ACC 764 1 on january 1 2008 goll corp

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1) on january 1, 2008, goll corp. issued 4,000 of its 10%, $1,000 bonds for $4,160,000.

these bonds were to mature on january 1, 2016 but were callable at 101 any time after

december 31, 2011. interest was payable semiannually on july 1 and january 1. on

july 1, 2013, goll called all of the bonds and retired them. bond premium was amortized

on a straight-line basis. before income taxes, goll’s gain or loss in 2013 on this early

extinguishment of debt was

a.$120,000 gain

b.$48,000 gain

c.$40,000 loss

d.$32,000 gain

2) the records for bosch co. show this data for 2013:

gross profit on installment sales recorded on the books was $360,000. gross profit from

collections of installment receivables was $240,000.

life insurance on officers was $3,800.

machinery was acquired in january for $300,000. straight-line depreciation over a

ten-year life (no salvage value) is used. for tax purposes, macrs depreciation is used and

bosch may deduct 14% for 2013.

interest received on tax exempt iowa state bonds was $9,000.

the estimated warranty liability related to 2013 sales was $21,600. repair costs under

warranties during 2013 were $13,600. the remainder will be incurred in 2014.

pretax financial income is $600,000. the tax rate is 30%.

instructions

(a)prepare a schedule starting with pretax financial income and compute taxable

income.

(b)prepare the journal entry to record income taxes for 2013.

3) the financial statement which summarizes operating, investing, and financing

activities of an entity for a period of time is the

a.retained earnings statement

b.income statement

c.statement of cash flows

d.statement of financial position

4) the following trial balance of reese corp. at december 31, 2012 has been properly

adjusted except for the income tax expense adjustment.

reese corp.

trial balance

december 31, 2012

other financial data for the year ended december 31, 2012:

in reese’s december 31, 2012 balance sheet,

the final retained earnings balance is

a.$4,551,000

b.$4,636,000

c.$5,076,000

d.$5,005,000

5) which statement is not true about the gross profit method of inventory valuation?

a.it may be used to estimate inventories for interim statements

b.it may be used to estimate inventories for annual statements

c.it may be used by auditors

d.none of these

6) when a company decides to switch from the double-declining balance method to the

straight-line method, this change should be handled as a

a.change in accounting principle

b.change in accounting estimate

c.prior period adjustment

d.correction of an error

7) the principal disadvantage of using the percentage-of-completion method of

recognizing revenue from long-term contracts is that it

a.is unacceptable for income tax purposes

b.gives results based upon estimates which may be subject to considerable uncertainty

c.is likely to assign a small amount of revenue to a period during which much revenue

was actually earned

d.none of these

8) the general ledger of vance corporation as of december 31, 2012, includes the

following accounts:

in the preparation of vance’s balance sheet as of december 31, 2012, what should be

reported as total intangible assets?

a.$530,000

b.$557,000

c.$560,000

d.$587,000

9) during 2013, greta company earned net income of $172,000 which included

depreciation expense of $39,000. in addition, the company experienced the following

changes in the account balances listed below:

based upon this information what amount will be shown for net cash provided by

operating activities for 2013.

a.$226,000

b.$212,500

c.$122,500

d.$113,500

10) wriglee, inc. went to court this year and successfully defended its patent from

infringe-ment by a competitor. the cost of this defense should be charged to

a.patents and amortized over the legal life of the patent

b.legal fees and amortized over 5 years or less

c.expenses of the period

d.patents and amortized over the remaining useful life of the patent

11) which of the following would not be considered an r & d activity?

a.adaptation of an existing capability to a particular requirement or customer’s need

b.searching for applications of new research findings

c.laboratory research aimed at discovery of new knowledge

d.conceptual formulation and design of possible product or process alternatives

12) reyes company had a gross profit of $480,000, total purchases of $560,000, and an

ending inventory of $320,000 in its first year of operations as a retailer. reyess sales in

its first year must have been

a.$720,000

b.$880,000

c.$240,000

d.$800,000

13) ifrs for revenue recognition

a.is enforced by an international enforcement body, the iasb, which is comparable to the

u.s. sec.

b.bases revenue recognition on the concepts of earned and realized or realizable.

c.permits use of the completed-contract method when costs are difficult to estimate.

d.contains limited industry-specific guidance.

14) garwood company has the following items: write-down of inventories, $360,000;

loss on disposal of sports division, $555,000; and loss due to an expropriation,

$339,000. ignoring income taxes, what total amount should garwood company report as

extraordinary losses?

a.$339,000

b.$555,000

c.$699,000

d.$894,000

15) transactions for the month of june were:

assuming that perpetual inventory records are kept in dollars, the ending inventory on a

lifo basis is

a.$6,165

b.$6,240

c.$6,435

d.$6,705

16) bank overdrafts, if material, should be

a.reported as a deduction from the current asset section

b.reported as a deduction from cash

c.netted against cash and a net cash amount reported

d.reported as a current liability

17) jarvis, inc. reported net income of $39,000 for the year ended december 31, 2013

included in net income were depreciation expense of $8,400 and a gain on sale of

equipment of $1,700. each of the following accounts increased during 2013:

what is the amount of cash provided by operating activities for jarvis, inc. for the year

ended december 31, 2013?

a.$36,200

b.$38,900

c.$27,200

d.$37,200

18) the accounting for treasury stock retirements under ifrs

a.is to charge the entire amount to paid-in capital

b.may have the excess charged to paid-in capital, depending on the original transaction

related to the issuance of the stock

c.is to charge the excess of the cost of treasury stock over par value to retained earnings

d.is to allocate the difference between paid-in capital and retained earnings

19) assume common stock is the only class of stock outstanding in the manley

corporation. total stockholders’ equity divided by the number of common stock shares