Accounting Final Review

Data for a defined benefit pension plan for the current year are as follows: PBO, January 1, $200mn Assets, January 1, $160mn Pension expense, $60mn Funding contribution, $50mn PBO gain (year-end), $14mn Amortization of PSC for year, $4mn The ending pension liability balance is

CPA Ques 03 #32mn

In its 2017 income statement, Tow, Inc. reports proceeds from an officer's life-insurance policy of $90,000 and depreciation of $250,000. Tow was the owner and beneficiary of the life insurance on its officer. Tow deducted depreciation of $370,000 in its 2017 income tax return when the tax rate was 30%. Data related to the reversal of the excess tax deduction for depreciation follow: Year Reversal of excess tax deduction Enacted tax rates 2018 $50,000 35% 2019 $40,000 35% 2020 $20,000 25% 2021 $10,000 25% There are no other temporary differences. Tow elected early application of FASB Statement No. 109 , Accounting for Income Taxes. In its December 31, 2017 balance sheet, what amount should Tow report as a deferred income tax liability?

CPA Ques 03 $39,000

Robbins, Inc. leased a machine from Ready Leasing Co. The lease qualifies as a capital lease and requires 10 annual payments of $10,000 beginning immediately. The lease specifies an interest rate of 12% and a purchase option of $10,000 at the end of the tenth year, even though the machine's estimated value on that date is $20,000. Robbins' incremental borrowing rate is 14%. The present value of an annuity due of $1 at: 12% for 10 years is 6.328 14% for 10 years is 5.946 The present value of $1 at: 12% for 10 years is .322 14% for 10 years is .270 What amount should Robbins record as lease liability at the beginning of the lease term?

CPA Ques 03 $66,500 (lessee computes PV using incremental borrowing rate UNLESS lessee knows implicit rate and implicit < incremental)

On December 30, 2016, Ames Co. leased equipment under a capital lease for 10 years. It contracted to pay $40,000 annual rent on December 31, 2016 and on December 31 of each of the next 9 years. The capital lease liability was recorded at $270,000 on December 30, 2016 before the first payment. The equipment's useful life is 12 years, and the interest rate implicit in the lease is 10%. Ames uses the straight-line method to depreciate all equipment. In recording the December 31, 2017 payment, by what amount should Ames reduce the capital lease liability?

CPA Ques 04 $17,000

The following information pertains to the 2017 activity of Ral Corp.'s defined benefit pension plan: Service cost $300,000 Return on plan assets $80,000 Interest cost on pension benefit obligation $164,000 Amortization of actuarial loss $30,000 Amortization of unrecognized net obligation $70,000 Ral's 2017 pension cost was

CPA Ques 04 $484,000

The journal entry to recognize the amortization of $50 of net gain causes what effect on (1) pension expense, and (2) pension liability? 1 2 decrease no effect no effect decrease no effect no effect decrease decrease

CPA Ques 05 The amortization decreases pension expense because the gain reduced the firm's pension costs. The amortization amount is the portion of the gain that is entered into pension expense (as a negative amount). The gain was recorded previously. At that time, pension liability was decreased, and other comprehensive income increased. The complete entry is: (dr.) Pension gain/loss-OCI $50, (cr.) Pension expense 50.

Rudd Corp. had 700,000 shares of common stock authorized and 300,000 shares outstanding at December 31, 2016. The following events occurred during 2017: January 31 Declared 10% stock dividend June 30 Purchased 100,000 shares August 1 Reissued 50,000 shares November 30 Declared 2-for-1 stock split At December 31, 2017, how many shares of common stock did Rudd have outstanding?

CPA Ques 06 560,000 shares of stock outstanding

An asset with a market value of $100,000 is leased on 1/1/x1. The lease is a capital lease for both parties. Five annual lease payments are due each December 31 beginning 12/31/x1. The unguaranteed residual value on 12/31/x5, the last day of the lease term, is estimated at $40,000. The lessor's implicit interest rate is 8%. Compute the lessor's net lease receivable immediately after the first lease payment is received. Present value factors for 5 years at 8% are: 3.99271 and 0.68058.

CPA Ques 07 $89773

Chape Co. had the following information related to common and preferred shares during the year: Common shares outstanding, 1/1 700,000 Common shares repurchased, 3/31 20,000 Conversion of preferred shares, 6/30 40,000 Common shares repurchased, 12/1 36,000 Chape reported net income of $2,000,000 at December 31. What amount of shares should Chape use as the denominator in the computation of basic earnings per share?

