{"id":7354,"date":"2021-10-12T19:46:01","date_gmt":"2021-10-12T19:46:01","guid":{"rendered":"https:\/\/assignmenttutors.net\/blog\/question-keller-graduate-school-of-management-ac555on-financial-7\/"},"modified":"2021-10-12T19:46:01","modified_gmt":"2021-10-12T19:46:01","slug":"question-keller-graduate-school-of-management-ac555on-financial-7","status":"publish","type":"post","link":"https:\/\/assignmenttutors.net\/blog\/question-keller-graduate-school-of-management-ac555on-financial-7\/","title":{"rendered":"Question-keller graduate school of management ac555on financial 7"},"content":{"rendered":"
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Question-Keller Graduate School of Management AC555ON Financial 7 PassMaster<\/p>\n

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CPA-00928 Type1 M\/C A-D Corr Ans: A PM#1 F 7-01<\/span><\/strong><\/p>\n

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1. CPA-00928 FARE R03 #4 Page 5<\/span><\/strong><\/p>\n

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On November 2, 2001, Platt Co. entered into a 90-day futures contract to purchase 50,000 Swiss francs<\/span><\/p>\n

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when the contract quote was $.70. The purchase was for speculation in price movement. The following<\/span><\/p>\n

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exchange rates existed during the contract period:<\/span><\/p>\n

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30-day futures<\/span><\/span><\/span><\/p>\n<\/td>\n

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Spot rate<\/span><\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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November 2, 2001<\/span><\/span><\/p>\n<\/td>\n

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$0.62 <\/span><\/span><\/p>\n<\/td>\n

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$0.63 <\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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December 31, 2001<\/span><\/span><\/p>\n<\/td>\n

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0.65<\/span><\/span><\/p>\n<\/td>\n

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0.64<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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January 30, 2002<\/span><\/span><\/p>\n<\/td>\n

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0.65<\/span><\/span><\/p>\n<\/td>\n

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0.68<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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What amount should Platt report as foreign currency exchange loss in its income statement for the year<\/span><\/p>\n

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ended December 31, 2001?<\/span><\/p>\n

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CPA-00930 Type1 M\/C A-D Corr Ans: D PM#3 F 7-01<\/span><\/strong><\/p>\n

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2. CPA-00930 FARE C98 #1 Page 3<\/span><\/strong><\/p>\n

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Fair value disclosure of financial instruments may be made in the:<\/span><\/p>\n

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CPA-00931 Type1 M\/C A-D Corr Ans: B PM#4 F 7-01<\/span><\/strong><\/p>\n

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3. CPA-00931 FARE C98 #2 Page 3<\/span><\/strong><\/p>\n

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Disclosures about the following kinds of risks are required for most financial instruments.<\/span><\/p>\n

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CPA-00933 Type1 M\/C A-D Corr Ans: B PM#5 F 7-01<\/span><\/strong><\/p>\n

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4. CPA-00933 FARE C98 #3 Page 3<\/span><\/strong><\/p>\n

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Which of the following assets are financial instruments?<\/span><\/p>\n

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CPA-00934 Type1 M\/C A-D Corr Ans: D PM#6 F 7-01<\/span><\/strong><\/p>\n

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5. CPA-00934 FARE C98 #4 Page 3<\/span><\/strong><\/p>\n

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Which of the following must be disclosed for most financial instruments?<\/span><\/p>\n

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CPA-00936 Type1 M\/C A-D Corr Ans: A PM#7 F 7-01<\/span><\/strong><\/p>\n

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6. CPA-00936 FARE C98 #5 Page 4<\/span><\/strong><\/p>\n

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In order for a financial instrument to be a derivative for accounting purposes, the financial instrument<\/span><\/p>\n

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must:<\/span><\/p>\n

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I. Have one or more underlyings.<\/span><\/p>\n

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II. Require an initial net investment.<\/span><\/p>\n

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CPA-00938 Type1 M\/C A-D Corr Ans: C PM#8 F 7-01<\/span><\/strong><\/p>\n

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7. CPA-00938 FARE C98 #6 Page 4<\/span><\/strong><\/p>\n

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The determination of the value or settlement amount of a derivative involves a calculation which uses:<\/span><\/p>\n

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I. An underlying.<\/span><\/p>\n

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II. A notional amount.<\/span><\/p>\n

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CPA-00941 Type1 M\/C A-D Corr Ans: B PM#9 F 7-01<\/span><\/strong><\/p>\n

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8. CPA-00941 FARE C98 #7 Page 6<\/span><\/strong><\/p>\n

