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accounting mcq quiz

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Question;12. Stewart Company acquired Meyer Manufacturing on January 1, 2013 for $6,800,000 and recorded goodwill of $1,800,000 as a result of that purchase. At December 31, 2013, Meyer Manufacturing Division had a fair value of $4,600,000. The net identifiable assets of the Division, excluding goodwill, had a fair value of $3,200,000 at that time. What amount of loss on impairment of goodwill should Stewart record in 2013?____ $ -0-____ $2,200,000____ $1,400,000____ $400,00013. Lillian Properties leased a building to Hopping Industries for a ten year term at an annual rental of $250,000. The lease began January 1, 2013, at which time Lillian received $1,000,000 covering the first two years' rent of $500,000 and a security deposit of $500,000. The deposit will not be returned to Hopping upon expiration of the lease, but will be applied to payment of rent for the last two years of the lease. What portion of the $1,000,000 should be shown as current and long-term liabilities, respectively, in Lillian's December 31, 2013 balance sheet?(Answers shown with Current Liabilities listed first, Long-term Liabilities listed second.)____ $500,000 and $500,000____ $250,000 and $500,000____ $500,000 and $250,000____ -0- and $1,000,00015. On January 1, 2014, Huntington Corporation issued eight year bonds with a face value of $8,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are:What is the issue price of the bonds?____ $8,990,400____ $7,360,000____ $7,078,560____ $7,068,48016. On December 31, 2013, the 11% bonds payable of Goodly Corporation had a carrying amount of $2,040,000. The bonds, which had a face value of $2,000,000 were issued at a premium to yield 10%. Goodly uses the effective-interest method of amortization. Interest is paid on June 30 and December 31. On July 1, 2014, several years before their maturity, Goodly retired the bonds at 103. The interest payment on June 30, 2014 was made as scheduled. The loss on retirement, ignoring taxes, is____ $40,000____ $28,000____ $20,000____ $ -0-18. On January 1, 2013, Martin Corporation signed a ten-year noncancelable lease for machinery. The terms of the lease called for Martin to make annual payments of $250,000 at the end of each year for ten years with title to pass to Martin at the end of this period. The machinery has an estimated useful life of 20 years and no salvage value. Martin uses the straight-line method of depreciation for all of its fixed assets. Martin accounted for this lease transaction as a capital lease. The lease payments were determined to have a present value of $1,840,023 at an effective interest rate of 6%. With respect to this capitalized lease, Martin should record for 2013:____ Depreciation expense of $184,002 and interest expense of $150,000.____ Depreciation expense of $92,001 and interest expense of $110,401.____ Depreciation expense of 184,002 and interest expense of $110,401.____ Lease expense of $250,000.19. On December 31, 2014, Pacific Rail Corporation leased a train car from Southern Transportation Company for a ten year period expiring December 30, 2024. Equal annual payments of $160,000 are due on December 31 of each year, beginning with December 31, 2014. The lease is properly classified as a capital lease on Pacific Rail's books. The present value at December 31, 2014 of the ten lease payments over the lease term discounted at 8% is $1,159,502. Assuming the first payment is made on time, the amount that should be reported by Pacific Rail Corporation as the lease liability on its December 31, 2014 balance sheet is____ $1,440,000____ $1,159,502____ $1,066,742____ $999,50220. Colfax Corporation enters into an agreement with Reynolds Rentals on January 1, 2014 for the purpose of leasing a machine to be used in its manufacturing operations. The term of the noncancelable lease is 4 years with no renewal option. Payments of $200,000 are due on December 31 of each year. The fair value of the machine on January 1, 2014, is $700,000. The machine has a remaining economic life of 10 years, with no salvage value. The machine reverts to the lessor upon termination of the lease. Colfax Corporation's incremental borrowing rate is 8% per year. Colfax does not have knowledge of the 6% implicit rate used by Reynolds. The factor for the present value of an ordinary annuity of 1, for 4 periods at 8% is 3.31213. The factor for the present value of an ordinary annuity of 1, for 4 periods at 6% is 3.46511. What type of lease is this from Colfax Corporation's point of view?