CPA Ques 07 702,000 is correct. Weighted average shares outstanding are weighted by the number of months the shares were outstanding during the year. The easiest way to do this is to take each change in common stock and multiply by the number of months remaining - add the shares that increased shares outstanding and subtract shares that reduced shares outstanding.

During the current year, Comma Co. had outstanding: 25,000 shares of common stock, 8,000 shares of $20 par, 10% cumulative preferred stock, and 3,000 bonds that are $1,000 par and 9% convertible. The bonds were originally issued at par, and each bond was convertible into 30 shares of common stock. During the year, net income was $200,000, no dividends were declared, and the tax rate was 30%. What amount was Comma's basic earnings per share for the current year?

CPA Ques 10 $7.36

Stine Inc. had 1,000,000 shares of common stock issued and outstanding at December 31, 2017. On July 1, 2018 an additional 1,000,000 shares were issued for cash. Stine also had stock options outstanding at the beginning and end of 2018 which allow the holders to purchase 300,000 shares of common stock at $28 per share. The average market price of Stine's common stock was $35 during 2018. The number of shares to be used in computing diluted earnings per share for 2018 is:

MC Ques 104 1,560,000

On January 2, 2018, Worth Co. issued at par $2,000,000 of 7% convertible bonds. Each $1,000 bond is convertible into 20 shares of common stock. No bonds were converted during 2018. Worth had 200,000 shares of common stock outstanding during 2018. Worth's 2018 net income was $900,000 and the income tax rate was 30%. Worth's diluted earnings per share for 2018 would be (rounded to the nearest penny):

MC Ques 106 $4.16

Jamar Co. sold its headquarters building at a gain, and simultaneously leased back the building. The lease was reported as a capital lease. At the time of the sale, the gain should be reported as an extraordinary item, net of income tax. operating income. a separate component of stockholders' equity. a deferred gain.

MC Ques 108 a deferred gain *If the seller gives up the right to the use of the asset, the transaction is in substance a sale and a gain/loss recognition is appropriate

Which of the following is not a characteristic of a defined-contribution pension plan? a) The employer's contribution each period is based on a formula. b) The benefits to be received by employees are determined by an employee's highest compensation level defined by the terms of the plan. c) The accounting for a defined-contribution plan is straightforward and uncomplicated. d) The benefit of gain or the risk of loss from the assets contributed to the pension fund is borne by the employee.

MC Ques 26 b) The benefits to be received by employees are determined by an employee's highest compensation level defined by the terms of the plan.

Which of the following are temporary differences that are normally classified as expenses or losses that are deductible after they are recognized in financial income? Product warranty liabilities. Depreciable property. Fines and expenses resulting from a violation of law. Prepaid expenses that are deducted on the tax return in the period paid.

MC Ques 30 Product warranty liabilities.

Direct costs incurred to sell stock such as underwriting costs should be accounted for as 1. a reduction of additional paid-in capital. 2. an expense of the period in which the stock is issued. 3. an intangible asset.

MC Ques 31 1. a reduction of additional paid-in capital.

Stuart Corporation's taxable income differed from its accounting income computed for this past year. An item that would create a permanent difference in accounting and taxable incomes for Stuart would be making installment sales during the year. using accelerated depreciation for tax purposes and straight-line depreciation for book purposes. a fine resulting from violations of OSHA regulations. a balance in the Unearned Rent account at year end.

MC Ques 33 a fine resulting from violations of OSHA regulations.

"Gains" on sales of treasury stock (using the cost method) should be credited to retained earnings. paid-in capital from treasury stock capital stock. other income.

MC Ques 39 paid-in capital from treasury stock

Porter Corp. purchased its own par value stock on January 1, 2017 for $20,000 and debited the treasury stock account for the purchase price. The stock was subsequently sold for $12,000. The $8,000 difference between the cost and sales price should be recorded as a deduction from a)net income. b)additional paid-in capital to the extent that previous net "gains" from sales of the same class of stock are included therein; otherwise, from retained earnings. c)retained earnings. d)additional paid-in capital without regard as to whether or not there have been previous net "gains" from sales of the same class of stock included therein.

MC Ques 40 b)additional paid-in capital to the extent that previous net "gains" from sales of the same class of stock are included therein; otherwise, from retained earnings.

