Intermediate Accounting 2 Final exam review

$300000

Onopea Inc. considered two contingencies at the end of​ 2016: ​** a probable loss in the range of $300,000 to $ 500 comma 000$500,000 ​** a reasonably possible loss of $150,000 Under U.S.​ GAAP, what is the balance for contingent liabilities at the end of​ 2016?

Realized gain of 1300; reported as part of Net Income

PM Distributors began Year 2 with Equity Investments of $8,200 ​(which consisted of a single​ investment) as well as a debit balance of 1,300 in the Fair Value Adjustment − Equity Investments account. PM does not have significant influence over the​ investee, and the investment has a readily determinable fair value. This trading security was sold for $9,500 during Year 2. How much was the gain or loss for the sale of this investments and how is it​ recorded?

debit to interest expense for 2249

Pegasus Corp. signed a three−​month, 55​% note on November​ 1, 2019 for the purchase of $271,000 of inventory. If Pegasus makes adjusting entries only at the end of the​ year, the adjusting entry made at December​ 31, 2019 will include a​ ________. (Do not round any intermediary calculations. Round your final answer to the nearest​ dollar.)

debit to interest expense for 8667

Pegasus Corp. signed a three−​month, zero−interest−bearing $263,000 note on November​ 1, 2019 for the purchase of​ $250,000 of inventory. If Pegasus makes adjusting entries only at the end of the​ year, the adjusting entry made at December​ 31, 2019 will include a​ ________.

9000 net outflow

PipCo financial statements included the following amounts for the current​ year: Retired preferred stock $58,000 Loaned cash to key supplier ​17,000 Dividends paid 22,000 Sold used delivery truck ​44,000 Issued new bonds 71,000 Based on this​ information, what is the amount of net cash flows from financing​ activities?

Treasury stock 700000 Cash. 700000

Pollyanna​ & Partners reacquired 50,000 shares of its​ $1 par common stock for $14 per share. What is the journal entry needed to record this​ transaction?

C a more faithful representation of the rights and obligations arising from leases

Prior to​ 2019, lessees did not include the right−of−use asset and the lease liability for operating leases on their balance sheets. Both FASB and IASB wrote new standards to require that lessees nearly always report an asset and liability on their balance sheets when they engage in a lease transaction. This accounting results in which of the​ following? A. a more reliable estimation of the​ lease's value B. a better determination on whether the lessor held the risks and rewards of the leased​ asset's ownership C. a more faithful representation of the rights and obligations arising from leases This is the correct answer. D. All of the above

True

Prospective changes require changes be made to the current year and all future years affected.

True

Retrospective changes require restatement of all periods reported in the annual report as if it had been used in those prior years.

excludes

Sidekick Services leases several computer servers from Lycoming Computing Company. The lease agreement includes consulting and training updates. The standalone prices charged by Lycoming for each separate component are​ $750,000 for the servers and​ $250,000 for the consulting and training updates. The lease is a 5 year lease with fixed payments of​ $400,000 per year. There are also variable payments required amounting to​ $7,000 per​ year, on​ average, based on the metered usage of the servers. There is no minimum charge included in the contract. . Using the above​ information, the total consideration in this contract​ ________ the variable payments.

33024

The Hudson Company borrowed $150,000 to purchase machinery and agreed to pay 66​% interest for six years on an installment note. Each note payment is $30,504. How much interest is Hudson paying over the life of the​ loan? (Do not round intermediate calculations. Only round your final answer to the nearest​ dollar.)

the estimated fair value of the options

The compensation associated with equity classified awards of stock options is​ ________.

Assets = Liabilities + Equity

The conceptual model for the statement of cash flows is based on which of the following​ equations?

