15 accounting multiple
Slack Inc. borrowed $400,000 on April 1. The note requires interest at 12% and principal to be paid in one year. How much interest is recognized for the period from
April 1 to December 31?
$32,000.
$36,000.
$0.
$48,000.
enible newspapers sold 6,000 of annual subscriptions at $150 each on June 1. How much unearned revenue will exist as of December 31?
$450,000.
$0.
$900,000.
$375,000.
Posner Co. is a retail store operating in a state with a 7% retail sales tax. The retailer may keep 2% of the sales tax collected. Posner Co. records the sales tax in
the Sales Revenue account. The amount recorded in the Sales Revenue account during May was $754,350.
The amount of sales taxes (to the nearest dollar) for May is
$49,350.
$67,893.
$62,286.
$52,806.
A company gives each of its 75 employees (assume they were all employed continuously through 2017 and 2018) 12 days of vacation a year if they are employed at the end
of the year. The vacation accumulates and may be taken starting January 1 of the next year. The employees work 8 hours per day. In 2017, they made $21 per hour and in
2018 they made $24 per hour. During 2018, they took an average of 9 days of vacation each. The company’s policy is to record the liability existing at the end of each
year at the wage rate for that year. What amount of vacation liability would be reflected on the 2017 and 2018 balance sheets, respectively?
$172,800; $210,600
$151,200; $210,600
$172,800; $216,000
$151,200; $216,000
The total payroll of Trolley Company for the month of October, 2017 was $960,000, of which $180,000 represented amounts paid in excess of $118,500 to certain
employees. $600,000 represented amounts paid to employees in excess of the $7,000 maximum subject to unemployment taxes. $180,000 of federal income taxes and $18,000
of union dues were withheld. The state unemployment tax is 1%, the federal unemployment tax is .8%, and the current F.I.C.A. tax is 7.65% on an employee’s wages to
$118,500 and 1.45% in excess of $118,500. What amount should Trolley record as payroll tax expense?
$79,560.
$73,440.
$87,360.
$68,760.
Excom manufactures high-end whole home electronic systems. The company provides a one-year warranty for all products sold. The company estimates that the warranty cost
is $300 per unit sold and reported a liability for estimated warranty costs $10.4 million at the beginning of this year. If during the current year, the company sold
60,000 units for a total of $324 million and paid warranty claims of $12,000,000 on current and prior year sales, what amount of liability would the company report on
its balance sheet at the end of the current year?
$6,000,000.
$16,400,000.
$18,000,000.
$3,733,333.
Excom manufactures high-end whole home electronic systems. The company provides a one-year warranty for all products sold. The company estimates that the warranty cost
is $300 per unit sold and reported a liability for estimated warranty costs $10.4 million at the beginning of this year. If during the current year, the company sold
60,000 units for a total of $324 million and paid warranty claims of $12,000,000 on current and prior year sales, what amount of liability would the company report on
its balance sheet at the end of the current year?
$6,000,000.
$16,400,000.
$18,000,000.
$3,733,333.
A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2016. Interest is paid on June 30 and December 31. The proceeds from the bonds are
$14,703,108. Using straight-line amortization, what is the carrying value of the bonds on December 31, 2018?
$14,747,642
$14,752,672
$14,955,466
$14,725,374
A company issues $25,000,000, 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
$24,505,180. Using effective-interest amortization, how much interest expense will be recognized in 2017?
$1,960,623
$975,000
$1,960,415
$1,950,000
On October 1, 2017 Bartley Corporation issued 5%, 10-year bonds with a face value of $8,000,000 at 104. Interest is paid on October 1 and April 1, with any premiums or
discounts amortized on a straight-line basis.
The entry to record the issuance of the bonds would include a
credit of $200,000 to Interest Payable.
credit of $320,000 to Premium on Bonds Payable.
debit of $320,000 to Discount on Bonds Payable.
credit of $7,680,000 to Bonds Payable.
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?
$810,000
$1,110,000
$960,000
$600,000
On January 1, 2017, Ann Price loaned $187,825 to Joe Kiger. A zero-interest-bearing note (face amount, $250,000) was exchanged solely for cash; no other rights or
privileges were exchanged. The note is to be repaid on December 31, 2019. The prevailing rate of interest for a loan of this type is 10%. The present value of $250,000
at 10% for three years is $187,825. What amount of interest income should Ms. Price recognize in 2017?
$25,000.
$75,000.
$56,350.
$18,783.
On January 1, 2018, Solis Co. issued its 10% bonds in the face amount of $8,000,000, which mature on January 1, 2028. The bonds were issued for $9,080,000 to yield 8%,
resulting in bond premium of $1,080,000. Solis uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. At December
31, 2018, Solis’s adjusted unamortized bond premium should be
$972,000.
$812,000.
$1,006,400.
$1,080,000.
