1) if a supplier ships goods f.o.b. destination, title passes to the buyer when the supplier
delivers the goods to the common carrier.
2) preferred dividends are subtracted from net income but not income before
extraordinary items in computing earnings per share.
3) pretax financial income is the amount used to compute income tax payable.
4) companies report the results of operations of a component of a business that will be
disposed of separately from continuing operations.
5) gains or losses from exchange or translation of foreign currencies are reported as
extraordinary items.
6) in january 2012, finley corporation, a newly formed company, issued 10,000 shares
of its $10 par common stock for $15 per share. on july 1, 2012, finley corporation
reacquired 1,000 shares of its outstanding stock for $12 per share. the acquisition of
these treasury shares
a.decreased total stockholders’ equity
b.increased total stockholders’ equity
c.did not change total stockholders’ equity
d.decreased the number of issued shares
7) on april 13, 2012, neill co. purchased machinery for $168,000. salvage value was
estimated to be $7,000. the machinery will be depreciated over ten years using the
double-declining balance method. if depreciation is computed on the basis of the
nearest full month, neill should record depreciation expense for 2013 on this machinery
of
a.$29,120
b.$28,560
c.$28,770
d.$29,306
8) plank co. uses the retail inventory method. the following information is available for
the current year.
if the ending inventory is to be valued at approximately lower of average cost or
market, the calculation of the cost ratio should be based on cost and retail of
a.$600,000 and $860,000
b.$600,000 and $856,000
c.$746,000 and $1,100,000
d.$756,000 and $1,104,000
9) bruner constructors, inc. has consistently used the percentage-of-completion method
of recognizing income. in 2012, bruner started work on a $28,000,000 construction
contract that was completed in 2013. the following information was taken from bruner’s
2012 accounting records:
what amount of gross profit should bruner have recognized in 2012 on this contract?
a.$2,800,000
b.$1,866,667
c.$1,400,000
d.$933,333
10) at december 31, 2012, tatum company had 2,000,000 shares of common stock
outstanding. on january 1, 2013, tatum issued 500,000 shares of preferred stock which
were convertible into 1,000,000 shares of common stock. during 2013, tatum declared
and paid $1,800,000 cash dividends on the common stock and $600,000 cash dividends
on the preferred stock. net income for the year ended december 31, 2013, was
$6,000,000. assuming an income tax rate of 30%, what should be diluted earnings per
share for the year ended december 31, 2013? (round to the nearest penny.)
a.$1.80
b.$2.00
c.$3.00
d.$2.50
11) hiser builders, inc. is using the completed-contract method for a $8,400,000 contract
that will take two years to complete. data at december 31, 2013, the end of the first year,
are as follows:
the gross profit or loss that should be recognized for 2013 is
a.$0
b.a $360,000 loss
c.a $180,000 loss
d.a $158,400 loss
12) niles co. has the following data related to an item of inventory:
the value assigned to cost of goods sold if niles uses fifo is
a.$290
b.$276
c.$862
d.$848
13) during the current fiscal year, jeremiah corp. signed a long-term noncancellable
purchase commitment with its primary supplier. jeremiah agreed to purchase $2.5
million of raw materials during the next fiscal year under this contract. at the end of the
current fiscal year, the raw material to be purchased under this contract had a market
value of $2.3 million. what is the journal entry at the end of the current fiscal year?
a.debit unrealized holding gain or loss for $200,000 and credit estimated liability on
purchase commitment for $200,000
b.debit estimated liability on purchase commitments for $200,000 and credit unrealized
holding gain or loss for $200,000
c.debit unrealized holding gain or loss for $2,300,000 and credit estimated liability on
purchase commitments for $2,300,000
d.no journal entry is required
14) hogan farms produced 1,200,000 pounds of cotton during the 2013 season. hogan
sells all of its cotton to ott co., which has agreed to purchase hogan’s entire production
at the prevailing market price. recent legislation assures that the market price will not
fall below $.70 per pound during the next two years. hogan’s costs of selling and
distributing the cotton are immaterial and can be reasonably estimated. hogan reports its
inventory at expected exit value. during 2013, hogan sold and delivered to ott 900,000
pounds at the market price of $.70. hogan sold the remaining 300,000 pounds during
2014 at the market price of $.72. what amount of revenue should hogan recognize in
2013?
a.$630,000
b.$648,000
c.$840,000
d.$864,000
15) the criteria for recognition of revenue at the completion of production of precious
metals and farm products include
a.an established market with quoted prices
b.low additional costs of completion and selling
c.units are interchangeable
d.all of these