____ Capital lease____ Operating lease____ Sales-type lease____ Direct-financing lease21. Roberts Corporation has 150,000 shares of $10 par common stock authorized. The following transactions took place during 2013, the first year of the corporation's existence:Sold 20,000 shares of common stock for $14 per shareIssued 20,000 shares of common stock in exchange for legal services valued at $300,000At the end of Roberts' first year, total paid-in capital amounted to____ $580,000____ $300,000____ $280,000____ $150,00022. On June 15, Handel Corporation reacquired 10,000 shares of its $10 par value common stock for $22 per share. Handel uses the cost method to account for treasury stock. The journal entry to record the reacquisition of the stock should debit____ Treasury Stock for $100,000____ Treasury Stock for $220,000____ Common Stock for $100,000____ Common Stock for $100,000 and Paid-in Capital in Excess of Par for $120,00023. The fair value of Willow Company's common stock was $57 per share at December 31, 2013 and $63 per share at December 31, 2014. Willow acquired 7,000 shares of its own common stock at $60 per share on March 10, 2014, and sold 5,000 of these shares at $65 per share on September 25, 2014. Willow Company uses the cost method to account for treasury stock. The journal entry to record the sale of the treasury stock should credit____ Treasury Stock for $300,000 and Retained Earnings for $25,000____ Treasury Stock for $285,000 and Retained Earnings for $40,000____ Treasury Stock for $300,000 and Paid-in Capital from Treasury Stock for $25,000____ Treasury Stock for $325,00025. Farnsworth Inc. declared a $500,000 cash dividend. It currently has 10,000 shares of 8%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Farnsworth distribute to the common stockholders?____ $420,000____ $500,000____ $160,000____ $340,00026. Weston Corporation owned 80,000 shares of Brandt Corporation, purchased in 2008 for $320,000. On December 20, 2013, Weston declared a property dividend of all of its Brandt Corporation shares on the basis of one share of Brandt for every 10 shares of Weston common stock held by its shareholders. The property dividend was distributed on January 10, 2014. On the declaration date, the aggregate market price of the Brandt Corporation shares held by Weston was $610,000. The entry to record the declaration of the dividend would include a debit to Retained Earnings (property dividends declared) of____ $320,000____ $610,000____ $290,000____ $ -0-27. Harping Corporation declared an $800,000 dividend, $200,000 of which was liquidating. How would this distribution affect Retained Earnings and Additional Paid-in Capital, respectively?(Answer is shown with Retained Earning listed first, Additional Paid-in Capital listed second.)____ No effect, $800,000 Decrease____ $800,000 Decrease, No effect____ $600,000 Decrease, $200,000 Decrease____ No effect, No effect28. After several profitable years, Pear Corporation's stock price had increased by 10-fold. Management prefers the stock price to be within range of the majority of potential investors, and on June 30, 2013, split its stock 2-for-1. Prior to the split, Pear's stockholders' equity section showed: Common Stock, 2,000 shares at $100 par. After the split, Pear's stockholders' equity section showed:____ Common stock, 4,000 shares at $50 par____ Common stock, 2,000 shares at $200 par____ Common stock, 1,000 shares at $200 par____ Common stock, 4,000 shares at $100 par\34. Jolly?s Corner Market made credit sales during the month of October of $225,000. The sales are subject to a 6% sales tax that was also collected. Which of the following would be included in the summary journal entry to reflect the sale transactions?____ Debit Accounts Receivable for $238,500____ Credit Sales Taxes Payable for $12,736____ Credit Sales Revenue for $212,264____ Debit Sales Taxes Payable for $13,50040. Monroe Company owes $1 million that is due on January 15. The company borrows $600,000 on January 8 (5-year note) and uses the proceeds to pay down the $1 million note and uses other cash to pay the balance. How much of the $1 million note is classified as long-term in the December 31 financial statements.____ $1,000,000____ $0____ $600,000____ $400,000

 

Paper#41261 | Written in 18-Jul-2015

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