True

The difference between pension plan assets and the PBO is equal to the funded status of the plan.

the minimum amount of the range

A company has a probable loss that can only be reasonably estimated within a range of outcomes. No single amount within the range is a better estimate than any other amount. Under U.S.​ GAAP, what amount of loss contingency should be​ accrued?

the book basis of liabilities is greater than the tax basis of liabilities

A deferred tax asset exists when​ ________.

the book basis of assets is greater than the tax basis of assets

A deferred tax liability is created when​ ________.

payment of premiums for life insurance

All of the following are examples of facts that may create temporary​ book-tax differences except​ ________. A. payment of premiums for life insurance Your answer is correct. B. depreciation C. contingent liabilities D. product warranty costs

unrealized loss of 7400 reported as part of Other Comprehensive Income

As of​ 12/31/20, XYZ Inc. had available−for−sale debt investments with a fair value of $503,000​, an amortized cost of $518,000​, and a credit balance in the Fair Value Adjustment − Available for Sale Debt Investments account of $7,600. What is the amount of gain or loss reported by XYZ related to these available−for−sale debt investments and how should it be​ reported?

9000

Bateman Enterprises invested in the bonds of Greater Gloucester on January​ 1, 2018. These 10−​year, $900,000 bonds pay interest of 22​% with semiannual payments every June 30 and December 31. The effective rate of interest for similar bonds on January 1 was​ 4%. What is the semi−annual interest payment received by Bateman for these​ bonds?

yield

Bonds are priced in the market so that their​ ________ is the same as the market rate of interest.

Permanent difference; book income greater than taxable income

Caesar Corporation reports municipal interest income on their financial statements. What​ (if any)​ book-tax difference will​ result?

False

Cash equivalents are shortminus−​term, highly liquid investments with original maturities of one year or less when acquired.

true

Changes in accounting principle may be handled prospectively if insufficient information is available to properly account for the change.

true

Changes in accounting principles can be mandatory or voluntary.

Income Tax Expense. 175000 Income Tax Payable. 175000

Charmed​ Inc.'s income before taxes is $680,000 and its tax rate is 25​%. Charmed included $20,000 in non−deductible life insurance premiums in the $680,000. There are no other book−tax differences. What is the journal entry to record income tax​ expense?

D All of the above are disclosed

Companies are required to disclose the amount of income tax expense that is​ ________. A. allocated to financial statement elements that are not part of income from continuing operations B. current C. noncurrent D. All of the above are disclosed.

based upon the estimated fair value of the options

Compensation expense associated with stock options is​ ________.

bonds are revalued to fair market value

Derecognition of debt occurs when all of the following​ occur, except when the​ ________.

A reconciliation of the numerators and denominators of the basic and diluted earnings per share computations is included in the footnotes to the financial statements. The purpose of this reconciliation is to tie the numbers used in the earnings per share computations back to the financial statements.

Do earnings per share disclosures include a reconciliation of the numbers used in the computation of EPS to the information provided in the financial​ statements?

C The​ if-converted assumption is always applied to diluted​ EPS, as long as the results are not antidilutive.​ However, this assumption is also applied to basic EPS in the case of actual stock dividends and stock splits.

Does the​ if-converted assumption apply only to diluted earnings per​ share? A. The​ if-converted assumption is always applied to diluted​ EPS, as long as the results are not antidilutive.​ However, this assumption is also applied to basic EPS in the case of convertible debt and convertible preferred stock. B. The​ if-converted assumption is always applied to diluted​ EPS, as long as the results are antidilutive.​ However, this assumption is also applied to basic EPS in the case of actual stock dividends and stock splits. Your answer is not correct. C. The​ if-converted assumption is always applied to diluted​ EPS, as long as the results are not antidilutive.​ However, this assumption is also applied to basic EPS in the case of actual stock dividends and stock splits. This is the correct answer. D. The​ if-converted assumption is always applied to diluted​ EPS, as long as the results are antidilutive.​ However, this assumption is also applied to basic EPS in the case of convertible debt and convertible preferred stock.

32000, 23000

Fitzgerald Corporation has 65,000 shares​ authorized, 42,000 shares​ issued, and 10,000 shares of treasury stock.​ ________ shares are​ outstanding, and​ ________ shares are unissued.

false

Footnote disclosures for EPS are concerned only with current and prior​ years, such that subsequent events after the close of the year are ignored.

demonstrate the ability to consummate the refinancing

For U.S. GAAP​ reporters, short−term debt can be reclassified as long−term when the company intends to refinance on a long−term basis and the company can​ ________.