Fogel Co. has $4,000,000 of 8% convertible bonds outstanding. Each $1,000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2018, the holders of $1,280,000 bonds exercised the conversion privilege. On that date the market price of the bonds was 105 and the market price of the common stock was $36. The total unamortized bond premium at the date of conversion was $280,000. Fogel should record, as a result of this conversion, a credit of $217,600 to Paid-in Capital in Excess of Par. credit of $89,600 to Premium on Bonds Payable. loss of $12,800. credit of $192,000 to Paid-in Capital in Excess of Par.

MC Ques 43 credit of $217,600 to Paid-in Capital in Excess of Par.

Deferred taxes should be presented on the balance sheet as either noncurrent or current. as a noncurrent amount. as reductions of the related asset or liability accounts. as a current amount.

MC Ques 47 as a noncurrent amount.

A pension liability is reported when a)the pension expense reported for the period is greater than the funding amount for the same period. b)the projected benefit obligation exceeds the fair value of pension plan assets. c)accumulated other comprehensive income exceeds theterm-46 fair value of pension plan assets. d)the accumulated benefit obligation is less than the fair value of pension plan assets.

MC Ques 50 the projected benefit obligation exceeds the fair value of pension plan assets.

On December 1, 2018, Lester Company issued at 103, eight hundred of its 9%, $1,000 bonds. Attached to each bond was one detachable stock warrant entitling the holder to purchase 10 shares of Lester's common stock. On December 1, 2018, the market value of the bonds, without the stock warrants, was 95, and the market value of each stock purchase warrant was $50. The amount of the proceeds from the issuance that should be accounted for as the initial carrying value of the bonds payable would be

MC Ques 51 $782,800

On March 1, 2018, Ruiz Corporation issued $2,000,000 of 8% nonconvertible bonds at 104, which are due on February 28, 2038. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase for $50 one share of Ruiz common stock, par value $25. The bonds without the warrants would normally sell at 95. On March 1, 2018, the fair value of Ruiz's common stock was $40 per share and the fair value of the warrants was $2.00. What amount should Ruiz record on March 1, 2018 as paid-in capital from stock warrants?

MC Ques 52 $104,000

At the beginning of 2018, Pitman Co. purchased an asset for $1,800,000 with an estimated useful life of 5 years and an estimated salvage value of $150,000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Pitman Co.'s tax rate is 40% for 2018 and all future years. At the end of 2018, which of the following deferred tax accounts and balances is reported on Pitman's balance sheet? Account Balance Deferred tax liability $156,000 Deferred tax asset $156,000 Deferred tax asset $234,000 Deferred tax liability $234,000

MC Ques 53 Deferred tax liability $156,000

On January 1, 2018, Dean Corporation signed a ten-year noncancelable lease for certain machinery. The terms of the lease called for Dean to make annual payments of $220,000 at the end of each year for ten years with the title passing to Dean at the end of this period. The machinery has an estimated useful life of 15 years and no salvage value. Dean uses the straight-line method of depreciation for all of its fixed assets. Dean accordingly accounted for this lease transaction as a capital lease. The lease payments were determined to have a present value of $1,342,016 at an effective interest rate of 8%. With respect to this capitalized lease, Dean should record for 2018 (interest expense and depreciation expense)

MC Ques 53 Interest Exp $107,361 Depreciation $89,468

Mathis Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $ 1,200,000 Estimated litigation expense 3,000,000 Installment sales (2,400,000) Taxable income $ 1,800,000 The estimated litigation expense of $3,000,000 will be deductible in 2019 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1,200,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1,200,000 current and $1,200,000 noncurrent. The income tax rate is 30% for all years. The income tax expense is

MC Ques 55 $360,000

Mathis Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $ 1,200,000 Estimated litigation expense 3,000,000 Installment sales (2,400,000) Taxable income $ 1,800,000 The estimated litigation expense of $3,000,000 will be deductible in 2019 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1,200,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1,200,000 current and $1,200,000 noncurrent. The income tax rate is 30% for all years. The deferred tax asset to be recognized is $900,000 noncurrent. $0. $180,000 current. $900,000 current.

