Carly Corporation issued $300,000 of 30-year

Offered Price: $ 18.00 Posted on: 01/31/2017 11:59 PM Due on: 02/01/2017
Question # 00474190 Subject Accounting Topic Accounting Tutorials: 1
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Question 1
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1 Carly Corporation issued $300,000 of 30-year, 8% bonds at 106 on January 1, 2016. Interest is
payable semiannually on June 30th and December 31st. The straight-line method of amortization
is to be used. After 11 interest payments have been made, what is the carrying value of the
bonds?
Select one:
a. $306,600
b. $311,400
c. $303,300
d. $314,700
e. $315,800 Question 2
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During 2015, Gum Co. introduced a new product carrying a two-year warranty against defects.
Gum Co. uses the expense warranty approach. The estimated warranty costs related to dollar
sales are 6%. Sales and actual warranty expenditures for the years ended December 31, 2015 and
2016 are as follows: What amount should Gum report as warranty expense on its 2015 income statement?
Select one:
a. $7,500
b. $1,500
c. $9,000
d. $14,250
e. $6,750 Question 3
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Mary Kay Company purchases an oil tanker depot on January 1, 2017. Purchase price was
$600,000. After a useful life of 10 years, Mary Kay must fully dismantle the depot, removing all
tanks. Cost estimate is $50,000. Present Value is $28,000 (at 6%). Straight-line depreciation is
used. Assume no salvage value.
For 2017, Depreciation Expense and Interest Expense, respectively, are:
Select one:
a. $60,000, $5,000
b. $60,000, $3,000
c. $60,000, $1,680
d. $62,800, $3,000
e. $62,800, $1,680 Question 4
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On November 1, 2008, Mason Corp. sold $800,000 of its ten-year, 8% term bonds dated
September 1, 2008. The bonds were sold to yield 10%, with total proceeds of $700,000 plus
accrued interest. Interest is paid every March 1 and September 1.
What amount should Mason report for interest payable in its December 31, 2008 balance sheet?
Select one:
a. $17,500
b. $16,000
c. $11,667
d. $10,667
e. $21,333 Question 5
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For the issuer of a ten-year bond, the carrying value using the effective interest method would
increase each year if the bond were sold at:
Select one:
a. A discount or a premium
b. A discount, but not a premium
c. A premium, but not a discount
d. Neither a discount nor a premium Question 6
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How would the amortization of Premium on Bonds Payable affect the Carrying Value of the
Bond and Net Income, respectively?
Select one:
a. Increase, Decrease
b. Increase, Increase
c. Decrease, Decrease
d. Decrease, Increase
e. No Effect, Increase Question 7
Question text
What must be true for short-term debt to be shown as long-term debt?
Select one:
a. The ability to refinance, but not the intent.
b. The intent to refinance, but not the ability.
c. Both the ability to refinance and the intent.
d. Neither the ability to refinance nor the intent. Question 8
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Kaselitz Corp. issued a $100,000, 9%, 5-year bond on 1/1/16. Interest is paid each June 30 and
December 31. The bond sold for $104,055 to yield 8%. The effective interest method is used.
Cash interest paid to the bondholders on 6/30/17 is:
Select one:
a. $4,500
b. $4,000
c. $4,162
d. $9,000
e. $8.000 Question 9
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THE DATA FOR THIS QUESTION ARE THE SAME DATA AS THE PREVIOUS QUESTION
Kaselitz Corp. issued a $100,000, 9%, 5-year bond on 1/1/16. Interest is paid each June 30 and
December 31. The bond sold for $104,055 to yield 8%. The effective interest method is used.
The Unamortized Premium on Bonds Payable at 12/31/16 is
Select one:
a. $3,366
b. $3,244
c. $3,717
d. $3,379
e. $3,244 Question 10
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The Winkel Company had Retained Earnings of $10,000 on 1/1/15. The only paid-in capital
account existing was due to Common Stock issued. The company properly recorded these
transactions in 2015:
1. 10% Stock dividend (Total Market Value of dividend $1,500, Par Value $1,000)
2. Purchase of Treasury Stock for $4,000 above Par
3. Net Income $3,800
Winkel 12/31/15 Retained Earnings is:
Select one:
a. $12,800
b. $12,300
c. $13,800
d. $16,300
e. $9,800 Question 11
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Which of the following is a characteristic of the sales warranty approach, but not the expense
warranty approach?
Select one:
a. Estimated liability under warranties
b. Warranty expense
c. Prepaid Warranty Expense
d. Warranty revenue Question 12
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Which accounts are closed at the end of an accounting period?