No journal entry is prepared

For an equity−classified award of stock​ options, what journal entry is made at the date of​ grant?

sales- type; net investment in lease - sales - type; cost of goods sold

For a​ ________ lease, a lessor recognizes revenue on the sale and records the​ asset, ________ lease. It also removes the leased asset from its accounts and records the​ ________.

5550

Greene Co. has pretax book income for the year ended December​ 31, 2018 in the amount of $$295,000 and has a tax rate of 30​%. Depreciation for tax purposes exceeded book depreciation by $18,500. What should Greene Co. record as its deferred tax liability for​ 2018?

1511

Harrison Corporation borrowed $37,000 from​ F&M Bank on June 1 of the current year. The bank required 77​% interest. Interest will be paid when the nine−month note becomes due. What is the interest expense for the current​ year? (Do not round intermediate calculations. Only round your final answer to the nearest​ dollar.)

5.75

Hudson Motors reported $635,000 net income for the current year. Beginning common shares outstanding were 100,000. Hudson also had​ 10,000, 6%​ nonconvertible, cumulative,​ $100 par value preferred shares outstanding for the entire year. No cash dividends were declared. Compute basic earnings per share.​ (Round your answer to the nearest​ cent.)

PBO is less than plan assets

If a pension plan is​ overfunded, it means that the​ ________.

C The note's face value and present value are equal

If a​ note's stated interest rate is equal to the prevailing market rate of​ interest, which of the following is true​? A. The​ note's face value is more than the​ note's present value. B. The​ note's face value is less than the​ note's present value. C. The​ note's face value and present value are equal. Your answer is correct. D. There is not enough information provided to make this determination.

an element in determining the carrying value of the bonds outstanding

In U.S.​ GAAP, bond issue costs are considered​ ________.

available-for-sale securities

Investments in debt securities that cannot be readily classified in two reporting categories are classified as​ ________.

5040

In​ December, 2018, Shooger Candy Company began including one coupon in each package of candy and offered customers a Stuffed Shooger Bear in exchange for​ $5 and five coupons. The stuffed bears cost Shooger $5.30 each.​ Eventually, it is expected that 40​% of the coupons will be redeemed. During​ December, Shooger sold 210,000 packages of candy and no coupons were redeemed. In its December​ 31, 2018 balance​ sheet, what amount should Shooger report as estimated liability for the​ coupons?

Earnings per share related to income from continuing​ operations, discontinued operations and net income are required to be reported on the face of the financial statements.

Is an entity required to present earnings per share on income from continuing operations and earning per share on discontinued operations on the face of its financial​ statements?

JayBird will decrease the investment account by 83100

JayBird Jewelers purchased​ 3,000,000 of the outstanding​ 10,000,000 shares of Angel​ & Associates. At the time of the​ acquisition, the book value of​ Angel's net assets equals their fair market value. Angel declared dividends of $277,000 during the year. How will JayBird record the last​ transaction?

C executory costs

Lessees often incur costs related to the ownership of the leased asset. These​ costs, referred to​ as, ________ include items such as property​ tax, insurance, and maintenance.

debit Loss on Settlement of Asset Retirement Obligation for $75000

Lifeline Biofuels built an oil rig at a cost of​ $4.5 million. At the time that construction was​ complete, the company estimated the oil rig would have a useful life of 20 years​ (with no salvage​ value), after which Federal regulations would require that the oil rig be dismantled and the land area restored. The fair value of this asset retirement project was $825,000 and the present value of these asset retirement costs was $177,000 based on the 88​% after−tax discount rate. At the end of the 20 year​ life, the company dismantles the oil rig and restores the land at a cost of $900,000. Following U.S.​ GAAP, the journal entry to record the completion of the restoration process would​ include:

