BOZ Co. has determined its year-end inventory on a FIFO basis to be $500,000. Information pertaining to that inventory follows:

Estimated selling price

$508,000

Estimated cost of disposal

20,000

Normal profit margin

60,000

Current replacement cost

455,000

BOZ records losses that result from applying the lower-of-cost-or-market (LCM) rule. At its year-end, what should be the net carrying value of BOZs inventory?

500,000

$488,000

$455,000

None of the above is correct

Question 3

The amount of interest to capitalize during the construction of a qualified asset is the

		lower of specific interest or avoidable interest
		lower of avoidable or actual interest
		lower of specific or actual interest
		higher of specific or avoidable interest

Question 4

Which of the following has no effect on comprehensive income?

		Unrealized gains and losses on held-to-maturity investments
		Unrealized gains and losses on available-for-sale investments
		Unrealized gains and losses on trading securities
		Realized gains and losses on available-for-sale securities that were held in previous periods

Question 5

Given the following information about Ultra Inc.s portfolio of investments:

	Cost		Fair Value 12/31/04		2005 Purchases		2005 Sales		Fair Value 12/31/05
Held-to-maturity securities
Security J					$128,000				$130,000
Trading equity securities
Security K	$700,000		$725,000						705,000
Security A	100,000		110,000				$150,000
Available-for-sale equity securities
Security S	400,000		380,000				500,000
Security L	100,000		95,000						102,000

Assume that Security J is a debt security that was purchased at a premium. The premium amortization for 2005 was $3,000. All declines in fair value are considered temporary.

What is the carrying amount of Security J at December 31, 2005?

		$125,000
		$128,000
		$130,000
		$131,000

Question 6

The journal entry in the sellers books to record an account deemed uncollectible in a factoring agreement with recourse would include a

		debit to Bad Debt Expense
		debit to Allowance for Uncollectible Accounts
		debit to Accounts Receivable
		None of the above

Question 7

The journal entry in the buyers books to record the honoring by the seller of an account deemed uncollectible in a factoring

agreement with recourse would include a

		debit to Bad Debt Expense
		debit to Allowance for Uncollectible Accounts
		debit to Cash
		debit to Loss on Factoring Agreement

Question 8

Which of the following would not be classified as an operating asset (PP&E)?

		Construction in progress
		Land held as an investment
		Land improvements
		Coal mine

Question 9

Bogus Co. exchanged Building 42 which has an appraised value of $4,800,000, a cost of $7,590,000, and accumulated depreciation of $3,600,000 for Building X belonging to Good Co. Building X has an appraised value of $4,512,000, a cost of $9,030,000, and accumulated depreciation of $4,752,000. The correct amount of cash was also paid. Assume depreciation has already been updated.

How much gain or loss did Good record, assuming no commercial substance?

		0 gain/loss
		234,000 gain
		48,600 gain
		None of the above

Question 10

Which of the following is not an equity security?

		Common stock
		Warrants
		Call Options
		Redeemable preferred stock with a mandatory redemption period

14040 biscayne blvd apt 1008 north Miami 33181

Question 11

Interest received from available-for-sale debt securities should be reported as

		an unrealized holding gainincome
		an unrealized holding gainequity
		other revenue on the income statement
		a reclassification adjustment on the statement of comprehensive income

Question 12

Information regarding Stone Co.s portfolio of available-for-sale securities is as follows:

Aggregate cost as of 12/31/05	$170,000
Unrealized gains as of 12/31/05	4,000
Unrealized losses as of 12/31/05	26,000
Net realized gains during 2005	30,000

At December 31, 2004, Stone reported an unrealized holding loss from available-for-sale securities of $1,500 on the statement of stockholders equity. What amount should Stone report on its December 31, 2005, balance sheet as an unrealized holding loss?

		$26,000
		$22,000
		$20,500
		None of the above

Question 13

Bubba Co.s beginning inventory at January 1 was understated by $100,000, and its ending inventory was overstated by

$120,000. Bubbas cost of sales for the year would be

		understated by $100,000
		overstated by $100,000
		understated by $220,000
		overstated by $220,000

Question 14

The Bubba Company uses the gross profit method to estimate inventory and cost of goods sold for interim reporting purposes. The average gross profit rate is 25 percent of sales. The following data relate to the month of May:

Inventory cost, May 1	$30,000
Purchases during the month at cost	80,400
Sales	100,800
Sales returns	3,600

Using the data above, what is the estimated ending inventory at May 31?

		$24,300
		$25,200
		$34,800
		$37,500

Question 15

The Big Bubba Company began operations on January 1, 2004 and used the FIFO method to assign cost to its inventory. Management is considering a change to the LIFO method. Given the following information: a change to the LIFO method in 2005 would result in net income for 2005 of

Final inventory	2004		2005
FIFO	$24,000		$27,000
LIFO	20,000		21,000
Net income (per FIFO)	$12,000		$17,000

Based on the above information, a change to the LIFO method in 2005 would result in net income for 2005 of

		$11,000
		$15,000
		$17,000
		$23,000

Question 16

Given the following information for Small Bubba Co. for 2015:

Merchandise purchased for resale	$600,000
Freight-in	20,000
Freight-out	10,000
Purchase returns	4,000

The companys 2015 inventoriable cost is

		$600,000
		$606,000
		$616,000
		$626,000

Question 17

. J & J exchanged an asset with a book value of $10,000 and paid $1,000 in cash for a another asset from W & W Company with a book value of $10,300. The fair value of the given asset was $9,500 and the new asset was $10,500. Calculate the gain or loss to be recognized by J & J. Assume commercial substance.

		$10,500
		$9,500
		$11,500
		None of the above

Question 18

Which of the following statements concerning exchanges of like kind assets without commercial substance is not true?

		Always recognize losses
		Gains are not recognized if cash is paid
		Losses are recognized if cash is paid
		Gains are never recognized

Question 19

J & J trades an asset that had a book value of $18,000 for another asset with a fair market value of $20,000. Assume lack of commercial substance. J & J pays $500 in cash. J & Js asset has a fair market value of $19,500. J & J would record the cost of the new asset at?