Select one:
a. Both Premium on Bonds Payable and Treasury Stock
b. Premium on Bonds Payable, but not Treasury Stock
c. Treasury Stock, but not Premium on Bonds Payable
d. Neither Premium on Bonds Payable nor Treasury Stock Question 13
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Landon Corporation issued 2,000 shares of $5 par value common stock and 400 shares of $40
par value preferred stock for a lump sum of $72,000 cash. What is the total credit to Additional
Paid-in-Capital accounts when the market value of the common shares is $30 each and market
value of the preferred shares is $50 each? (Round to nearest dollar)
Select one:
a. $44,000
b. $46,000
c. $54,000
d. $26,000
e. $18,000 Question 14
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The Leverenz Company issued 10,000 shares of $10 par common stock. Sale price was $25 per
share. Leverenz then:
1. Purchased 2,000 shares at $35 per share.
2. Resold 800 of the shares at $38 per share.
3. Resold 500 of the shares at $30 per share.
No other stock transactions occurred. Retained Earnings was $20,000 prior to these transactions.
What is the combined effect of Transactions #1 through #3 on Net Income and Total
Stockholders' Equity, respectively?
Select one:
a. $0, $0
b. $0, $24,600 decrease
c. $100 decrease, $24,600 decrease
d. $100 increase, $45,400 increase
e. $100 increase, $24,500 decrease Question 15
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Treasury stock was acquired for cash at more than its par value, and then subsequently sold for
an amount more than the acquisition price. There were no other Treasury Stock transactions in
the history of the company. Assuming that the cost method of accounting for treasury stock
transactions is used, what is the effect of the Purchase of Treasury Stock and the Sale of Treasury
Stock, respectively, on Retained Earnings?
Select one:
a. No Effect, No Effect
b. No Effect, Increase
c. Decrease, Increase
d. Decrease, No Effect
e. No Effect, Decrease Question 16
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Piano Corporation has a current ratio of 2:1. Piano declares a cash dividend. How will the journal
entry to record the declaration affect the Current Ratio and Stockholders' Equity, respectively?
Select one:
a. Increase, No Effect
b. Decrease, No Effect
c. Increase, Increase
d. No Effect, Decrease
e. Decrease, Decrease Question 17
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Which of the following dividend types does not reduce total stockholders' equity?
Select one:
a. Cash dividends
b. Stock dividends
c. Property dividends
d. Liquidating dividends Question 18
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How does the declaration of a cash dividend that is ENTIRELY liquidating affect Retained
Earnings and Current Liabilities, respectively?
Select one:
a. No effect, No effect
b. Increase, Decrease
c. Decrease, Increase
d. Decrease, No effect e. No effect, Increase Question 19
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The Borio Company had an asset with an $8 book value and a $7 market value; it decided to
distribute the asset as a property dividend. Journal entries were made to adjust the property to
market value and declare the dividend. Indicate the combined effect on the Net Income and
Retained Earnings, respectively:
Select one:
a. Decrease, Decrease
b. No Effect, Decrease
c. No Effect, Increase
d. Decrease, Increase
e. Increase, Decrease Question 20
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Puppy Company includes one coupon in each bag of dog food it sells. In return for 3 coupons,
customers receive a toy dog that the company purchases for $1.20 each. Puppy Company's
experience indicates that 50% of the coupons will be redeemed. Information for 2012 is as
follows:
The amount of estimated liability for premiums on the 12/31/12 balance sheet is:
Select one:
a. $6,000
b. $8,000
c. $18,000
d. $35,000
e. $48,000 Question 21
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Lott Co. has outstanding 20,000 shares of 8% preferred stock with a $10 par value and 100,000
shares of $3 par value common stock. Dividends have been paid every year except last year and
the current year. If the preferred stock is cumulative and fully participating and $131,000 is
distributed, the common stockholders will receive:
Select one:
a. $63,333
b. $51,000
c. $69,000
d. $78,600
e. $83,400 Question 22
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Fuller Food Company distributes coupons which may be presented (on or before a stated
expiration date) to grocers. The grocers are reimbursed when they send the coupons to Fuller. In
Fuller's experience, 50% of such coupons are redeemed, and generally one month elapses
between the date a grocer receives a coupon from a consumer and the date Fuller receives it.
