ACCT 311 ACCT311 Quiz 1 Answers (UMUC)

ACCT 311 ACCT311 Quiz 1 Answers (UMUC)

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ACCT311 Quiz 1 (UMUC)

MULTIPLE CHOICE

  1. Which of the following is generally associated with payables classified as accounts payable
  2. On January 1, 2015, Hershey Co. leased a building to Mars Corp. for a ten-year term at an annual rental of $80,000. At inception of the lease, Hershey received $320,000 covering the first two years' rent of $160,000 and a security deposit of $160,000. This deposit will not be returned to Mars 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 $320,000 should be shown as a current and long-term liability, respectively, in Hershey’s December 31, 2015 balance sheet
  3. On September 1, 2014, Tavani Co. issued a note payable to National Bank in the amount of $1,200,000, bearing interest at 12%, and payable in three equal annual principal payments of $400,000. On this date, the bank's prime rate was 11%. The first payment for interest and principal was made on September 1, 2015. At December 31, 2014, Tavani should record accrued interest payable of
  4. Fusion Company’s salaried employees are paid biweekly. Occasionally, advances made to employees are paid back by payroll deductions. Information relating to salaries for the calendar year 2013 is as follows:
  5. Waters Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to unearned service contract revenues. This account had a balance of $480,000 at December 31, 2013 before year-end adjustment. Service contract costs are charged as incurred to the service contract expense account, which had a balance of $120,000 at December 31, 2013. Outstanding service contracts at December 31, 2013 expire as follows
  6. Sharon Trading Stamp Co. records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees. Sharon’s past experience indicates that only 80% of the stamps sold to licensees will be redeemed. Sharon’s liability for stamp redemptions was $7,500,000 at December 31, 2014. Additional information for 2015  is as follows:
  7. The present value of the principal is
  8. The present value of the interest is
  9. The issue price of the bonds is
  10. The term used for bonds that are unsecured as to principal is
  11. Acme, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from date of issue. If the bonds were issued at a premium, this indicates that
  12. The rate of interest actually earned by bondholders is called the
  13. The residual interest in a corporation belongs to the
  14. In a corporate form of business organization, legal capital is best defined as
  15. The cumulative feature of preferred stock
  16. The total stockholders' equity of Lyndon Corporation is
  17. The total paid-in capital (cash collected) related to the common stock is
  18. Walter Company has outstanding both common stock and nonparticipating, non-cumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaffected by
  19. Assume common stock is the only class of stock outstanding in the Bosch Corporation. Total stockholders' equity divided by the number of common stock shares outstanding is called
  20. In computations of weighted average of shares outstanding, when a stock dividend or stock split occurs, the additional shares are
  21. What effect will the acquisition of treasury stock have on stockholders' equity and earnings per share, respectively?
  22. Due to the importance of earnings per share information, it is required to be reported by all
  23. A convertible bond issue should be included in the diluted earnings per share computation as if the bonds had been converted into common stock, if the effect of its inclusion is
  24. Stockholders of a business enterprise are said to be the residual owners. The term residual owner means that shareholders
  25. Guzman Corp. had 600,000 shares of common stock outstanding on January 1, issued 900,000 shares on July 1, and had income applicable to common stock of $1,050,000 for the year ending December 31, 2012. Earnings per share of common stock for 2012 would be

PROBLEMS

On August 31, Able Co. partially refunded $180,000 of its outstanding 10% note payable made one year ago to Best Fededral Bank by paying $180,000 plus $18,000 interest, having obtained the $198,000 by using $52,400 cash and signing a new one-year $160,000 note discounted at 9% by the bank.

Below are three independent situations.

 

Essay Question: What accounting treatment is required for convertible debt? Why? What accounting treatment is required for debt issued with stock warrants? Why?

On July 1, 2013, Zillow Co. issued 1,000 of its 10%, $1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, 2013 and mature on April 1, 2023. Interest is payable semiannually on April 1 and October 1. What amount did Zillow receive from the bond issuance?

Peabody Corporation has issued 2,000 shares of common stock and 400 shares of preferred stock for a lump sum of $72,000 cash

Weighted average shares outstanding

General Malfunction, Inc. shipped 100 million coupons in products it sold in 2013. The coupons are redeemable for thirty cents each. General anticipates that 70% of the coupons will be redeemed. The coupons expire on December 31, 2014. There were 45 million coupons redeemed in 2013, and 30 million redeemed in 2014

What was General's coupon liability as of December 31, 2013

What was General's coupon promotion expense in 2013

What was General's coupon promotional expense in 2014

Determine the price of a $200,000 bond issue under each of the following independent assumptions:


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