Unrealized Gain of 6500, reported as part of Net Income

L​ & J purchased common shares of Company A and B for​ $10,000 and $9,000​, respectively on​ 12/15. L​ & J intends to sell these securities within 30 days. At​ 12/31, Investments in Company A​ & B had a fair value of​ $9,000 and​ $15,000, respectively. L​ & J does not have significant influence over the investees. Assuming an existing $1,500 credit balance in Fair Value Adjustment− Equity​ Investments, what is the unrealized gain or loss for these securities and how is it​ reported?

false

Material error corrections are retrospectively applied but do not require adjustments to retained earnings as priorminus−period adjustments.

interest expense 1446.67; interest payable 206.67

Morrison Corporation borrowed $31,000 from Commercial Bank on June 1 of the current year. The bank required 88​% interest. Interest will be paid every three months until the 9−month note is paid. What is the total Interest Expense and the Interest Payable at December 31 of the current​ year? (Do not round intermediate calculations. Only round your final answer to the nearest​ cent.)

Dividends- preferred 8750 Dividends payable- pref. 8750

Mozart​ & Company issued 2,500 shares of​ 5%, $ 70$70 par​ value, preferred stock for $180,000. The board of directors declared preferred dividends for one year on December​ 30, to be paid in January. What journal entry is necessary to record the declaration of​ dividends?

True

Netting deferred tax assets and liabilities is permitted as long as the right to offset exists.

a credit to Fair Value Adjustment - Trading Debt Investments for 8000

Olympic Corporation purchased a debt security for $800,000 on July​ 1, 2020 and properly classified it as a trading security. As of the last day of​ 2020, the fair value of the security was $792,000. The proper journal entry on this date includes​ ________.

Convertible Preferred Stock 85000 Addl Paid-in Capital in Excess of Par- Par- Preferred 85000 C/S. 34000 APIC excess Par- Common. 136000

On January​ 1, 2018,​ TNT, Inc. issued 1,700 shares of $50 par​ value, convertible preferred shares for $170,000. Each preferred share is convertible into one share of $20.00 par common stock. On August​ 1, 2018, all preferred shareholders converted their shares into common stock. What is the necessary journal entry to record the August 1st​ transaction?

6,000,000

On January​ 1, Year​ 1, Fields Corporation granted 500,000 stock options to certain executives. The vesting period is 3 years. The options are exercisable no sooner than December​ 31, Year 3 and expire on January​ 1, Year 7. Each option can be exercised to acquire one share of​ $10 par common stock for​ $15. An appropriate option−pricing model estimates the fair value of each option to be $12 on the date of grant. What is the fair value of the​ award?

the present value of the lease payments plus the present value of the guaranteed residual value if the lessee guarantees​ it(if any)

On the balance​ sheet, the lease liability is measured as​ ______.

interest portion, finance, higher

On the statement of cash​ flows, the total lease payment reduces cash flow from operating activities for the operating lease. Only the​ ________ reduces operating cash flows under the​ ________ lease.​ Therefore, cash flows from operating activities are​ ________ under the finance lease each year and in total.

exercise price

The fixed price paid by an employee to acquire a share of stock under an option plan is the​ ________.

cost

The most popular method of accounting for treasury stock is the​ ________ method.

provide information about a​ company's cash receipts and cash payments for​ operating, financing, and investing activities over a period of time

The primary objective of the statement of cash flows is to​ ________.

present value of the par value plus the present value of the interest payable

The selling price of a bond is the​ ________.

not representative of the value of the company to its stockholders

The total amount of​ stockholders' equity reported on the balance sheet is often​ ________.

authorized shares

The total number of shares that a firm can legally issue are called​ ________.

net income & other comprehensive income

The two major components of comprehensive income are​ ________ and​ ________.

lease inception; lease commencement

The​ ________ date is when the lease agreement is signed. The​ ________ date is the date on which the lessee is allowed to begin using the leased asset.