MC Ques 56 $900,000 noncurrent

Hopkins Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $3,000,000 Estimated litigation expense 4,000,000 Extra depreciation for taxes (6,000,000) Taxable income $ 1,000,000 The estimated litigation expense of $4,000,000 will be deductible in 2018 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2,000,000 in each of the next three years. The income tax rate is 30% for all years. Income taxes payable is

MC Ques 58 $300,000

On May 1, 2018, Marly Co. issued $2,500,000 of 7% bonds at 103, which are due on April 30, 2028. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Marly's common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96. On May 1, 2018, the fair value of Marly's common stock was $35 per share and of the warrants was $2. On May 1, 2018, Marly should record the bonds with a discount of $28,000. discount of $100,000. discount of $25,000. premium of $75,000.

MC Ques 59 discount of $28,000.

On January 1, 2018, Ellison Company granted Sam Wine, an employee, an option to buy 1,000 shares of Ellison Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $6,000. Wine exercised his option on October 1, 2018 and sold his 1,000 shares on December 1, 2018. Quoted market prices of Ellison Co. stock in 2018 were: July 1 $30 per share October 1 $36 per share December 1 $40 per share The service period is for three years beginning January 1, 2018. As a result of the option granted to Wine, using the fair value method, Ellison should recognize compensation expense for 2018 on its books in the amount of

MC Ques 61 Compensation Expense/3 years = 2000

On January 1, 2017, Ellison Co. issued eight-year bonds with a face value of $6,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are: Present value of 1 for 8 periods at 6% .627 Present value of 1 for 8 periods at 8% .540 Present value of 1 for 16 periods at 3% .623 Present value of 1 for 16 periods at 4% .534 Present value of annuity for 8 periods at 6% 6.210 Present value of annuity for 8 periods at 8% 5.747 Present value of annuity for 16 periods at 3% 12.561 Present value of annuity for 16 periods at 4% 11.652 The issue price of the bonds is

MC Ques 62 $5,301,360

On June 30, 2018, Yang Corporation granted compensatory stock options for 25,000 shares of its $24 par value common stock to certain of its key employees. The market price of the common stock on that date was $31 per share and the option price was $28. Using a fair value option pricing model, total compensation expense is determined to be $100,000. The options are exercisable beginning January 1, 2020, providing those key employees are still in the employ of the company at the time the options are exercised. The options expire on June 30, 2021. On January 4, 2020, when the market price of the stock was $36 per share, all options for the 25,000 shares were exercised. The service period is for two years beginning January 1, 2018. Using the fair value method, what should be the amount of compensation expense recorded by Yang Corporation for these options on December 31, 2018?

MC Ques 65 100,000/2 years = 50,000

A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14,703,108. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2017 balance sheet?

MC Ques 68 $14,709,482

The following information for Cooper Enterprises is given below: December 31, 2018 Assets and obligations Plan assets (at fair value) $600,000 Accumulated benefit obligation 1,110,000 Projected benefit obligation 1,200,000 Other Items Pension asset / liability, January 1, 2018 30,000 Contributions 360,000 Accumulated other comprehensive loss 503,700 There were no actuarial gains or losses at January 1, 2018. The average remaining service life of employees is 10 years. What is the amount that Cooper Enterprises should report as its pension liability on its balance sheet as of December 31, 2018?

MC Ques 69 $600,000

On January 1, 2018, Newlin Co. has the following balances: Projected benefit obligation $3,500,000 Fair value of plan assets 3,000,000 The settlement rate is 10%. Other data related to the pension plan for 2018 are: Service cost $300,000 Amortization of prior service costs due to increase in benefits 100,000 Contributions 500,000 Benefits paid 225,000 Actual return on plan assets 395,000 Amortization of net gain 30,000 The balance of the projected benefit obligation at December 31, 2018 is

MC Ques 77 $3,925,000

Gannon Company acquired 20,000 shares of its own common stock at $20 per share on February 5, 2017, and sold 10,000 of these shares at $27 per share on August 9, 2018. The fair value of Gannon's common stock was $24 per share at December 31, 2017, and $25 per share at December 31, 2018. The cost method is used to record treasury stock transactions. What account(s) should Gannon credit in 2018 to record the sale of 10,000 shares? a)Treasury Stock for $240,000 and Retained Earnings for $30,000. b)Treasury Stock for $270,000. c)Treasury Stock for $200,000 and Paid-in Capital from Treasury Stock for $70,000. d)Treasury Stock for $200,000 and Retained Earnings for $70,000.

