,600.;$688,000.;$696,600.;$946,000.;28.;Red;Co. recorded a residual asset of $115,000 in a 10-year lease under which no;profit was recorded at commencement by the lessor. The interest rate charged;the lessee was 10%. Under the new ASU, the balance in the residual asset;after 2 years will be;$80,000.;$103,500.;$139,150.;$126,500.


Paper#39209 | Written in 18-Jul-2015

Price : $27