Valuation Allowance for Deferred Tax Asset

The​ contra-asset to the Deferred Tax Asset account is called​ ________.

tax contingency

Uncertain tax positions may result in a​ ________.

noncurrent only

Under U.S.​ GAAP, companies classify individual deferred tax assets or liabilities as​ ________.

True

Under a defined−contribution pension​ plan, the contribution is fixed but benefits can vary.

True

Under the corridor​ approach, a company only amortizes the net accumulated unamortized actuarial gain or loss when the beginning accumulated unamortized balance of the net actuarial gain or loss exceeds the corridor.

gain on sale of a used truck

Under the indirect​ method, which of the following would be subtracted from net income when determining net cash flows from​ operations?

zero coupon bonds have zero interest paid during the term of the bond

What is the main difference in computing the selling price of a zero−coupon bond and the selling price of a traditional​ bond?

D both A and C

When a company adjusts the balance of a deferred tax account to reflect changes in their tax​ rate, this impacts​ ________. A. income tax expense B. income tax payable C. effective tax rate Your answer is not correct. D. both A and C

deferred tax liability

When a company depreciates a fixed asset at a faster rate for tax purposes than book​ purposes, this creates a​ ________.

D. The definition of diluted earnings per share requires that diluted earnings per share reflect the​ worst-case scenario or maximum potential decrease in EPS. So if a security increases the earnings per share​ ratio, it​ is, by​ definition, antidilutive.

When is a potentially dilutive security​ antidilutive? A. The definition of diluted earnings per share requires that diluted earnings per share reflect the​ worst-case scenario or maximum potential increase in EPS. So if a security increases the earnings per share​ ratio, it​ is, by​ definition, antidilutive. B. The definition of diluted earnings per share requires that diluted earnings per share reflect the​ best-case scenario or maximum potential decrease in EPS. So if a security decreases the earnings per share​ ratio, it​ is, by​ definition, antidilutive. C. The definition of diluted earnings per share requires that diluted earnings per share reflect the​ best-case scenario or maximum potential increase in EPS. So if a security decreases the earnings per share​ ratio, it​ is, by​ definition, antidilutive. D. The definition of diluted earnings per share requires that diluted earnings per share reflect the​ worst-case scenario or maximum potential decrease in EPS. So if a security increases the earnings per share​ ratio, it​ is, by​ definition, antidilutive.

true

When making a voluntary accounting​ change, a firm must explain the justification for the change on the basis that it more accurately portrays its financial position and performance.

A company must typically elect the fair value option at acquisition

When must a company generally elect the fair value option for reporting financial​ assets?

unrealized losses from trading securities

When preparing the statement of cash flows using the indirect​ method, which of the following is added to net income to determine cash flows from​ operations?

adjust the first period of the amortization table

When working with bonds issued between interest​ dates, the accountant must​ ________.

B gains on the sale of equipment

Which of the following is NOT a part of Other Comprehensive​ Income? A. foreign currency translation adjustments B. gains on the sale of equipment Your answer is correct. C. unrecognized pension costs D. unrealized gains on availableminus−forminus−sale debt securities

B Employer contributions are typically based upon salary levels of employees

Which of the following is a characteristic of a defined−contribution pension​ plan? A. Employers must make contributions for prior service costs to a defined contribution plan. B. Employer contributions are typically based upon salary levels of employees. Your answer is correct. C. Pension plan assets draw interest that may be used to reduce annual contributions to the plan. D. Employers bear the risk of loss on pension fund assets.

Held-to-maturity

Which of the following is a debt security for which management has both the positive intent and ability to hold the debt investment until all principal and interest is fully​ paid?

C trading security

Which of the following is a debt security that a company intends to hold only for the short​ term? A. ​available-for-sale security B. ​held-to-maturity security C. trading security Your answer is correct. D. Not enough information to classify this security.

