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Accounting exam questions




Question;During;2007, Taub Company issued at 104 three hundred, $1,000 bonds due in ten years.;One detachable stock warrant entitling the holder to purchase 15 shares of Taub;s common stock was attached to each bond. At the date of issuance, the market;value of the bonds, without the stock warrants, was quoted at 96. The market;value of each detachable warrant was quoted at $40. What amount, if any, of the;proceeds from the issuance should be accounted for as part of Taub s;stockholders' equity?;On;May 1, 2007, Logan Co. issued $300,000 of 7% bonds at 103, which are due on;April 30, 2017. Twenty detachable stock warrants entitling the holder to;purchase for $40 one share of Logan s common stock, $15 par value, were;attached to each $1,000 bond. The bonds without the warrants would sell at 96.;On May 1, 2007, the fair value of Logan s common stock was $35 per share and of;the warrants was $2. On May 1, 2007, Logan should record the bonds with a;The;data below were taken from the accounting records of Fosel Inc. for 2006:Net;income - $150,000,Income tax expense - 55,000,Interest expense -;35,000,Preferred stock dividends - 30,000,Common stock dividends -;45,000,Beginning shares of common stock- 54,000 shares,Shares of common stock;issued February 28- 12,000 shares,Shares of treasury stock purchased July 1-;6,000 shares.Assuming that Fosel Inc. had split its stock 2 for 1 on June 1;compute the weighted-average number of shares outstanding at December 31, 2006.;On;January 2, 2007, Ramos Co. issued at par $10,000 of 6% bonds convertible in;total into 1,000 shares of Ramos's common stock. No bonds were converted during;2007. Throughout 2007, Ramos had 1,000 shares of common stock outstanding.;Ramos's 2007 net income was $3,000, and its income tax rate is 30%. No;potentially dilutive securities other than the convertible bonds were;outstanding during 2007. Ramos's diluted earnings per share for 2007 would be;(rounded to the nearest penny);Ross;Co. purchased $300,000 of bonds for $315,000. If Ross intends to hold the;securities to maturity, the entry to record the investment includes;A;company invests in the common stock of XYZ Inc. with the intent to sell the;stock within a couple of months. The company should classify the investment as;17-Which;of the following is not a held-to-maturity security?;a-Investment;in bonds that the company intends to hold until the maturity date;b-Investment;in debt securities acquired exclusively as a fixed-income investment, which the;company intends to keep until the end of the bond term;c-Investment;in preferred stock that the company intends to hold for 20 years;d-Investment;in bonds purchased four years after issue that the company intends to hold;until the due date;18-Held-to-maturity;securities are reported at;acquisition;cost.;acquisition;cost plus amortization of a discount.;acquisition;cost plus amortization of a premium.;fair;value.;On;August 1, 2007, Bettis Company acquired $200,000 face value 10% bonds of Hanson;Corporation at 104 plus accrued interest. The bonds were dated May 1, 2007, and;mature on April 30, 2012, with interest payable each October 31 and April 30.;The bonds will be held to maturity. What entry should Bettis make to record the;purchase of the bonds on August 1, 2007?;On;August 1, 2007, Witten Co. acquired 200, $1,000, 9% bonds at 97 plus accrued;interest. The bonds were dated May 1, 2007, and mature on April 30, 2013, with;interest paid each October 31 and April 30. The bonds will be added to Witten s;available-for-sale portfolio. The preferred entry to record the purchase of the;bonds on August 1, 2007 is;Miley;Inc. began work in 2007 on a contract for $8,400,000. Other data are as;follows: For 2007: Costs incurred to date: $3,600,000, Estimated costs to;complete: $2,400,000, Billings to date: $2,800,000, Collections to date;$2,000,000. For 2008: Costs to date: $5,600,000, Estimated costs to complete;$0, Billings to date: $8,400,000, Collections to date: $7,200,000. If Miley;uses the completed-contract method, the gross profit to be recognized in 2008;is;Stone;Co. owns 4,000 of the 10,000 outstanding shares of Maye Corp. common stock.;During 2007, Maye earns $120,000 and pays cash dividends of $40,000. Stone;should report investment revenue for 2007 of


Paper#43397 | Written in 18-Jul-2015

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