The Fundamentals of Financial Management for Student Guide
$1,000,000. |
Discounted cash flow method. |
50. multiple Choice Long term liabilities
1. On July 1, 2010, Spear Co. issued 1,000 of its 10%, $1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, 2010 and mature on April 1, 2020. Interest is payable semiannually on April 1 and October 1. What amount did Spear receive from the bond issuance?
a. $1,015,000
b. $1,000,000
c. $990,000
d. $965,000
2. 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 should be
a. $405,000.
b. $377,400.
c. $364,500.
d. $304,500.
3. 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
a. $264,050.
b. $255,000.
c. $244,000.
d. $215,000.
4. On January 1, 2010, Huff Co. sold $1,000,000 of its 10% bonds for $885,296 to yield 12%. Interest is payable semiannually on January 1 and July 1. What amount should Huff report as interest expense for the six months ended June 30, 2010?
a. $44,266
b. $50,000
c. $53,118
d. $60,000
5. On January 1, 2011, Doty Co. redeemed its 15-year bonds of $2,500,000 par value for 102. They were originally issued on January 1, 1999 at 98 with a maturity date of
January 1, 2014. The bond issue costs relating to this transaction were $150,000. Doty amortizes discounts, premiums, and bond issue costs using the straight-line method. What amount of loss should Doty recognize on the redemption of these bonds (ignore taxes)?
a. $90,000
b. $60,000
c. $50,000
d. $0
6. On its December 31, 2010 balance sheet, Emig Corp. reported bonds payable of $6,000,000 and related unamortized bond issue costs of $320,000. The bonds had been issued at par. On January 2, 2011, Emig retired $3,000,000 of the outstanding bonds at par plus a call premium of $70,000. What amount should Emig report in its 2011 income statement as loss on extinguishment of debt (ignore taxes)?
a. $0
b. $70,000
c. $160,000
d. $230,000
7. On January 1, 2006, Goll Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000. These bonds were to mature on January 1, 2016 but were callable at 101 any time after December 31, 2009. Interest was payable semiannually on July 1 and January 1. On
July 1, 2011, Goll called all of the bonds and retired them. Bond premium was amortized on a straight-line basis. Before income taxes, Goll's gain or loss in 2011 on this early extinguishment of debt was
a. $30,000 gain.
b. $12,000 gain.
c. $10,000 loss.
d. $8,000 gain.
8. On June 30, 2011, Omara Co. had outstanding 8%, $3,000,000 face amount, 15-year bonds maturing on June 30, 2021. Interest is payable on June 30 and December 31. The unamortized balances in the bond discount and deferred bond issue costs accounts on June 30, 2011 were $105,000 and $30,000, respectively. On June 30, 2011, Omara acquired all of these bonds at 94 and retired them. What net carrying amount should be used in computing gain or loss on this early extinguishment of debt?
a. $2,970,000.
b. $2,895,000.
c. $2,865,000.
d. $2,820,000.
9. A ten-year bond was issued in 2009 at a discount with a call provision to retire the bonds. When the bond issuer exercised the call provision on an interest date in 2011, the carrying amount of the bond was less than the call price. The amount of bond liability removed from the accounts in 2011 should have equaled the
a. call price.
b. call price less unamortized discount.
c. face amount less unamortized discount.
d. face amount plus unamortized discount.
10. Paige Co. took advantage of market conditions to refund debt. This was the fourth refunding operation carried out by Paige within the last three years. The excess of the carrying amount of the old debt over the amount paid to extinguish it should be reported as a
a. gain, net of income taxes.
b. loss, net of income taxes.
c. part of continuing operations.
d. deferred credit to be amortized over the life of the new debt.