During 2012 Fuller issued two separate series of coupons as follows:
The December 31, 2012 balance sheet should indicate a liability for unredeemed coupons of
Select one:
a. $0
b. $60,000
c. $124,000
d. $360,000
e. $684,000 Question 23
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What effect will the acquisition of treasury stock have on stockholders' equity and earnings per
share, respectively?
Select one:
a. Decrease and no effect
b. Increase and no effect
c. Decrease and increase
d. Increase and decrease
e. Decrease and decrease Question 24
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A company grants its executives stock options as a form of compensation. The company
correctly determines the fair value of the options. During the expected period of benefit, how
does the annual recognition of compensation expense affect Net Income and Paid-In-Capital,
respectively?
Select one:
a. No Effect, Increase
b. No Effect, No Effect
c. Decrease, Increase
d. Decrease, Decrease
e. Decrease, No Effect Question 25
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Contingent share agreements based simply on time passing will
Select one:
a. Always decrease DEPS
b. Always increase DEPS
c. Increase the DEPS numerator
d. Decrease the DEPS denominator Question 26
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Loredo Company's net income for 2017 is $50,000. The only potentially dilutive securities
outstanding were 1,000 options, each exercisable for one share at $6. None have been exercised,
and 10,000 shares of common were outstanding during 2017. The average market price of
Loredo's stock during 2017 was $10. The 1,000 options were issued on March 1, 2017. DEPS
for 2017 is:
Select one:
a. $4.84
b. $4.55
c. $4.72
d. $4.95
e. $4.87 Question 27
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Given the following for the Austin Company:
The following Capital Structure items existed for the entire year:
1. 6%, Cumulative Preferred Stock (Total par $200,000), Convertible to 20,000 common shares.
2. Stock Options to purchase 12,000 Common Shares at $31 per share.
In the computation of Diluted EPS, the numerator is:
Select one:
a. $283,200
b. $296,400
c. $291,600
d. $288,000
e. $300,000 Question 28
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Anti-dilutive securities
Select one:
a. should be included in the computation of diluted earnings per share but not basic earnings
per share.
b. are those whose inclusion in earnings per share computations would cause basic earnings
per share to exceed diluted earnings per share.
c. include stock options and warrants whose exercise price is less than the average market
price of common stock.
d. should always be ignored in the computation of diluted EPS. Question 29
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On January 1, 2010, Fox Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000. These
bonds were to mature on January 1, 2020, but were callable at 103 any time after December 31,
2013. Interest was payable semiannually on July 1 and January 1. After 5 ½ years, on July 1,
2015, Fox called all of the bonds and retired them. Bond premium was properly amortized on a
straight-line basis over 10 years. Before income taxes, Fox's gain or loss in 2015 on this early
extinguishment of debt was
Select one:
a. $10,000 gain
b. $12,000 loss
c. $8,000 gain
d. $10,000 loss
e. $24,000 loss Question 30
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A liability for compensated absences (such as vacations) that employees will be paid should:
Select one:
a. Be accrued following the employee's retirement
b. Be accrued during the period when earned by the employees
c. Be accrued during the period when the compensated time is expected to be used by
employees
d. Be accrued when the employee begins vacation time Question 31
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The Edmonton Company is issuing $50,000 face value, 10% bonds with detachable stock
warrants. The value of the bonds without the warrants is $40,000 and the value of the warrants is
unknown. The bonds with the warrants sold for $55,000. The journal entry to record the sale will
include:
Select one:
a. A debit to Discount on Bonds Payable for $6,000
b. A debit to Discount on Bonds Payable for $15,000
c. A credit to Premium on Bonds Payable for $5,000
d. A credit to Paid-in-Capital Stock Warrants for $10,000
e. A credit to Paid-in-Capital Stock Warrants for $15,000 Question 32
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BRB Company issues common shares and pays stock issue costs. The stock issue costs will
affect what account?
Select one:
a. Common Stock
b. Stock Issue Costs (an asset)
c. Stock Issue Cost Expense
d. Paid-in-Capital Question 33
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Case Corporation issues $100,000, 10%, five-year bonds at 96. The total interest expense over
the life of the bonds is:
Select one:
a. $56,000
b. $44,000
c. $50,000
d. $54,000
e. $46,000 Question 34
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Given:
For EPS, the weighted average number of shares is:
Select one:
a. 447
b. 473
c. 428
d. 443
e. 383 Question 35
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What is the most likely effect of a stock split on the par value per share and Additional Paid-inCapital, respectively?
Select one:
a. Decrease, Increase
b. Decrease, No Effect
c. Increase, Increase
d. No Effect, No Effect
e. No Effect, Increase
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