Accounting 302 Final Exam

12. What best describes the time value of money?

The relationship between time and money

15. Carr Corporation Retires its $300,000 face value bonds at 105 on January 1, following the payment of interest. The carrying Value of the bonds at the redemption date is $311,235. The entry to record the redemption will include a

C. debit if $11,235 to Premium on Bonds Payable.

7. On Oct. 1, 2014 Macklin Corporation issued 5% 10-year bonds with a face value of $4,000,000 at 104. Interest is paid on Oct. 1 and April 1 with any premiums or discounts amitorized on a straight-line basis. The entry to record the issuance of the bond would include a credit of

A) $160,000 to premium on Bonds Payable.

14. Use the following to answer question 14: On January 1, 2014, Ellison Co. Issued eight-year bonds with a face value of 4,000,000 and a stated interest rate of 6%, payable on june 30 and dec 31. The bonds were sold at a yield of 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 16periods at 3% .623 Present value of 1 for 16 Periods at 4% .534 Present value of annuity for8 periods at 6% 6.210 Present value of annuity for8 periods at 8% 5.747 Present value of annuity for16 periods at 3% 12.561 Present value of annuity for16 periods at 4% 11.652 The present value of the interest is

A) 1,398,240

23. Palco Co., which has a taxable payroll of $900,000, is subject to FUTA tax of 0.8% and SUTA tax of 5.4%. Howerever, because of stable employment experience, the company's state rate has been reduced to 2%. What is the total amount of federal and state unemployment tax for Palco Co.?

A. $25,200

21. On January 1, 2014, Gore Co. Sold to Cey Corp. $800.000 of its 10% bonds for $708,236 to yield 12%. Interest is payable semiannually on jan 1 and july 1. Using the effective interest rate method, what amount should Gore report as interest expense for the 6 months ended jun 30, 2014.?

A. $42,494

25. Long term debt that matures within one year and is to be converted into stock should be reported

A. As noncurrent and accompanied with a note explaining the method to be used in its liquidation.

4. On January 1, 2014, Haley Co. Issued ten-year bonds with a face amount of 47,000,000 and a stated interest rate of 8% payable annually on January 1. The bonds were priced to yiels 10%. Present value factors are as follows: Present value of 1 for 10 periods Present value of an ordinary annuity of 1 for 10 periods The total issue price of the bond was

B) $3,510,400

Posner Co. is a retail store operating in a state with a 7% retail sales tax. Posner Co. records the sales tax in the sales revenue account. The amount recoded in the sales revenue account during may was $251,450. 2. The amount of sales taxes (to the nearest dollar) for may is

B) 16,450

17. Muggs Co. includes one coupon in each bag of dog food it sells. In return for right coupons, costumers receive a leash . the leashes costs mugs $3 each. Meggs estimates that 45 percent of the coupons will be redeemed. Data for 2014 and 2015 are as follows: 2014 2015 Bags of food sold 500,000 600,000 Leashes purchased 18,000 22,000 Coupons Redeemed 120,000 150,000 The premium expense for 2014 is

B) 84,345

9. Which of the following is true?

B) Rents occur at the beginning of each period of an annuity due

18. "in-substance defense" is a term used to refer to an arrangement whereby

B. a company provides for the future repayment of a long-term debt by placing purchased securities in an irrevocable trust.

11. The ability to consummate the refinancing of a short-term obligation may be demonstrated by

D) All of these are correct

10. Which of the following situations may give rise to unearned revenue?

C) Selling magazine subscriptions.

5. Bonds that pay no interest unless the issuing company is profitable are called

C. Income Bonds

16. Which of the following is not a factor that is considered when evaluating whether or not to record a liability for pending litigation?

C. the type of litigation involved.

Vanco company has 35 employees who work 8-hour days and are paid hourly. On January 1, 2013, the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2013 may first be taken on January 1, 2014. Information relative to these employees is as follows: Hourly Vacation days earned Vacation days used Year Wages by each employee by each employees 2013 20.50 10 0 2014 22.50 10 8 2015 22.50 10 10 Vanco has the amount of expenses relative to compensated absences at the current rates of pay in effect when the compensated time is earned. 1. What is the amount of expense relative to compensated absenses that should b reported on vanco's income statement for 2013?

D) $57.400

6. Among the short-term obligations of Larsen Company as of December 31, the balance sheet date, are notes payable totaling $5250,000 with the Dennison national bank. These are 90-day notes, renewable for another 90-day period. These notes should be classified on the balance sheet of Larsen Company as

D) Current Liability

8. What does the current ratio inform you about a company?

D) The company's Liquidity.

3. A troubled debt restructuring will generally result in a

D) gain by the bebtor and a loss by the creditor

13. At dec 31, 2014 the following balances existed on the books of Rentro Corportation: Bonds payable 3,500,000 Discount on bonds payable 280,000 Interest payable 84,000 Unamitorized Bond Issue Cost 210,000 If the bonds are retired on jan 1,2015, at 102, what will Rentro report as a loss on redemption?

D. $560,000

24. Present Value is

D. All of these answer choices are correct.

19. A series of equal receipts at equal intervals of time when each receipt is received at the beginning of each time period is called an

D. Annuity due

22. The rate of interest actually earned by bondholder is called the

D. Effective rate

20. Liabilities are

D. Obligations arising from past transactions and payable in assets or services in the future