*11. Eddy Co. is indebted to Cole under a $400,000, 12%, three-year note dated
December 31, 2009. Because of Eddy's financial difficulties developing in 2011, Eddy owed accrued interest of $48,000 on the note at December 31, 2011. Under a troubled debt restructuring, on December 31, 2011, Cole agreed to settle the note and accrued interest for a tract of land having a fair value of $360,000. Eddy's acquisition cost of the land is $290,000. Ignoring income taxes, on its 2011 income statement Eddy should report as a result of the troubled debt restructuring
Gain on Disposal Restructuring Gain
a. $158,000 $0
b. $110,000 $0
c. $70,000 $40,000
d. $70,000 $88,000
51. Prepare the value analysis schedule and the determination and distribution of excess schedule for...
Problem 2-7
Prepare the value analysis schedule and the determination and distribution of excess schedule for the investment in Shield Company. Complete a consolidated worksheet for Aron Company and its subsidiary Shield Company as of December 31, 2015, . Using the data given in Problem 2-6, assume that Aron Company purchases 80% of the common stock of Shield Company for $320,000 cash. The following comparative balance sheets are prepared for the two companies immediately after the purchase: Prepare the value analysis and the determination and distribution of excess schedule for the investment in Shield Company. Complete a consolidated worksheet for Aron Company and its subsidiary Shield Company as of December 31, 2015, .
52. Accounting 1 PLEASE HELP
Please answer as many of these as you can. It would be VERY helpful in total there are 7 i need this as possible as it is due in 5 hours haha thanks in advanced
PROBLEM
Adjusting Entries Sarah Company's trial balance on December 31, 2013 (the end of its annual accounting period), included the following account balances before adjustments:
Debit Credit
Notes Receivable $10,000
Insurance 3,000
Delivery Equipment 14,000
Building 60,000
Unearned Rent $4,320
Notes Payable 7,200
Reviewing the company's recorded transactions and accounting records for 2013, you find the following data pertaining to the December 31, 2013 adjustments:
Required:
Prepare the adjusting entries that are necessary to bring Sarah's accounts up to date on December 31, 2013. Each journal entry explanation should summarize your calculations. No calculations = no points for me...
1. On July 2, 2013, the company had accepted a $10,000, 9-month, 10% (annual rate) note receivable from a customer. The interest is to be collected when the note is collected
2. On August 2, 2013, the company had paid $3,000 for a 2-year insurance policy.
3. The building was acquired in 1998 and is being depreciated using the straight-line method over a 25-year lief. It has an estimated residual value of $8,000.
4. The delivery equipment was purchased on April 2, 2013. It is to be depreciated using the straight-line method over a 10-year life, with an estimated residual value of $2,000.
5. On September 1, 2013, the company had received 2 years' rent in advance ($4320) for a portion of a building it is renting to Victoria Company.
6. On December 1, 2013, the company had issued a $7,200, 30month, 12% (annual rate) note payable to a supplier. The interest is to be paid when the note is paid.
7. On January 2, 2013, the company purchased $1,000 of office supplies. A physical count on December 31, 2013, revealed that there are $400 of office supplies still on hand. No supplies were on hand at the beginning of the year.
53. multiple Choice Long term liabilities
1. On July 1, 2010, Spear Co. issued 1,000 of its 10%, $1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, 2010 and mature on April 1, 2020. Interest is payable semiannually on April 1 and October 1. What amount did Spear receive from the bond issuance?
a. $1,015,000
b. $1,000,000
c. $990,000
d. $965,000
2. 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 should be
a. $405,000.
b. $377,400.
c. $364,500.
d. $304,500.
3. 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
a. $264,050.
b. $255,000.
c. $244,000.
d. $215,000.
4. On January 1, 2010, Huff Co. sold $1,000,000 of its 10% bonds for $885,296 to yield 12%. Interest is payable semiannually on January 1 and July 1. What amount should Huff report as interest expense for the six months ended June 30, 2010?
a. $44,266
b. $50,000
c. $53,118
d. $60,000
5. On January 1, 2011, Doty Co. redeemed its 15-year bonds of $2,500,000 par value for 102. They were originally issued on January 1, 1999 at 98 with a maturity date of
January 1, 2014. The bond issue costs relating to this transaction were $150,000. Doty amortizes discounts, premiums, and bond issue costs using the straight-line method. What amount of loss should Doty recognize on the redemption of these bonds (ignore taxes)?
