Attached is home work problems. Please look through and give me your input on the answers

ACCT 311 6980 - Quiz 2 Part 1, 16 questions, 5 points each 1. Bing Corporation purchased bonds at a discount on the open market as an investment and intends to hold these bonds to maturity. Assume that Bing elects the fair value option. Bing should account for these bonds at a. Cost. b. Amortized cost. c. Fair value. d. Lower of cost or market. 2. Reed Insurance Co. began operations on January 1, year 1. The following information pertains to Reed's December 31, year 1 portfolio of marketable equity securities: Trading securities Aggregate cost Aggregate fair value Aggregate lower of cost or market value applied to each security in the portfolio $360,000 320,000 304,000 Available-for-sale securities $550,000 450,000 420,000 Reed does not elect the fair value option. If the fair value declines are judged to be temporary, what amounts should Reed report as a loss on these securities in its December 31, year 1 income statement? a. b. c. d. Trading securities $40,000 $0 $40,000 $56,000 Available-for-sale securities $0 $100,000 $100,000 $130,000 3. Antonio Corp. acquired a portfolio of marketable equity securities that it does not intend to sell in the near term. Antonio elects the fair value option for reporting its financial assets. How should Antonio classify these securities, and how should it report unrealized gains and losses? Classify as Report as a a. b. c. d. Trading securities Available-for-sale securities Trading securities Available-for-sale securities Component of income from continuing operations Separate component of other comprehensive income Separate component of other comprehensive income Component of income from continuing operations 4. On January 10, year 1, Box, Inc. purchased marketable equity securities of Knox, Inc. and Scot, Inc., neither of which Box could significantly influence. Box classified both securities as available-for-sale. At December 31, year 1, the cost of each investment was greater than its fair value. The loss on the Knox investment was considered other-than-temporary and that on Scot was considered temporary. How should Box report the effects of these investing activities in its year 1 income statement, assuming Box does not elect the fair value option to account for these securities? I. Excess of cost of Knox stock over its fair value. II. Excess of cost of Scot stock over its fair value. a. An unrealized loss equal to I plus II. b. An unrealized loss equal to I only. c. A realized loss equal to I only. d. No income statement effect. 5. Pal Corp.'s year 1 dividend revenue included only part of the dividends received from its Ima Corp. investment. Pal Corp. has an investment in Ima Corp. that it intends to hold indefinitely. The balance of the dividend reduced Pal's carrying amount for its Ima investment. This reflects the fact that Pal accounts for its Ima investment a. As an available-for-sale investment, and only a portion of Ima's year 1 dividends represent earnings after Pal's acquisition. b. As an available-for-sale investment and its carrying amount exceeded the proportionate share of Ima's fair value. c. As an equity investment, and Ima incurred a loss in year 1. d. As an equity investment, and its carrying amount exceeded the proportionate share of Ima's fair value. 6. A marketable debt security is transferred from available-for-sale to held-tomaturity securities. At the transfer date, the security's carrying amount exceeds its fair value. Assume the fair value option is not elected to report this security. What amount is used at the transfer date to record the security in the held-to-maturity portfolio? a. Fair value, regardless of whether the decline in fair value below cost is considered permanent or temporary. b. Fair value, only if the decline in fair value below cost is considered permanent. c. Cost, if the decline in fair value below cost is considered temporary. d. Cost, regardless of whether the decline in fair value below cost is considered permanent or temporary. 7. When the equity method is used to account for investments in common stock, which of the following affects the investor's reported investment income? a. b. c. d. Equipment amortization related to purchase Yes No No Yes Cash dividends from investee Yes Yes No No 8. Upon the death of an officer, Jung Co. received the proceeds of a life insurance policy held by Jung on the officer. The proceeds were not taxable. The policy's cash surrender value had been recorded on Jung's books at the time of payment. What amount of revenue should Jung report in its statements? a. Proceeds received. b. Proceeds received less cash surrender value. c. Proceeds received plus cash surrender value. d. None. 9. The Branch Company sells inventory costing $22,500 to a customer for $30,000. Because of significant uncertainties surrounding the transaction, the installment sales method is viewed as proper. In the first year, the company collects $8,000. On the first day of the following year, the customer defaults and the company repossesses the inventory which now has a fair value of only $11,000. What is the company's loss on this default? a. $3,500 b. $5,500 c. $8,000 d. $11,000 10. When is a company most likely to record the results of its sales by application of the cost recovery method? a. Whenever the amount of cash to be collected is not subject to a reasonable estimation. b. Whenever a sale is made that creates a loss for the seller. c. Whenever profit should be recognized proportionate to the cash that is actually collected. d. Whenever there is substantial doubt that the seller will receive enough cash to cover the cost of the inventory. 