D amortization of future benefit obligations

Which of the following is not a key element of pension expense under a defined−benefit pension​ plan? A. expected return on plan assets B. interest on projected benefit obligation C. service cost D. amortization of future benefit obligations

B reconciliation of net income to total net cash flows

Which of the following is not a required disclosure item for the statement of cash​ flows? A. interest and taxes paid when the indirect method is used B. reconciliation of net income to total net cash flows This is the correct answer. C. policy regarding cash equivalents Your answer is not correct. D. all significant noncash investing and financing activities

B funding activities section

Which of the following is not a required section of the cash flow​ statement? A. financing activities section B. funding activities section Your answer is correct. C. investing activities section D. operating activities section

C The option is granted for the acquisition of securities classified as equity securities

Which of the following is not a situation in which employee compensation is classified as a​ liability? A. The employee can sell back the acquired shares to the employer corporation at the exercise price within a reasonable period of time. B. The option is granted for the acquisition of securities classified as​ liabilities, such as redeemable preferred stock. C. The option is granted for the acquisition of securities classified as equity securities. Your answer is correct. D. The compensation is in the form of cashminus−settled stock appreciation rights.

C wage dividend

Which of the following is not a type of​ dividend? A. liquidating dividend B. cash dividend C. wage dividend Your answer is correct. D. property dividend

D all of the above are examples of indirect lease costs

Which of the following items are not examples of initial direct lease​ costs? A. legal fees resulting from the execution of the lease B. commissions C. costs to prepare documents after the execution of the lease D. All of the above are examples of indirect lease costs

D current market prices

Which of the following items is generally not specified by a compensation arrangement involving stock​ options? A. vesting period B. exercise price C. number of options granted D. current market price

payment of dividends

Which of the following items would be reported in the financing activities section of the statement of cash​ flows?

projected benefit obligation

Which of the following measures of benefit obligations does the FASB require for pension​ computations?

accounts payable

Which of the following represents amounts owed for​ goods, supplies, or services​ purchased?

A the footnote must disclose assumptions used for discount rates and expected return on assets on a weighted average basis

Which of the following statements about pension plan disclosures is​ true? A. The footnote must disclose assumptions used for discount rates and expected return on assets on a weighted average basis. Your answer is correct. B. The difference between the projected benefit obligation and the plan assets at fair value represents the unfunded status of the plan reported on the balance sheet. C. Public entities are not required to disclose the components of net pension benefit cost. D. Nonpublic entities must separately disclose the components of net pension benefit cost.

A Employees holding stock appreciation rights are required to purchase shares on the vesting date

Which of the following statements is false​? A. Employees holding stock appreciation rights are required to purchase shares on the vesting date. Your answer is correct. B. The liability for a SAR is measured as the difference between the stock price and the preminus−established price. C. The employee benefits from stock appreciation rights only if the stock price increases. D. Stock appreciation rights are a form of compensation similar to a bonus.

C The investment account is adjusted to fair value at the end of the reporting period

Which of the following statements is incorrect in regard to the equity method of accounting for​ investments? The fair value option approach is not used. A. The investment account is decreased by the percentage of the​ investee's dividends declared. B. The investment account is decreased by the percentage of the​ investee's net loss. C. The investment account is adjusted to fair value at the end of the reporting period. Your answer is correct. D. The investment account is increased by the percentage of the​ investee's net income.

B If the investor has no significant influence over the investee​ company, and the investment has no readily determinable fair​ value, the investment is reported at cost with unrealized gains and losses reported as part of other comprehensive income.

Which of the following statements is​ incorrect? A. If the investor has control over the​ investee, financial statements for the two companies must be consolidated. B. If the investor has no significant influence over the investee​ company, and the investment has no readily determinable fair​ value, the investment is reported at cost with unrealized gains and losses reported as part of other comprehensive income. This is the correct answer. C. If the investor has no significant influence over the​ investee, and can readily determine the fair value of the​ investment, the investor should report the investment at fair value. Your answer is not correct. D. If the investor has significant influence over the​ investee, the investor must use the equity method of accounting for the investment.

A If the investor has no significant influence over the investee​ company, and the investment has no readily determinable fair​ value, the investment is reported at cost with unrealized gains and losses reported as part of other comprehensive income.

