1. Coe Corp. issued 20,000 shares of $5 par common stock at $10 per share. On December 31, 2005, Coe's retained earnings were $300,000. In March 2006, Coe reacquired 5,000 shares of its common stock at $20 per share. In June 2006, Coe sold 1,000 of these shares to its corporate officers for $25 per share. Coe uses the cost method to account for its treasury stock. Net income for the year ended December 31, 2006, was $60,000. At December 31, 2006, what amount should Coe report as retained earnings?

   $360,000

   $365,000

   $375,000

   $380,000

4 points

QUESTION 2

1. During 2005, Bob Co. issued 5,000 shares of $100 par convertible preferred stock for $110 per share. One share of preferred stock can be converted into three shares of Bob's $25 par common stock at the option of the preferred shareholder. On December 31, 2006, when the market value of the common stock was $40 per share, all of the preferred stock was converted. What amount should Bob credit to Common Stock and to Additional Paid-in Capital as a result of the conversion?

   Common Stock

   Additional Paid-in Capital

   $375,000

   $175,000

   375,000

   225,000

   500,000

   50,000

   600,000

   0

4 points

QUESTION 3

1. Assume that S Company makes sales of $400,000 during 2004 and reports the amount as sales revenue on its income statement. Also assume that the company wishes to delay the reporting of a portion of that amount for tax purposes and uses the installment sales method for tax purposes. Assume that $100,000 of collections occurred during 2004, $150,000 occurred in 2005, and the remainder will occur in 2006. Assuming a tax rate of 40 percent, what is the amount of the entry into the Deferred Tax account at the end of the year 2004?

   $40,000

   $60,000

   $120,000

   $160,000

4 points

QUESTION 4

1. A liability for a cash dividend exists at the

   end of each year

   date of declaration

   date of record

   date of payment

4 points

QUESTION 5

1. Assume that Bad Company makes sales of $200,000 during 2004 and reports the amount as sales revenue on its income statement. Also assume that the company wishes to delay the reporting of a portion of that amount for tax purposes and uses the installment sales method for tax purposes. Assume that $60,000 of collections occurred during 2004 and the remainder will occur in 2005. What is the amount of the temporary difference at the end of the year 2004?

   $200,000

   $140,000

   $60,000

   $0

4 points

QUESTION 6

1. B Corp. issued 200,000 shares of common stock when it began operations in 2004 and issued an additional 100,000 shares in 2005. B also issued preferred stock convertible into 100,000 shares of common stock. In 2006,B purchased 75,000 shares of its common stock and held it in the treasury. At December 31, 2006, how many shares of B's common stock were outstanding?

   400,000

   325,000

   300,000

   225,000

4 points

QUESTION 7

1. The Company purchases an asset on January 1, 2005, for $200,000. The straight-line method of depreciation is used for book purposes, resulting in depreciation of $50,000 per year. An accelerated method is used for tax purposes, resulting in depreciation of $80,000, $60,000, $40,000, and $20,000 for the years 2005, 2006, 2007, and 2008, respectively. Assume that the tax rate is 40 percent for all years and that depreciation is the only temporary difference between book and tax purposes. The 2005 journal entry would include a

   debit to Deferred Tax Liability of $12,000

   debit to Deferred Tax Liability of $4,000

   credit to Deferred Tax Asset of $4,000

   credit to Deferred Tax Liability of $12,000

4 points

QUESTION 8

1. Other comprehensive income includes changes in the fair value of

   held-to-maturity securities

   trading securities

   available-for-sale securities

   investments accounted for under the equity method

4 points

QUESTION 9

1. On January 1, 2005, N Inc. purchased 10-year bonds issued by B Company. The bonds have a face value of $500,000 and pay interest annually at 8 percent on each December 31. N purchased the bonds for $550,000. Ns accounting year ends on December 31. Ns management has chosen to treat the bonds purchased as an available-for-sale security. There are no other securities in the available-for-sale portfolio. Assume that on December 31, 2005, the fair market value of the bonds was $510,000. The company uses the straight-line method of amortization.What is the amount of interest income to be reported on the 2005 income statement?

