1) On January 1, 2014, Huff Co. sold $4,000,000 of its 10% bonds for $3,541,184 to
yield 12%. Interest is payable semiannually on January 1 and July 1 . What amount
should Huff report as interest expense for the six months ended June 30, 2014?
a.$177,064
b.$200,000
c.$212,471
d.$240,000
2) Which of the following is an advantage of a restricted-stock plan?
a.It creates new job opportunities in a company
b.It never becomes completely worthless
c.It increases the market price of the stock
c.It increases the profit of a company
3) Jones Company was formed on December 1, 2013 . The following information is
available from Jones’s inventory record for Product X.
Units Unit Cost
January 1, 2014 (beginning inventory)1,600$18.00
Purchases:
January 5, 20142,600$20.00
January 25, 20142,400$21.00
February 16, 20141,000$22.00
March 15, 20141,800$23.00
A physical inventory on March 31, 2014, shows 2,000 units on hand.
Instructions
Prepare schedules to compute the ending inventory at March 31, 2014, under each of
the following inventory methods:
(a)FIFO.
(b)LIFO.
(c)Weighted-average.
Show supporting computations in good form.
4) Which of the following is a realistic assumption of the straight-line method of
depreciation?
a.The asset’s economic usefulness is the same each year
b.The repair and maintenance expense is essentially the same each period
c.The rate of return analysis is enhanced using the straight-line method
d.Depreciation is a function of time rather than a function of usage
5) Which of the following is not correct in regard to trading securities?
a.They are held with the intention of selling them in a short period of time
b.Unrealized holding gains and losses are reported as part of net income
c.Any discount or premium is not amortized
d.All of these are correct
6) Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2015
AssetsEquities
Cash$ 640,000Accounts payable$ 304,000
Accounts receivable576,000
Buildings and equipment2,400,000
Accumulated depreciation
buildings and equipment(800,000)Common stock1,840,000
Patents 288,000Retained earnings 960,000
$3,104,000$3,104,000
Kiner Company
Statement of Cash Flows
For the Year Ended December 31, 2015
Increase (Decrease) in Cash
Cash flows from operating activities
Net income$800,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accounts receivable$(256,000)
Increase in accounts payable128,000
Depreciationbuildings and equipment240,000
Gain on sale of equipment(96,000)
Amortization of patents 32,000 48,000
Net cash provided by operating activities848,000
Cash flows from investing activities
Sale of equipment192,000
Purchase of land(400,000)
Purchase of buildings and equipment (768,000)
Net cash used by investing activities(976,000)
Cash flows from financing activities
Payment of cash dividend(240,000)
Sale of common stock 640,000
Net cash provided by financing activities 400,000
Net increase in cash272,000
Cash, January 1, 2015 640,000
Cash, December 31, 2015$912,000
Total assets on the balance sheet at December 31, 2015 are $4,432,000. Accumulated
deprecia-tion on the equipment sold was $224,000.
The accounts payable at December 31, 2015 were
a.$176,000
b.$432,000
c.$128,000
d.$592,000
7) If a company chooses the fair value option, a decrease in the fair value of the liability
is recorded by crediting
a.Bonds Payable
b.Gain on Restructuring of Debt
c.Unrealized Holding Gain/Loss-Income
d.None of these answers are correct
8) Halltown Company purchased a depreciable asset for $450,000. The estimated
salvage value is $30,000, and the estimated useful life is 8 years. The double-declining
balance method will be used for depreciation. What is the depreciation expense for the
second year on this asset?
a.$52,500
b.$78,750
c.$84,375
d.$112,500
9) All of the following are characteristics of a derivative financial instrument except the
instrument
a.has one or more underlyings and an identified payment provision
b.requires a large investment at the inception of the contract
c.requires or permits net settlement
d.All of these are characteristics
10) June Corp. sells one product and uses a perpetual inventory system. The beginning
inventory consisted of 40 units that cost $20 per unit. During the current month, the
company purchased 240 units at $20 each. Sales during the month totaled 180 units for
$43 each. What is the number of units in the ending inventory?
a. 40 units
b. 60 units
c.100 units
d.280 units