11. A construction company is hired by the state government on January 1, Year One to build a section of a new highway. The sales price is $100 million and the company estimates that the work will cost $92 million. During Year One, $18 million is spent on the work and the company's engineers believe that work costing $72 million is left to be completed. During Year Two, another $39 million is spent but $38 million of work is now estimated to remain. If the company is applying the percentage of completion method, what is the impact on net income to be recognized in Year Two? a. $1 million b. $2 million c. $3 million d. $4 million 12. Hayden Construction signs an agreement with the state of Vermont to build a short stretch of highway. According to cost estimations, Hayden anticipates a total profit of $2 million. By the end of the first year of this project, 18 percent of this new highway had been completed. Unfortunately, in December of this first year, the company's engineers discover problems that had not been expected. These problems cast significant uncertainties over the entire project. Which of the following statements is true? a. The percentage of completion method must be applied by Hayden. b. Hayden can choose to recognize this project by either the percentage of completion method or the completed contract method. c. The completed contract method must be applied by Hayden. d. Hayden should recognize profits for the first year of 18 percent of $2 million or $360,000. 13. In a statement of cash flows, if used equipment is sold at a gain, the amount shown as a cash inflow from investing activities equals the carrying amount of the equipment a. Plus the gain. b. Plus the gain and less the amount of tax attributable to the gain. c. Plus both the gain and the amount of tax attributable to the gain. d. With no addition or subtraction. 14. Which of the following is not disclosed on the statement of cash flows when prepared under the direct method, either on the face of the statement or in a separate schedule? a. The major classes of gross cash receipts and gross cash payments. b. The amount of income taxes paid. c. A reconciliation of net income to net cash flow from operations. d. A reconciliation of ending retained earnings to net cash flow from operations. 15. Metro, Inc. reported net income of $150,000 for year 1. Changes occurred in several balance sheet accounts during year 1 as follows: Investment in Videogold, Inc. stock, carried on the equity basis Accumulated depreciation, caused by major repair to projection equipment Premium on bonds payable Deferred income tax liability (long-term) $5,500 increase 2,100 decrease 1,400 decrease 1,800 increase In Metro's year 1 cash flow statement, the reported net cash provided by operating activities should be a. $150,400 b. $148,300 c. $144,900 d. $142,800 16. A company starts the year with accounts payable of $13,000 but ends the year with the balance being $19,000. Net income for the year is $300,000. If the company reports its cash flows from operating activities by means of the indirect method, what amount should be reported? a. $287,000 b. $294,000 c. $306,000 d. $319,000 Part 2, 2 questions, 10 points each Please select two of the following three questions. Note that all questions have multiple parts. QUESTION 1. Presented below is information related to the purchases of common stock by Lilly Company during 2014. Cost (at purchase date) Fair Value (at December 31) Investment in Arroyo Company stock $103,200 $82,200 Investment in Lee Corporation stock 265,500 303,900 Investment in Woods Inc. stock 197,800 212,460 Total $566,500 $598,560 In addition, assume that the investment in the Woods Inc. stock was sold during 2015 for $210,690. At December 31, 2015, the following information relates to its two remaining investments of common stock. Cost (at purchase date) Fair Value (at December 31) Investment in Arroyo Company stock $103,200 $149,200 Investment in Lee Corporation stock 265,500 327,300 $368,700 $476,500 Total Net income before any security gains and losses for 2015 was $909,000. The Arroyo Company stock is reported using the fair value option, The Lee Corporation investment is classified as availableforsale and the Woods, Inc. investment is a trading security. PART (a) Compute the amount of net income or net loss that Lilly should report for 2015, taking into consideration Lilly's security transactions for 2015. PART (b) Prepare the journal entry to record unrealized gain or loss related to the investment in Arroyo Company stock at December 31, 2015. (If no entry is required, note "No Entry\".) QUESTION 2. Dixon Construction Company was awarded a contract to construct an interchange at the junction of U.S. 94 and Highway 30 at a total contract price of $11,300,000. The estimated total costs to complete the project were $8,300,000. PART (a) Make the entry to record construction costs of $4,399,000, on construction in process to date. PART (b) Make the entry to record progress billings of $2,930,000. PART (c) Make the entry to recognize the profit that can be recognized to date, on a percentageofcompletion basis. QUESTION 3. Hunt Co. at the end of 2015, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $ 810,000 Estimated warranty expenses deductible for taxes when paid 1,260,000 Extra depreciation (1,668,000) Taxable income $ 402,000 Estimated warranty expense of $770,000 will be deductible in 2016, $360,000 in 2017, and $130,000 in 2018. The use of the depreciable assets will result in taxable amounts of $556,000 in each of the next three years. PART (a) Prepare a table of future taxable and deductible amounts. 2016 2017 2018 Total $ $ $ $ Future taxable (deductible) amounts Warranties Excess depreciation PART (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015, assuming an income tax rate of 35% for all years