Presented below is information related to Hale Corporation:
Common Stock, $1 par $3,500,000
Paid-in Capital in Excess of Par?Common Stock 550,000
Preferred 8 1/2% Stock, $50 par 2,000,000
Paid-in Capital in Excess of Par?Preferred Stock 400,000
Retained Earnings 1,500,000
Treasury Common Stock (at cost) 150,000
The total stockholders’ equity of Hale Corporation is
$7,800,000.
$7,950,000.
$6,300,000.
$6,450,000.
Manning Company issued 10,000 shares of its $5 par value common stock having a fair value of $25 per share and 15,000 shares of its $15 par value preferred stock
having a fair value of $20 per share for a lump sum of $520,000. How much of the proceeds would be allocated to the common stock?
$236,364
$250,000
$283,636
$276,250
On September 1, 2017, Valdez Company reacquired 30,000 shares of its $10 par value common stock for $15 per share. Valdez uses the cost method to account for treasury
stock. The journal entry to record the reacquisition of the stock should debit
Treasury Stock for $450,000.
Common Stock for $300,000 and Paid-in Capital in Excess of Par for $150,000.
Treasury Stock for $300,000.
Common Stock for $300,000.
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?
Treasury Stock for $200,000 and Retained Earnings for $70,000.
Treasury Stock for $240,000 and Retained Earnings for $30,000.
Treasury Stock for $270,000.
Treasury Stock for $200,000 and Paid-in Capital from Treasury Stock for $70,000.
Luther Inc., has 4,000 shares of 5%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2018, and
December 31, 2017. The board of directors declared and paid an $8,000 dividend in 2017. In 2018, $40,000 of dividends are declared and paid. What are the dividends
received by the preferred stockholders in 2018?
$28,000
$20,000
$10,000
$12,000
Anders, Inc., has 15,000 shares of 4%, $100 par value, cumulative preferred stock and 60,000 shares of $1 par value common stock outstanding at December 31, 2018.
There were no dividends declared in 2016. The board of directors declares and pays a $110,000 dividend in 2017 and in 2018. What is the amount of dividends received by
the common stockholders in 2018?
$60,000
$110,000
$0
$40,000
Masterson Company has 490,000 shares of $10 par value common stock outstanding. During the year Masterson declared a 15% stock dividend when the market price of the
stock was $36 per share. Three months later Masterson declared a $.60 per share cash dividend. As a result of the dividends declared during the year, retained earnings
decreased by
$ 462,000
$ 485,100
$2,984,100
$2,646,000
On July 1, 2018, an interest payment date, $150,000 of Parks Co. bonds were converted into 3,000 shares of Parks Co. common stock each having a par value of $45 and a
market value of $54. There is $6,000 unamortized discount on the bonds. Using the book value method, Parks would record
no change in paid-in capital in excess of par.
a $12,000 increase in paid-in capital in excess of par.
a $9,000 increase in paid-in capital in excess of par.
a $18,000 increase in paid-in capital in excess of par.
In 2017, Eklund, Inc., issued for $103 per share, 90,000 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into three
shares of Eklund’s $25 par value common stock at the option of the preferred stockholder. In August 2018, all of the preferred stock was converted into common stock.
The market value of the common stock at the date of the conversion was $30 per share. What total amount should be credited to additional paid-in capital from common
stock as a result of the conversion of the preferred stock into common stock?
$1,170,000.
$2,250,000.
$2,520,000.
$1,530,000.
Vernon Corporation offered detachable 5-year warrants to buy one share of common stock (par value $5) at $20 (at a time when the stock was selling for $32). The price
paid for 800, $1,000 bonds with the warrants attached was $820,000. The market price of the Vernon bonds without the warrants was $720,000, and the market price of the
warrants without the bonds was $80,000. What amount should be allocated to the warrants?
$100,000
$80,000
$82,000
$96,000
On January 1, 2017, Sharp Corp. granted an employee an option to purchase 15,000 shares of Sharp’s $5 par value common stock at $20 per share. The Black-Scholes option
pricing model determines total compensation expense to be $350,000. The option became exercisable on December 31, 2018, after the employee completed two years of
service. The market prices of Sharp’s stock were as follows:
January 1, 2017 $30
December 31, 2018 50
For 2018, should recognize compensation expense under the fair value method of
$225,000.
$175,000.
$75,000.
$0.
Hill Corp. had 600,000 shares of common stock outstanding on January 1, issued 900,000 shares on July 1, and had income applicable to common stock of $2,940,000 for
the year ending December 31, 2018. Earnings per share of common stock for 2018 would be
$4.90.
$2.32.
$2.80.
$3.28.
On January 2, 2018, Mize Co. issued at par $300,000 of 6% convertible bonds. Each $1,000 bond is convertible into 60 shares. No bonds were converted during 2018. Mize
had 100,000 shares of common stock outstanding during 2018. Mize ‘s 2018 net income was $160,000 and the income tax rate was 30%. Mize’s diluted earnings per share for
2018 would be (rounded to the nearest penny)
$1.60.
$1.51.
$1.35.
$1.46.
