1) during 2012, gordon company issued at 104 five hundred, $1,000 bonds due in ten
years. one detachable stock warrant entitling the holder to purchase 15 shares of
gordons 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 gordons stockholders’ equity?
a.$0
b.$20,000
c.$20,800
d.$19,760
2) for 2012, hoyle company reports beginning of the year total assets of $900,000, end
of the year total assets of $1,100,000, net sales of $750,000, and net income of
$150,000.
hoyles 2012 asset turnover ratio is
a.0.14 times
b.0.15 times
c.0.68 times
d.0.75 times
3) the accounting for fair value hedges records the derivative at its
a.amortized cost
b.carrying value
c.fair value
d.historical cost
4) given below are the future value factors for 1 at 8% for one to five periods. each of
the items 65 to 68 is based on 8% interest compounded annually.
if $3,000 is put in a savings account today, what amount will be available three years
from today?
a.$3,000 1.260
b.$3,000 1.260
c.$3,000 1.080 3
d.($3,000 1.080) + ($3,000 1.166) + ($3,000 1.260)
5) which of the following is not treated as a change in accounting principle?
a.a change from lifo to fifo for inventory valuation
b.a change to a different method of depreciation for plant assets
c.a change from full-cost to successful efforts in the extractive industry
d.a change from completed-contract to percentage-of-completion
6) which of the following accounts is not reported in inventory?
a.raw materials
b.equipment
c.finished goods
d.supplies
7) which of following is not a similarity in the accounting treatment for depreciation
and cost depletion?
a.the estimated life is based on economic or productive life
b.assets subject to either are reported in the same classification on the balance sheet
c.the rates may be changed upon revision of the estimated productive life used in the
original rate computations
d.both depreciation and depletion are based on time
8) on august 1, 2012, fowler company acquired $600,000 face value 10% bonds of
kasnic corporation at 104 plus accrued interest. the bonds were dated may 1, 2012, and
mature on april 30, 2017, with interest payable each october 31 and april 30. the bonds
will be held to maturity. what entry should fowler make to record the purchase of the
bonds on august 1, 2012?
9) on december 31, 2011, short co. is in financial difficulty and cannot pay a note due
that day. it is a $750,000 note with $75,000 accrued interest payable to bryan, inc. bryan
agrees to forgive the accrued interest, extend the maturity date to december 31, 2013,
and reduce the interest rate to 4%. the present value of the restructured cash flows is
$642,000.
instructions
prepare entries for the following:
(a)the restructure on shorts books.
(b)the payment of interest on december 31, 2012.
(c)the restructure on bryans books.
10) on may 1, 2012, marly co. issued $1,000,000 of 7% bonds at 103, which are due on
april 30, 2022. twenty detachable stock warrants entitling the holder to purchase for $40
one share of marlys common stock, $15 par value, were attached to each $1,000 bond.
the bonds without the warrants would sell at 96. on may 1, 2012, the fair value of
marlys common stock was $35 per share and of the warrants was $2.
on december 31, 2014, 16,000 sars are exercised by executives. what amount of
compensation expense should korsak recognize for the year ended december 31, 2014?
a.$380,000
b.$260,000
c.$780,000
d.$104,000