MC Ques 80 c)Treasury Stock for $200,000 and Paid-in Capital from Treasury Stock for $70,000. 10,000 x $20 10,000 x $7

Presented below is the stockholders' equity section of Oaks Corporation at December 31, 2017: Common stock, par value $20; authorized 75,000 shares; issued and outstanding 45,000 shares $ 900,000 Paid-in capital in excess of par value 350,000 Retained earnings 500,000 $1,750,000 (total) During 2018, the following transactions occurred relating to stockholders' equity: 3,000 shares were reacquired at $28 per share. 3,000 shares were reacquired at $35 per share. 1,800 shares of treasury stock were sold at $30 per share. For the year ended December 31, 2018, Oaks reported net income of $450,000. Assuming Oaks accounts for treasury stock under the cost method, what should it report as total stockholders' equity on its December 31, 2018, balance sheet?

MC Ques 85 $2,065,000

Presented below is information related to Decker Manufacturing Company as of December 31, 2018: Projected benefit obligation $ 1,700,000 Accumulated OCI -net gain 600,000 Accumulated OCI (PSC) 810,000 The amount for the prior service cost is related to an increase in benefits. The fair value of the pension plan assets is $1,200,000. The pension asset / liability reported on the balance sheet at December 31, 2018 is

MC Ques 85 $500,000

At December 31, 2017 the following balances existed on the books of Foxworth Corporation: Bonds Payable $6,000,000 Discount on Bonds Payable 840,000 Interest Payable 150,000 If the bonds are retired on January 1, 2018, at 102, what will Foxworth report as a loss on redemption?

MC Ques 87 $960,000

When computing diluted earnings per share, convertible bonds are: assumed converted whether they are dilutive or antidilutive. assumed converted only if they are antidilutive. ignored. assumed converted only if they are dilutive.

MC Ques 88 assumed converted only if they are dilutive. *Companies will not report diluted EPS if the securities in their capital structure are antidilutive

Khan, Inc. reports a taxable and financial loss of $2,250,000 for 2019. Its pretax financial income for the last two years was as follows: 2017 $900,000 2018 1,200,000 The amount that Khan, Inc. reports as a net loss for financial reporting purposes in 2019, assuming that it uses the carryback provisions, and that the tax rate is 30% for all periods affected, is

MC Ques 88 $1,575,000

Wilcox Corporation reported the following results for its first three years of operation: 2017 income (before income taxes) $ 300,000 2018 loss (before income taxes) (2,700,000) 2019 income (before income taxes) 3,000,000 There were no permanent or temporary differences during these three years. Assume a corporate tax rate of 30% for 2017 and 2018, and 40% for 2019. Assuming that Wilcox elects to use the carryback provision, what income (loss) is reported in 2018? (Assume that any deferred tax asset recognized is more likely than not to be realized.)

MC Ques 89 $1,650,000

Pye Company leased equipment to the Polan Company on July 1, 2018, for a ten-year period expiring June 30, 2028. Equal annual payments under the lease are $240,000 and are due on July 1 of each year. The first payment was made on July 1, 2018. The rate of interest contemplated by Pye and Polan is 9%. The cash selling price of the equipment is $1,680,000 and the cost of the equipment on Pye's accounting records was $1,488,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Pye, what is the amount of profit on the sale and the interest revenue that Pye would record for the year ended December 31, 2018?

MC Ques 90 Profit $192,000 Interest Revenue $64,800

Nickerson Corporation began operations in 2016. There have been no permanent or temporary differences to account for since the inception of the business. The following data are available: Year Enacted Tax Rate Taxable Income Taxes Paid 2016 45% $2,000,000 $900,000 2017 40% 2,400,000 960,000 2018 35% 2019 30% In 2018, Nickerson had an operating loss of $2,480,000. What amount of income tax benefits should be reported on the 2018 income statement due to this loss assuming that it uses the carry back provision?

MC Ques 92 $1,092,000

On January 1, 2018, Gridley Corporation had 375,000 shares of its $2 par value common stock outstanding. On March 1, Gridley sold an additional 750,000 shares on the open market at $20 per share. Gridley issued a 20% stock dividend on May 1. On August 1, Gridley purchased 420,000 shares and immediately retired the stock. On November 1, 600,000 shares were sold for $25 per share. What is the weighted-average number of shares outstanding for 2018?

