3)Leland Corporation sells DVD players. The corporation also offers its customers a 4-year service-type warranty contract. On 1/1/24, Leland sold 10,000 warranty contracts at $50 each; Leland spent $45,000 servicing warranties during 2024 and $65,000 servicing warranties in 2025. Estimated warranty expense for the four-year period is $400,000. The Sales Warranty (Deferred Revenue) approach is applicable. Assume straight-line amortization.

What is the effect on 2025 Net Income?

a.

$60,000

b.

$65,000

c.

$25,000

d.

$35,000

e.

$100,000

7)Benton Company issues $10,000,000 of 10-year, 8% bonds on April 1, 2025 at 95 plus accrued interest.The bonds are dated January 1, 2025, and pay interest on June 30 and December 31.What is the total cash received on the issue date?

a.

$9,700,000

b.

$10,200,000

c.

$9,850,000

d.

$9,766,667

e.

$10,000,000

11) In accounting for long-term construction-type contracts, the difference between Billings and Construction in Progress is:

Select one:

a.

Recognized on the balance sheet as a net asset or liability

b.

Subtracted from Gross Profit Recognized

c.

Added to Gross Profit Recognized

d.

Not disclosed as a net amount in the financial statements

16) Which is NOT included in the five-step process of revenue recognition?

Select one:

a.

Allocate price to performance obligation

b.

Identify performance obligation

c.

Recognize revenue when performance obligation is probable

d.

Identify contract with customer

18) In a four-column December proof of cash reconciling Bank to Book, which 12/31 item would appear as an addition in columns two and four?

Select one:

a.

December collection by bank

b.

December deposit in transit

c.

December service charge

d.

December outstanding check

19) Which statement is TRUE?

Select one:

a.

At year-end, a journal entry to increase assets by the estimate of future inventory returns should be made

b.

Inventory on consignment should be included in the consignee's inventory count until sold

c.

For assurance-type warranties, warranty expense is allocated over the life of the warranty

d.

For service-type warranties, warranty revenue is recorded in the year of the sale of the additional warranty

20)Which statement is FALSE?

Select one:

a.

Diluted EPS is never higher than Basic EPS

b.

Use of the "Treasury Stock Method" determines the effect of convertible bonds on Diluted EPS

c.

Bond interest expense is the cash interest paid plus the discount amortized that period

d.

Bond interest expense is the cash interest paid less the premium amortized that period

21) Which statement is false for both a property dividend and a stock dividend?

Select one:

a.

Retained Earnings decreases

b.

Par value per share decreases

c.

Contributed capital increases

d.

Total stockholders' equity does not change

e.

Total stockholders' equity decreases

22) On July 1, 2023, a firm issued $200,000 of 9% bonds. The bonds were dated May 1, 2023. The maturity date is 5/1/28. Interest is paid semi-annually on May 1 and November 1. Straight-line amortization is used. A total of $210,500 in cash was received, which included accrued interest. What appears as Interest Payable on the 12/31/23 balance sheet?

Select one:

a.

$9,000

b.

$6,000

c.

$12,000

d.

$3,000

e.

$15,000

23) The Shippecasse Company had a Current Ratio of 1:2. The Company declared a $10,000 cash dividend to preferred shareholders and accrued revenue of $7,500. What is the combined effect of these two transactions on the current ratio and total stockholders' equity, respectively?

Select one:

a.

Increase, Increase

b.

Decrease, Decrease

c.

Increase, Decrease

d.

No Effect, Increase

e.

Decrease, No Effect