   $35,000

   $40,000

   $44,000

   $45,000

4 points

QUESTION 10

1. 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

4 points

QUESTION 11

1. William Corp. issued 10,000 shares of its $1 par value common stock for a building. The building was listed for sale at $500,000. Williams common stock is currently selling for $45 per share. William Corp. should record the building at

   $10,000

   $440,000

   $450,000

   $500,000

4 points

QUESTION 12

1. Assume that Grandzol Company believes that $120,000 of a $600,000 deduction will not be utilized in future periods and that the tax rate is 40 percent for all periods. What is the amount of the valuation allowance?

   $48,000

   $120,000

   $192,000

   $240,000

4 points

QUESTION 13

1. On December 31, 2010, Dinky Company had 300,000 shares of common stock issued and outstanding.Dinky issued a 10% stock dividend on June 30, 2011. On September 30, 2011, 12,000 shares of common stock were reacquired as treasury stock. What is the appropriate number of shares to be used in the basic earnings per share computation for 2011?

   303,000

   342,000

   312,000

   None of the above

4 points

QUESTION 14

1. Rent income received in advance that is included for tax purposes when received, but recorded for book purposes when earned results in

   expense items and deductions being taken for tax purposes before book purposes

   expense items and deductions being recorded for book purposes before tax purposes

   purposes income being included for tax purposes before book

   income being recorded for book purposes before tax purposes.

4 points

QUESTION 15

1. Which of the following doesnotuse the Adjustment and Unrealized Holding Gain (Loss) accounts?

   Held-to-maturity securities

   Trading securities

   Available-for-sale securities

   Both held-to-maturity and trading securities

4 points

QUESTION 16

1. Treasury stock is a(n)

   asset account

   contra-asset account

   equity account

   contra-equity account

4 points

QUESTION 17

1. 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

4 points

QUESTION 18

1. Debt securities that are classified as available-for-sale securities are reported on the balance sheet at

   fair value

   historical cost

   amortized cost

   lower of amortized cost or fair value

4 points

QUESTION 19

1. On December 31, 2010, the Dork Company had 100,000 shares of common stock issued and outstanding. On July 1, 2011, the company sold 20,000 additional shares for cash. Dork's net income for the year ended December 31, 2011 was $650,000. During 2011, Dork declared and paid $89,000 in cash dividends on its nonconvertible preferred stock. What is the 2011 basic earnings per share?

   5.91

   5.10

   5.61

   None of the above

4 points

QUESTION 20

1. If a company reissued at $20 per share 100 shares of treasury stock that it had previously acquired for $28 per share and there wasnt any Paid-in Capital from Treasury Stock, it would debit

   Loss on Sale of Treasury Stock for $800

   Paid-in Capital from Common Stock for $800

   Retained Earnings for $800

   Treasury Stock for $800

4 points

QUESTION 21

1. At December 31, 2005 and 2006, C Corp. had outstanding 4,000 shares of $100 par value, 6 percent cumulative preferred stock and 20,000 shares of $10 par value common stock. At December 31, 2005, dividends in arrears on the preferred stock were $12,000. Cash dividends declared in 2006 totaled $44,000. Of the $44,000, what amounts were payable on each class of stock?

   Preferred Stock

   Common Stock

   $44,000

   $ 0

   36,000

   8,000

   32,000

   12,000

   24,000

   20,000

4 points

QUESTION 22

1. Dividends are a(n)

   expense

   distribution to owners

   asset

   increase in equity

4 points

QUESTION 23

1. Which of the following isnotan equity security?

   Common stock

   Warrants

   Call options

   Redeemable preferred stock with a mandatory redemption period

4 points

QUESTION 24

1. On March 1, 2004, Leo Corp. was formed by issuing 100,000 shares of $1 par value common stock at $5 per share and 20,000 shares of $100 par value preferred stock at $101 per share. If Leo earned $35,000 in its first year of operations, total stockholders equity at year end would be

   $335,000

   $735,000.

   $2,135,000.

   $2,555,000

4 points

QUESTION 25

1. Information regarding Silly 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, Silly reported an unrealized holding loss from available-for-sale securities of $1,500 on the statement of stockholders equity. Assuming the application ofSFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, what amount should Silly report on its December 31, 2005, balance sheet as an unrealized holding loss?

   $26,000

   $22,000

   $20,500

   $0

4 points

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