MC Ques 99 1,125,000

On January 1, Patterson Inc. issued $5,000,000, 9% bonds for $4,695,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Patterson uses the effective-interest method of amortizing bond discount. At the end of the first year, Patterson should report unamortized bond discount of

MC Question 82 $285,500

In 2016, General Dynamics Corporation began selling a new line of products that carries a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows: First year of warranty 2% Second year of warranty 5% Sales and actual warranty expenditures for 2016 and 2017 are presented below: 2016 2017 Sales $600,000 $800,000 Actual warranty expenditures 20,000 40,000 What is the estimated warranty liability at the end of 2017?

$38,000 Practice Question 30

At the beginning of 2017, Winston Corporation issued 10% bonds with a face value of $4,000,000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $3,705,600 to yield 12%. Winston uses a calendar-year reporting period. Using the effective-interest method of amortization, what amount of interest expense should be reported for 2017? (Round your answer to the nearest dollar.)

$446,012 MC Ques 84

The following information pertains to Camp Corp.'s issuance of bonds on July 1, 2017: Face amount $800,000 Term 10 years Stated interest rate 6% Interest payment dates Annually on July 1 Yield 9% At 6% At 9% Present value of 1 for 10 periods 0.558 0.422 Future value of 1 for 10 periods 1.791 2.367 Present value of ordinary annuity of 1 for 10 periods 7.36 6.418 What should be the issue price for each $1,000 bond?

$807 The issue price for one $1,000 face value bond is the present value of all future payments discounted at the yield rate of 9% CPA Question 02

Bondholders of Balm Co. converted their bonds into 90,000 shares of $5 par value common stock. In Balm's accounting records, the bonds had a par value of $775,000 and unamortized discount of $23,000 at the time of conversion. What amount of additional paid-in capital from the conversion should Balm record?

CPA Ques 01 Without fair value information, the book value method of allocating the bond carrying value to the owners' equity accounts must be used. $302,000

500 shares of 6%, $100 par convertible preferred stock were issued at $103 per share. Each share is convertible into 20 shares of $5 par common stock. The journal entry to record conversion includes which of the following? Cr. paid in capital in excess of par, common $1,500. Dr. preferred stock $51,500. Cr. common stock $51,500. Dr. retained earnings $1,500.

CPA Ques 10 Cr. paid in capital in excess of par, common $1,500. *complete journal entry in notes

Which of the following disclosures is not required of companies with a defined benefit pension plan? A description of the plan. The amount of pension expense by component. The weighted average discount rate. The estimates of future contributions.

CPA Ques 11 estimates of future contributions Firms are required to make extensive disclosures about employer-sponsored pension plans. Those disclosures include (a) a description of the plan, (b) the amount of pension expense by component (current service cost, interest cost, return on plan assets, etc.), and (c) the weighted average discount rate used in pension calculations. There is no requirement to provide estimates of future contributions.

Presented below is information related to Jensen Inc. pension plan for 2018. Service cost $1,360,000 Actual return on plan assets 280,000 Interest on projected benefit obligation 520,000 Amortization of net loss 120,000 Amortization of prior service cost due to increase in benefits 220,000 Expected return on plan assets 240,000 What amount should be reported for pension expense in 2018?

Multiple Choice Question 66 $1,980,000

In a service-type warranty, warranty revenue is a)recognized equally over the warranty period. b)not recognized. c)recognized in the year of sale. d)recognized only in the last year of the warranty period.

a)recognized equally over the warranty period.

Sandy Shoes Foot Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 40% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be $800,000. What is the required journal entry as a result of this litigation? a)Debit Litigation Expense for $480,000 and credit Litigation Liability for $480,000. b)Debit Litigation Expense for $800,000 and credit Litigation liability for $800,000. c)No journal entry is required. d)Debit Litigation Expense for $320,000 and credit Litigation Liability for $320,000.

c)No journal entry is required. NO JOURNAL ENTRY IS REQUIRED BECAUSE THE PROBABILITY IS LESS THAN 50%. HENCE INSTEAD OF MAKING A JOURNAL ENTRY IT HAS TO BE SHOWN AS CONTINGENT LIABILITY IN THE FOOT NOTES

A company offers a cash rebate of $2 on each $6 package of batteries sold during 2018. Historically, 10% of customers mail in the rebate form. During 2018, 5,000,000 packages of batteries are sold, and 175,000 $2 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2018 financial statements dated December 31?

expense $1,000,000; liability $650,000 MC Ques 121