Which of the following statements is​ incorrect? A. If the investor has no significant influence over the investee​ company, and the investment has no readily determinable fair​ value, the investment is reported at cost with unrealized gains and losses reported as part of other comprehensive income. This is the correct answer. B. If the investor has control over the​ investee, financial statements for the two companies must be consolidated. C. If the investor has no significant influence over the​ investee, and can readily determine the fair value of the​ investment, the investor should report the investment at fair value. Your answer is not correct. D. If the investor has significant influence over the​ investee, the investor must use the equity method of accounting for the investment.

A an entity must disclose information only for vested shares that are exercised and exercisable

Which of the following statements regarding disclosures for stock−based compensation plans is false​? A. An entity must disclose information only for vested shares that are exercised and exercisable. This is the correct answer. B. The effect on the stock−based compensation plans on the​ entity's cash flows must be disclosed. C. An entity is required to disclose the intrinsic values of outstanding stock options granted. Your answer is not correct. D. An entity must provide a reconciliation of beginning and ending amounts for the number and weighted average exercise price of share options.

the type of litigation involved

Which of the following would not be considered when evaluating whether to record a contingent loss for pending​ litigation?

D the estimated effect on future earnings per share

Which one of the following would not be a required disclosure for a change in accounting​ principle? A. description of the nature of the change B. cumulative effect of the change on retained earnings for the first year presented C. ​management's justification for the change D. the estimated effect on future earnings per share

litigation

Which type of contingency are companies most likely to disclose in their annual​ report?

pay April 1 30000; receive June 30 60000

Wilson Corp. issued $2,000,000 of 66​% bonds on April 1 at par value. The bonds were dated January 1. The company pays interest on June 30 and December 31 each year. How much will the buyer need to pay the company in accrued interest at purchase and how much will the buyer receive in interest on June​ 30?

40000 gain

Zambrano Corp. decided to go into the market to repurchase bonds before their due date. The following are the balances of the accounts on the date of the​ retirement: Bonds Payable ​$5,000,000 Discount on Bonds Payable $80,000 If Zambrano pays $4,880,000 to retire the​ bond, what is the gain or loss on the early extinguishment of the​ debt?

pays the issuer interest from the date on the bonds to the purchase date

when bonds are sold at a discount between interest dates, the buyer ___.

21300

​$100,000 of five−year bonds are sold for $98,200 on the issue date. Interest of $3,900 is paid each year until the bonds are repaid. What is the total interest expense to the company for issuing these​ bonds?

credit sales tax payable for 4776

​Kool's Stores made cash sales during the month of May of $79,600. The sales are subject to a 66​% sales tax that was also collected. Which of the following would be included in the summary journal entry to reflect the May sales​ transactions?

0

​Ripa, Inc. issued $1,000,000 of bonds at par. The bonds contained nondetachable stock warrants. Similar bonds without the warrants were selling at 99. By what amount will Additional Paidminus−in Capital minus− Stock Warrants be​ credited?

Income Tax Expense 10500 Valuation Allowance for Deferred Tax Asset. 10500

​Violet, Inc. recorded a deferred tax asset of $42,000 due to a book−tax difference in warranty liabilities. Management has assessed that it is more likely than not that the firm will not realize 25​% of the deferred tax asset. What is the necessary journal entry to record the valuation​ allowance?

2450, 4200

​Woods, Inc. issued 350 shares of its $7 par value common stock for $19 per share. They will record​ ________ in the common stock account at par value and​ ________ as additional paid−in capital in excess of par−common.

Callable preferred shares

​________ are shares for which the issuing entity has the right to​ "buy back" the shares at a specified price and future date.

Permanent

​________ differences between book income and taxable income result in an effective tax rate that differs from the statutory tax rate.

Treasury Stock

​________ is the​ corporation's own shares repurchased by the corporation and held for some future use.

Common shareholders

​________ receive dividend distributions after the company has paid all other providers of capital their return on investment.

Additional paid - in capital

​________ represents the amounts that common and preferred shareholders contribute in excess of the stated or par value.