17 Multiple Choice Questions for Intermediate Accounting class:

Multiple Choice Question 40

Which of the following isnota condition necessary to exclude a short-term obligation from current liabilities?

Obligation must be due within one year.

Demonstrate the ability to complete the refinancing.

Intend to refinance the obligation on a long-term basis.

Multiple Choice Question 93

Coronado Industriesborrowed $410000on April 1. The note requires interest at12% and principal to be paid in one year. How much interest is recognized for the period from April 1 to December 31?

$0.

$32800.

$36900.

$49200.

Multiple Choice Question 95

Brambleowes $4.3million that is due on February 28. The company borrows $3520000on February 25 (5-year note) and uses the proceeds to pay down the $4.3million note and uses other cash to pay the balance. How much of the $4.3million note is classified as long-term in the December 31 financial statements?

$3520000.

$780000.

$4300000.

$0.

Multiple Choice Question 111

Vaughn Manufacturinghas50employees who work 8-hour days and are paid hourly. On January 1, 2017, the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2017 may first be taken on January 1, 2018. Information relative to these employees is as follows:

Year

Hourly

Wages

Vacation Days Earned

by Each Employee

Vacation Days Used

by Each Employee

2017

$35.50

10

0

2018

37.50

10

8

2019

40.50

10

10

Vaughnhas chosen to accrue the liability for compensated absences at the current rates of pay in effect when the compensated time is earned.

What is the amount of the accrued liability for compensated absences that should be reported at December 31, 2019?

$192000.

$418800.

$162000.

$217200.

Multiple Choice Question 120

Crane Companyself-insures its property for fire and storm damage. If the company were to obtain insurance on the property, it would cost them $1900000per year. The company estimates that on average it will incur losses of $1590000per year. During 2018, $690000worth of losses were sustained. How much total expense and/or loss should be recognized byCrane Companyfor 2018?

$0 in losses and $1590000in insurance expense

$690000in losses and no insurance expense

$690000in losses and $665000in insurance expense

$0 in losses and $1900000in insurance expense

Multiple Choice Question 62

On January 1, 2017, Sheridan Company issued eight-year bonds with a face value of $6080000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are:

Present value of 1 for 8 periods at 10%

0.467

Present value of 1 for 8 periods at 12%

0.404

Present value of 1 for 16 periods at 5%

0.458

Present value of 1 for 16 periods at 6%

0.394

Present value of annuity for 8 periods at 10%

5.335

Present value of annuity for 8 periods at 12%

4.968

Present value of annuity for 16 periods at 5%

10.838

Present value of annuity for 16 periods at 6%

10.106

The issue price of the bonds is

$6083040.

$5467744.

$5476864.

$5528544.

Multiple Choice Question 74

A company issues $25700000, 9.8%, 20-year bonds to yield 10% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are $25259010. What is interest expense for 2018, using straight-line amortization?

$2540650

$2518600

$2491169

$2527399

Multiple Choice Question 87

At December 31, 2017 the following balances existed on the books of Coronado Industries:

Bonds Payable

$5960000

Discount on Bonds Payable

847000

Interest Payable

158000

If the bonds are retired on January 1, 2018, at 101, what will Coronado report as a loss on redemption?

$748600

$596000

$1064600

$906600

Multiple Choice Question 109

On January 1, 2018, Sheridan Company sold $5050000 of its 8% bonds for $4470740 to yield 10%. Interest is payable semiannually on January 1 and July 1. What amount should Sheridan report as interest expense for the six months ended June 30, 2018?

$178836

$223537

$252500

$202000

Multiple Choice Question 71

Presented below is information related to Concord Corporation:

Common Stock, $1 par

$3410000

Paid-in Capital in Excess of ParCommon Stock

560000

Preferred 8 1/2% Stock, $50 par

2090000

Paid-in Capital in Excess of ParPreferred Stock

388000

Retained Earnings

1440000

Treasury Common Stock (at cost)

150000

The total stockholders' equity of Concord Corporation is

$7888000.

$7738000.

$6298000.

$6448000.

Multiple Choice Question 77

Sheffield Corp. issued 5900 shares of its $5 par value common stock having a fair value of $25 per share and 8400 shares of its $15 par value preferred stock having a fair value of $20 per share for a lump sum of $254000. The proceeds allocated to the preferred stock is

$118748

$168000

$169800

$135252

Multiple Choice Question 89

Swifty Corporation declared a $228000 cash dividend. It currently has 11500 shares of 4%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Swifty distribute to the common stockholders?

$92000.

$136000.

$182000.

None.

Multiple Choice Question 106

Sunland Company has 635000 shares of $10 par value common stock outstanding. During the year Sunland declared a 16% stock dividend when the market price of the stock was $49 per share. Two months later Sunland declared a $0.50 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by:

$ 639000.

$5346700.

$4978400.

$ 368300.

Multiple Choice Question 56

On May 1, 2018, Sheffield Corp. issued $1650000 of 6% bonds at 103, which are due on April 30, 2028. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Sheffield's common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96. On May 1, 2018, the fair value of Sheffield's common stock was $35 per share and of the warrants was $2.

On May 1, 2018, Sheffield should record the bonds with a

discount of $18480.

discount of $66000.

discount of $16500.

premium of $49500.

Multiple Choice Question 68

On January 1, 2018, Coronado Industries granted Tim Telfer, an employee, an option to buy 4700 shares of Coronado Co. stock for $25 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $37800. Telfer exercised his option on September 1, 2018, and sold his 4700 shares on December 1, 2018. Quoted market prices of Coronado Co. stock during 2018 were

January 1

$26 per share

September 1

$31 per share

December 1

$35 per share

The service period is for three years beginning January 1, 2018. As a result of the option granted to Telfer, using the fair value method, Coronado should recognize compensation expense for 2018 on its books in the amount of

$12600.

$ 9200.

$47000.

$37800.

Multiple Choice Question 102

Bonita Industries had 302000 shares of common stock issued and outstanding at December 31, 2017. During 2018, no additional common stock was issued. On January 1, 2018, Bonita issued 402000 shares of nonconvertible preferred stock. During 2018, Bonita declared and paid $175000 cash dividends on the common stock and $158000 on the nonconvertible preferred stock. Net income for the year ended December 31, 2018, was $958000. What should be Bonita's 2018 earnings per common share, rounded to the nearest penny?

$2.07

$1.10

$2.65

$3.17

Multiple Choice Question 127

Marigold Corp. had 806000 shares of common stock outstanding at December 31, 2018. In addition, it had 157000 stock options outstanding, which had been granted to certain executives, and which gave them the right to purchase shares of Marigold's stock at an option price of $37 per share. The average market price of Marigold's common stock for 2018 was $50. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2018?

922180

861162

846820

806000