Question 25 of 30 A company offers a coffee mug as a premium for every ten $1 candy bar wrappers presented by customers together with $2. The purchase price of each mug to the company is $1.80; in addition it costs $1.20 to mail each mug. The results of the premium plan for the years 2014 and 2015 are as follows (assume all purchases and sales are for cash): 2014: Coffee mugs purchased = 720,000 Candy bars sold = 5,600,000 Wrappers redeemed = 2,800,000 2014 wrappers expected to be redeemed in 2015 = 2,000,000

2015:

Coffee mugs purchased = 800,000 Candy bars sold = 6,750,000 Wrappers redeemed = 4,200,000 2015 wrappers expected to be redeemed in 2016 = 2,700,000

The company should report a Premium Expense amount of _________ on its income statement for the year ending 2014.

$490,000

$492,000

$500,000

None of these answers are correct

$480,000 Question 26 of 30 Stockholders' equity is generally classified into two major categories:

earned capital and contributed capital.

none of these answers are correct

retained earnings and unappropriated capital.

contributed capital and appropriated capital.

appropriated capital and retained earnings. Question 27 of 30 Common stockholders of a business enterprise are said to be the residual owners. The term residual owner means that shareholders

are entitled to a dividend every year in which the business earns a profit.

can negotiate individual contracts on behalf of the enterprise.

none of these answers are correct

bear the ultimate risks and uncertainties and receive the benefits of enterprise ownership.

have the rights to specific assets of the business. Question 28 of 30 A company offers a coffee mug as a premium for every ten $1 candy bar wrappers presented by customers together with $2. The purchase price of each mug to the company is $1.80; in addition it costs $1.20 to mail each mug. The results of the premium plan for the years 2014 and 2015 are as follows (assume all purchases and sales are for cash): 2014: Coffee mugs purchased = 720,000 Candy bars sold = 5,600,000 Wrappers redeemed = 2,800,000 2014 wrappers expected to be redeemed in 2015 = 2,000,000

2015:

Coffee mugs purchased = 800,000 Candy bars sold = 6,750,000 Wrappers redeemed = 4,200,000 2015 wrappers expected to be redeemed in 2016 = 2,700,000

The company should report a Premium Expense amount of _________ on its income statement for the year ending 2015.

None of these answers are correct

$490,000

$500,000

$492,000

$480,000 Question 29 of 30 A company markets household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash received from the contracts are credited to Unearned Service Contract Revenues. At December 31, 2013, the balance in the Unearned Service Contract Revenues account was $720,000. This balance was before any year-end adjustments were made. As service contract costs are incurred they are charged to the Service Contract Expense account. The Service Contract Expense account had a balance of $180,000 at December 31, 2013. The currently outstanding service contracts at December 31, 2013 expire as follows:

$150,000 during 2014 $240,000 during 2015 $105,000 during 2016

What should the adjusted balance in the Unearned Service Contract Revenues be on the December 31, 2013 balance sheet?

$540,000

None of these answers are correct

$360,000

$330,000

$495,000 Question 30 of 30 A company issues $4,000,000 face value of bonds at 96 on January 1, 2013. The bonds are dated January 1, 2013, pay interest semiannually at 8% on June 30 and December 31, and mature in 10 years. Straight-line amortization is used for discounts and premiums. On September 1, 2016, $2,400,000 of the bonds are called at 102 plus accrued interest. What gain or loss would be recognized on the called bonds on September 1, 2016?

$181,000 loss

$108,800 gain

$240,000 loss

None of these answers are correct

$144,000 gain