1

Consider the following facts: - At the beginning of the year, Company A had 20,000 shares of common shares outstanding. - During the year, it sold another 2,600 shares on July 1. - On November 1, it repurchased 600 shares. - For the year, Company A had net income of $337,600. - Company A also has 15,000 shares of $10 par value, 6%, cumulative preferred stock outstanding. - For the last two years, no dividends have been declared on the preferred stock. In this scenario, the basic earnings per share for Company A is $ _______.

$14.92

$15.08

$16.50

$15.65

None of these answers are correct.

2

Consider the following facts: - Company A has partially satisfied its obligation under a multiple performance obligation contract. Company A should report this partial obligation satisfaction on its balance sheet as:

contract asset

contract liability

None of these answers are correct

unearned service revenue

receivable

3

A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2014. Interest is paid on June 30 and December 31. The proceeds from the bonds are $19,604,144. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2014 balance sheet?

$19,608,308

$20,000,000

$19,625,124

None of these answers are correct

$19,612,642

4

Consider the following facts: - During 2013, Company B introduced a new line of equipment that carry a three-year warranty against defects. - Industry experience suggests that warranty costs are estimated as follows: 1% of sales in the year of sale 3% of sales in the year after sale 4% in the second year after sale Company B's sales and actual warranty expenditures for its first three-year period were as follows under the accrual method: Sales: 2013 = $1,400,000 2014 = $1,000,000 2015 = $1,400,000 Actual Warranty Expenditures: 2013 = $26,000 2014 = $40,000 2015 = $90,000 What amount should Company B report as warranty liability at December 31, 2015?

$148,000

$14,000

$22,000

None of these answers are correct

$0

5

Consider the following facts: - Company A invests in Company B. - Company A uses the equity method to account for its investment in Company B. In this scenario, Company A should recognize its share of Company B's earnings when _________________.

Company B reports earnings on its income statement.

Company B declares a cash dividend.

Company B pays a cash dividend.

Company A sells the investment.

None of these answers are correct