ACCT 311 ACCT311 Quiz 1 (Chapter 13 - 16) (UMUC)

ACCT 311 ACCT311 Quiz 1 (Chapter 13 - 16) (UMUC)


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ACCT311 Quiz 1 (Chap 13 - 16) (UMUC)

The quiz cosists of 25 Questions:

1. On August 31, Demich 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

a) In August, 2012 a worker was injured in the factory in an accident partially the result of his own negligence. The worker has sued Crusher Co. for $800,000. Counsel believes it is reasonably possible that the outcome of the suit will be unfavorable and that the settlement would cost the company from $250,000 to $500,000.

b)A suit for breach of contract seeking damages of $2,400,000 was filed by an author against Parker Co. on October 4, 2012. Parker’s legal counsel believes that an unfavorable outcome is probable. A reasonable estimate of the award to the plaintiff is between $600,000 and $1,800,000. No amount within this range is a better estimate of potential damages than any other amount

c)Rose is involved in a pending court case. Rose’s lawyers believe it is probable that Rose will be awarded damages of $1,000,000


25. Bobich 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

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