Description of this paper

acct-221 e

Description

solution


Question

Please answer all multiple choice questions and problems.;1. The following data are available for Two-off Company.;Increase in accounts payable;$120,000;Increase in bonds payable;250,000;Sale of investments;150,000;Issuance of common stock;160,000;Payment of cash dividends;80,000;Net cash provided by financing activities is;a. $180,000.;b. $360,000.;c. $320,000.;d. $330,000;2. If a company reports a net loss, it;a. will not be able to pay cash dividends.;b. may still have a net increase in cash.;c. will not be able to get a loan.;d. will not be able to make capital expenditures.;3. A creditor would be most interested in evaluating which of the following ratios?;a. Asset turnover;b. Earnings per share;c. Payout ratio;d. Current asset ratio;4. In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in;a. the financing section.;b a separate schedule or note to the financial statements.;c. the stockholders' equity section.;d. the "extraordinary" section.;5. The current carrying value of Lane?s $800,000 face value bonds is $797,000. If the bonds are retired at 103, what would be the amount Lane would pay its bondholders?;a. $797,000;b. $800,000;c. $820,910;d. $824,000;6. Which one of the following affects cash during a period?;a. Recording depreciation expense;b. Payment of an accounts payable;c. Declaration of a cash dividend;d. Write-off of an uncollectible account receivable;7. Horizontal analysis evaluates a series of financial statement data over a period of time;a. that has been arranged from the highest number to the lowest number.;b. that has been arranged from the lowest number to the highest number.;c. to determine which items are in error.;d. to determine the amount and/or percentage increase or decrease that has taken place.;8. The net income reported on the income statement for the current year was $220,000. Depreciation recorded on plant assets was $35,000. Accounts receivable and inventories increased by $2,000 and $8,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $12,000 respectively. How much cash was provided by operating activities?;a. $200,000;b. $220,000;c. $235,000;d.$255,000;9. Which one of the following is not a characteristic generally evaluated in analyzing financial statements?;a. Liquidity;b. Profitability;c. Marketability;d. Solvency;10. A major disadvantage resulting from the use of bonds is that;a. earnings per share may be lowered.;b. bondholders have voting rights.;c. taxes may increase.;d. interest must be paid on a periodic basis.;11. If sixty $1,000 convertible bonds with a carrying value of $70,000 are converted into 9,000 shares of $5 par value common stock, the journal entry to record the conversion is;a. Bonds Payable...................................................................... 70,000;Common Stock........................................................... 70,000;b. Bonds Payable...................................................................... 60,000;Premium on Bonds Payable................................................. 10,000;Common Stock........................................................... 70,000;c. Bonds Payable...................................................................... 60,000;Premium on Bonds Payable................................................. 10,000;Common Stock........................................................... 45,000;Paid-in Capital in Excess of Par.................................. 25,000;d. Bonds Payable...................................................................... 70,000;Discount on Bonds Payable........................................ 10,000;Common Stock........................................................... 45,000;Paid-in Capital in Excess of Par.................................. 15,000;12. When bonds are converted into common stock;a. the market price of the stock on the date of conversion is credited to the Common Stock account.;b. the market price of the stock and the bonds is ignored when recording the conversion.;c. the market price of the bonds on the date of conversion is credited to the Common Stock account.;d. gains or losses on the conversion are recognized.;13. If a stockholder receives a dividend that reduces retained earnings by the fair market value of the stock, the stockholder has received a;a. large stock dividend.;b. cash dividend.;c. contingent dividend.;d. small stock dividend;14. If bonds are originally sold at a discount using the straight-line amortization method;a. Interest expense in the earlier years of the bond?s life will be less than the interest to be paid.;b. Interest expense in the earlier years of the bond?s life will be the same as interest to be paid.;c. Unamortized discount is subtracted from the face value of the bond to determine its carrying value.;d. Unamortized discount is added to the face value of the bond to determine its carrying value.;15. Each of the following is added to net income in computing net cash provided by operating activities except;a. amortization expense.;b. an increase in accrued expenses payable.;c. a gain on sale of equipment.;d. a decrease in inventory.;16 All of the following statements about short-term investments are true except;a. Short-term investments are also called marketable securities;b. Trading securities are always classified as short-term investments.;c Short-term assets must be readily marketable.;d. Short-term investments are listed below accounts receivable in the current asset section of the balance sheet.;17. If bonds with a face value of $150,000 are converted into common stock when the carrying value of the bonds is $135,000, the entry to record the conversion will include a debit to;a. Bonds Payable for $150,000.;b. Bonds Payable for $135,000.;c. Discount on Bonds Payable for $15,000.;d. Bonds Payable equal to the market price of the bonds on the date of conversion.;18. Penny Company owns 20% interest in the stock of Lynn Corporation. During the year, Lynn pays $25,000 in dividends, and reports $200,000 in net income. Penny Company?s investment in Lynn will increase by;a. $25,000.;b. $40,000.;c. $45,000.;d. $35,000.;19. Which of the following transactions does not affect cash during a period?;a. Write-off of an uncollectible account;b. Collection of an accounts receivable;c. Sale of treasury stock;d. Exercise of the call option on bonds payable;20. If the cost of an available-for-sale security exceeds its fair value by $40,000, the entry to recognize the loss;a. is not required since the share prices will likely rebound in the long run.;b. will show a debit to an unrealized loss account that is deducted in the stockholders' equity section of the balance sheet.;c. will show a debit to an expense account.;d. will show a credit to a contra-asset account that appears in the stockholders' equity section of the balance sheet.;PROBLEM 1;James (investor) Corporation acquires 45% of the common shares of Heck (investee) Company for $200,000 on January 1, 2010. For 2010, Heck reports net income of $70,000 and paid dividends of $20,000.;Instructions;(a) Prepare the entries for these transactions that James Corporation would make in the space provided below.;Compute the balance in the stock investment account of James Corporation;(a);Date;Account;Debit;Credit

 

Paper#81769 | Written in 18-Jul-2015

Price : $37
SiteLock