a. $90,000
b. $60,000
c. $50,000
d. $0
6. On its December 31, 2010 balance sheet, Emig Corp. reported bonds payable of $6,000,000 and related unamortized bond issue costs of $320,000. The bonds had been issued at par. On January 2, 2011, Emig retired $3,000,000 of the outstanding bonds at par plus a call premium of $70,000. What amount should Emig report in its 2011 income statement as loss on extinguishment of debt (ignore taxes)?
a. $0
b. $70,000
c. $160,000
d. $230,000
7. On January 1, 2006, Goll Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000. These bonds were to mature on January 1, 2016 but were callable at 101 any time after December 31, 2009. Interest was payable semiannually on July 1 and January 1. On
July 1, 2011, Goll called all of the bonds and retired them. Bond premium was amortized on a straight-line basis. Before income taxes, Goll's gain or loss in 2011 on this early extinguishment of debt was
a. $30,000 gain.
b. $12,000 gain.
c. $10,000 loss.
d. $8,000 gain.
8. On June 30, 2011, Omara Co. had outstanding 8%, $3,000,000 face amount, 15-year bonds maturing on June 30, 2021. Interest is payable on June 30 and December 31. The unamortized balances in the bond discount and deferred bond issue costs accounts on June 30, 2011 were $105,000 and $30,000, respectively. On June 30, 2011, Omara acquired all of these bonds at 94 and retired them. What net carrying amount should be used in computing gain or loss on this early extinguishment of debt?
a. $2,970,000.
b. $2,895,000.
c. $2,865,000.
d. $2,820,000.
9. A ten-year bond was issued in 2009 at a discount with a call provision to retire the bonds. When the bond issuer exercised the call provision on an interest date in 2011, the carrying amount of the bond was less than the call price. The amount of bond liability removed from the accounts in 2011 should have equaled the
a. call price.
b. call price less unamortized discount.
c. face amount less unamortized discount.
d. face amount plus unamortized discount.
10. Paige Co. took advantage of market conditions to refund debt. This was the fourth refunding operation carried out by Paige within the last three years. The excess of the carrying amount of the old debt over the amount paid to extinguish it should be reported as a
a. gain, net of income taxes.
b. loss, net of income taxes.
c. part of continuing operations.
d. deferred credit to be amortized over the life of the new debt.
*11. Eddy Co. is indebted to Cole under a $400,000, 12%, three-year note dated
December 31, 2009. Because of Eddy's financial difficulties developing in 2011, Eddy owed accrued interest of $48,000 on the note at December 31, 2011. Under a troubled debt restructuring, on December 31, 2011, Cole agreed to settle the note and accrued interest for a tract of land having a fair value of $360,000. Eddy's acquisition cost of the land is $290,000. Ignoring income taxes, on its 2011 income statement Eddy should report as a result of the troubled debt restructuring
Gain on Disposal Restructuring Gain
a. $158,000 $0
b. $110,000 $0
c. $70,000 $40,000
d. $70,000 $88,000
54. The yield to maturity (YTM) on 1-year zero-coupon bonds is 5% and the YTM on 2-year zeros is 6%. The...
The 6-month Treasury bill spot rate is 4%, and the 1-year Treasury bill spot rate is 5%. The implied 6-month forward rate for 6 months from now is:
a. 3.0%
b. 4.5%
c. 5.5%
d. 6.0%
The yield to maturity (YTM) on 1-year zero-coupon bonds is 5% and the YTM on 2-year zeros is 6%. The yield to maturity on 2-year-maturity coupon bonds with coupon rates of 12% (paid annually) is 5.8%. What arbitrage opportunity is available for an investment banking firm? What is the profit on the activity?
55. How does concurrency control contribute to financial data integrity?
1. How does concurrency control contribute to financial data integrity?
2. In a relational database environment, certain accounting records (for example, journals, subsidiary ledgers, and event general ledger accounts) may not exist. How is this possible?
3. Explain how to link tables in a 1:1 association. Why may this be different in a 1:0,1 association?
4. Discuss the accounting implications of the update, insertion, and deletion anomalies associated with improperly normalized tables.