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ACCT 551 Final Exam Set 2 NEW
ACCT 551 Final Exam Set 2 NEW
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ACCT 551 Final Exam Set 2 NEW

Question 1. 1. (TCO C) Which characteristic is not possessed by intangible assets? (Points : 5) 
        Physical existence
        Short-lived
        Result in future benefits
        Expensed over current and/or future years 
 
 
 
Question 2. 2.   (TCO C) One factor that is not considered in determining the useful life of an intangible asset is (Points : 5) 
        salvage value.
        provisions for renewal or extension.
        legal life.
        expected actions of competitors. 
 
 
Question 3. 3.   (TCO C) Intangible assets are reported on the balance sheet (Points : 5) 
        with an accumulated depreciation account.
        in the property, plant, and equipment section.
        separately from other assets.
        None of the above 
 
 
Question 4. 4. (TCO D) Which of the following is a current liability? (Points : 5) 
        A long-term debt maturing currently, which is to be paid with cash in a sinking fund
        A long-term debt maturing currently, which is to be retired with proceeds from a new debt issue
        A long-term debt maturing currently, which is to be converted into common stock
        A long-term debt maturing currently, which is to be paid with current assets 
 
 
Question 5. 5. (TCO D) A contingent liability (Points : 5) 
        definitely exists as a liability but its amount and due date are indeterminable.
        is accrued even though not reasonably estimated.
        is not disclosed in the financial statements.
        is the result of a loss contingency. 
 
 
 
Question 6. 6. (TCO D) Which of the following is a characteristic of the expense warranty approach, but not the sales warranty approach? (Points : 5) 
        Estimated liability under warranties
        Warranty expense
        Unearned warranty revenue
        Warranty revenue 
 
 
Question 7. 7. (TCO D) The term used for bonds that are unsecured regarding principal is (Points : 5) 
        junk bonds.
        debenture bonds.
        in-debenture bonds.
        callable bonds. 
 
 
Question 8. 8.  (TCO D) On July 1, 2009, Noble, Inc. issued 9% bonds in the face amount of $5,000,000, which mature on July 1, 2015. The bonds were issued for $4,695,000 to yield 10%, resulting in a bond discount of $305,000. Noble uses the effective-interest method of amortizing bond discount. Interest is payable annually on June 30. At June 30, 2011, Noble's unamortized bond discount should be (Points : 5) 
        $264,050.
        $255,000.
        $244,000.
        $215,000. 
a2009–2010
$4,695,000 + [($4,695,000 × .1) – ($5,000,000 × .09)] = $4,714,500. 
2010–2011:
$4,714,500 + ($471,450 – $450,000) = $4,735,950 $5,000,000 – $4,735,950 = $264,050
 
Question 9. 9.  (TCO E) Total stockholders' equity represents (Points : 5) 
        a claim to specific assets contributed by the owners.
        the maximum amount that can be borrowed by the enterprise.
        a claim against a portion of the total assets of an enterprise.
        only the amount of earnings that have been retained in the business. 
 
 
Question 10. 10. (TCO F) Houser Corporation owns 4,000,000 shares of stock in Baha Corporation. On December 31, 2010, Houser distributed these shares of stock as a dividend to its stockholders. This is an example of a (Points : 5) 
        property dividend.
        stock dividend.
        liquidating dividend.
        cash dividend.  
 
 
Page 2 
 
 
Question 1. 1. (TCO C) If intangible assets are acquired for stock, how is the cost of the intangible determined? (Points : 20) 
      
         
 
Question 2. 2. (TCO D) Total payroll of Watson Co. was $920,000, of which $160,000 represented amounts paid in excess of $100,000 to certain employees. The amount paid to employees in excess of $7,000 was $720,000. Income taxes withheld were $225,000. The state unemployment tax is 1.2%, the federal unemployment tax is .8%, and the FICA tax is 7.65% on an employee’s wages to $100,000 and 1.45% in excess of $100,000. 
(a) Prepare the journal entry for the wages and salaries paid.
(b) Prepare the entry to record the employer payroll taxes. (Points : 30) 
      
         
 
Question 3. 3. (TCO D) On January 1, 2010, Solis Co. issued its 10% bonds in the face amount of $3,000,000, which mature on January 1, 2020. The bonds were issued for $3,405,000 to yield 8%, resulting in bond premium of $405,000. Solis uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. At December 31, 2010, Solis's adjusted unamortized bond premium is what amount? Please show computations. (Points : 35) 
      
         
 
Question 4. 4. 
(TCO E) The original sale of the 450 par-value common shares of Gray Company was recorded as follows:
 
 
Record the treasury stock transactions (given below) under the cost method.
Transactions:
(a)   Bought 300 shares of common stock as treasury shares at $62 
(b)   Sold 80 shares of treasury stock at $60 
(c)   Sold four treasury shares at $68       
(Points : 30) 
      
         
 
Question 5. 5. (TCO F) In each of the following independent cases, it is assumed that the corporation has $400,000 of 6% preferred stock and $1,600,000 of common stock outstanding, each having a par value of $10. No dividends have been declared for 2009 and 2010.
(a) As of 12/31/11, it is desired to distribute $250,000 in dividends. How much will the preferred stockholders receive if their stock is cumulative and nonparticipating?
(b) As of 12/31/11, it is desired to distribute $400,000 in dividends. How much will the preferred stockholders receive if their stock is cumulative and participating up to 11% in total?
(c) On 12/31/11, the preferred stockholders received a $120,000 dividend on their stock, which is cumulative and fully participating. How much money was distributed in total for dividends during 2011? (Points : 30) 
      
         
 
Question 6. 6. (TCO A) At December 31, 2010, Kifer Company had 500,000 shares of common stock outstanding. On October 1, 2011, an additional 100,000 shares of common stock were issued. In addition, Kifer had $10,000,000 of 6% convertible bonds outstanding at December 31, 2010, which are convertible into 225,000 shares of common stock. No bonds were converted into common stock in 2011. The net income for the year ended December 31, 2011, was $3,000,000. Assuming the income tax rate was 30%, what would be the diluted earnings per share for the year ended December 31, 2011 (rounded to the nearest penny)? Show all computations. (Points : 25) 
      
         
 
Question 7. 7. 
(TCO B) The following information pertains to Fox Inc.’s portfolio of marketable securities for the Year ended Dec 31, Year 1 and Dec 31, Year 2.
  Cost Fair Value at 
 
 
Record the journal entries for the following marketable securities transactions based on the information given in the table.
1. Mark to market journal entry for the  Smith Co security at 12/31 Year 1
2. Mark to market journal entry for the  Jones Co security at 12/31 Year 1
3. Mark to market journal entry for the  Williams Co security at 12/31 Year 1
4. Mark to market journal entry for the  Gores  Co security at 12/31 Year 1
5. Mark to market journal entry for the  Smith Co security at 12/31 Year 2
6. Mark to market journal entry for the  Jones  Co security at 12/31 Year 2
7. Mark to market journal entry for the  Williams Co security at 12/31 Year 2
8. Mark to market journal entry for the  Gores  Co security at 12/31 Year 2
9. Journal entry to record  purchase of Martin Co. Investment
10. Journal entry to record the impairment of Martin Co. Investment
(Points : 30)

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