P 4-17

Required Answer the following multiple-choice questions:

a. The following relate to Owens data in 2012. What is the ending inventory?

Purchases $580,000

Beginning inventory $80,000

Purchase returns $8,000

Sales $900,000

Cost of goods sold $520,000

1. $150,000

2. $132,000

3. $152,000

4. $170,000

5. $142,000

b. Changes in account balances of Gross Flowers during 2012 were as follows:

Assets $400,000 (increase)

Liabilities $150,000 (increase)

Capital stock $120,000 (increase)

Additional paid-in capital $110,000 (increase)

Assuming there were no charges to retained earnings other than dividends of $20,000, the net income (loss) for 2012 was

1. $(20,000).

2. $(40,000).

3. $20,000.

4. $40,000.

5. $60,000

c. Which of the following would be classified as an extraordinary item on the income

statement?

1. Loss on disposal of a segment of business.

2. Cumulative effect of a change in accounting principle.

3. A sale of fixed assets.

4. An error correction that relates to a prior year.

5. A loss from a flood in a location that would not be expected to flood.

d. Net incomenoncontrolling interest comes from which of the following situations?

1. A company has been consolidated with our income statement, and our company owns less than 100% of the other company.

2. A company has been consolidated with our income statement, and our company owns 100% of the other company.

3. Our company owns less than 100% of another company, and the statements are not consolidated.

4. Our company owns 100% of another company, and the statements are not consolidated.

5. None of the above.

e. Which of the following will not be disclosed in retained earnings?

1. Declaration of a stock dividend

2. Adjustment for an error of the current period

3. Adjustment for an error of a prior period

4. Net income

5. Net loss

f. Bell Company has 2 million shares of common stock with par of $10. Additional paid- in capital totals $15 million, and retained earnings is $15 million. The directors declare a 5% stock dividend when the market value is $10. The reduction of retained earnings as a result of the declaration will be

1. $0.

2. $1 million.

3. $800,000.

4. $600,000.

5. None of the above.

g. The stockholders equity of Gaffney Company at November 30, 2012, is presented below.

Common stock, par value $5, authorized 200,000 shares, 100,000 shares issued and outstanding Paid-in capital in excess of par Retained earnings

$500,000

100,000

300,000

$900,000

On December 1, 2012, the board of directors of Gaffney Company declared a 5% stock dividend, to be distributed on December 20. The market price of the common stock was $10 on December 1 and $12 on December 20. What is the amount of the change to retained earnings as a result of the declaration and distribution of this stock dividend?

1. $0

2. $40,000

3. $50,000

4. $60,000

5. None of the above.

h. Schroeder Company had 200,000 shares of common stock outstanding with a $2 par value and retained earnings of $90,000. In 2010, earnings per share were $0.50. In 2011, the company split the stock 2 for 1. Which of the following would result from the stock split?

1. Retained earnings will decrease as a result of the stock split.

2. A total of 400,000 shares of common stock will be outstanding.

3. The par value would become $4 par.

4. Retained earnings will increase as a result of the stock split.

5. None of the above.

i. Which of the following is not a category within accumulated other comprehensive income?

1. Foreign currency translation adjustments.

2. Unrealized holding gains and losses on available-for-sale marketable securities.

3. Changes to stockholders equity resulting from additional minimum pension

liability.

4. Unrealized gains and losses from derivative instruments.

5. Extraordinary item.