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On December 31, 199X, the end of its fiscal year, Smarti Company held a derivative instrument which it<\/span><\/p>\n

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had acquired for speculative purposes during November, 199X. Since its acquisition the fair value of the<\/span><\/p>\n

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derivative had increased materially. On December 31, how should the increase in fair value of the<\/span><\/p>\n

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derivative instrument be reported by Smarti in its financial statements?<\/span><\/p>\n

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CPA-00945 Type1 M\/C A-D Corr Ans: C PM#11 F 7-01<\/span><\/strong><\/p>\n

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9. CPA-00945 FARE C98 #9 Page 6<\/span><\/strong><\/p>\n

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Gains and losses from changes in the fair value of a derivative designated and qualified as a fair value<\/span><\/p>\n

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hedge should be:<\/span><\/p>\n

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CPA-00948 Type1 M\/C A-D Corr Ans: A PM#12 F 7-01<\/span><\/strong><\/p>\n

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10. CPA-00948 FARE C98 #10 Page 5<\/span><\/strong><\/p>\n

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Qualified derivatives may be used to hedge the cash flow associated with an\/a:<\/span><\/p>\n

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CPA-00951 Type1 M\/C A-D Corr Ans: C PM#13 F 7-01<\/span><\/strong><\/p>\n

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11. CPA-00951 FARE C98 #11 Page 6<\/span><\/strong><\/p>\n

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A change in the fair value of a derivative qualified as a cash flow hedge is determined to be either<\/span><\/p>\n

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effective in offsetting a change in the hedged item or ineffective in offsetting such a change. How should<\/span><\/p>\n

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the effective and ineffective portions of the change in value of a derivative which qualifies as a cash flow<\/span><\/p>\n

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hedge be reported in financial statements?<\/span><\/p>\n

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12. CPA-00954 FARE R96 #8 Page 4<\/span><\/strong><\/p>\n

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Which of the following risks are inherent in an interest rate swap agreement?<\/span><\/p>\n

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I. The risk of exchanging a lower interest rate for a higher interest rate.<\/span><\/p>\n

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II. The risk of nonperformance by the counterparty to the agreement.<\/span><\/p>\n

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CPA-00958 Type1 M\/C A-D Corr Ans: C PM#15 F 7-01<\/span><\/strong><\/p>\n

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13. CPA-00958 FARE R96 #9 Page 3<\/span><\/strong><\/p>\n

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If it is not <\/strong>practicable for an entity to estimate the fair value of a financial instrument, which of the<\/span><\/p>\n

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following should be disclosed?<\/span><\/p>\n

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I. Information pertinent to estimating the fair value of the financial instrument.<\/span><\/p>\n

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II. The reasons it is not practicable to estimate fair value.<\/span><\/p>\n

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CPA-00965 Type1 M\/C A-D Corr Ans: A PM#16 F 7-01<\/span><\/strong><\/p>\n

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14. CPA-00965 FARE May 95 #4 Page 3<\/span><\/strong><\/p>\n

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Disclosure of information about significant concentrations of credit risk is required for:<\/span><\/p>\n

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CPA-04658 Type1 M\/C A-D Corr Ans: B PM#17 F 7-01<\/span><\/strong><\/p>\n

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15. CPA-04658 Released 2005 Page 3<\/span><\/strong><\/p>\n

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Where in its financial statements should a company disclose information about its concentration of credit<\/span><\/p>\n

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risks?<\/span><\/p>\n

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CPA-05221 Type1 M\/C A-D Corr Ans: D PM#26 F 7-01<\/span><\/strong><\/p>\n

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16. CPA-05221 Released 2006 Page 3<\/span><\/strong><\/p>\n

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Whether recognized or unrecognized in an entity’s financial statements, disclosure of the fair values of the<\/span><\/p>\n

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entity’s financial instruments is required when:<\/span><\/p>\n

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CPA-05193 Type1 M\/C A-D Corr Ans: D PM#27 F 7-01<\/span><\/strong><\/p>\n

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17. CPA-05193 Released 2006 Page 3<\/span><\/strong><\/p>\n

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Which of the following financial instruments is not <\/strong>considered a derivative financial instrument?<\/span><\/p>\n

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CPA-00971 Type1 M\/C A-D Corr Ans: A PM#2 F 7-02<\/span><\/strong><\/p>\n

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18. CPA-00971 FARE R99 #10 Page 18<\/span><\/strong><\/p>\n

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On January 15, 2000, Rico Co. declared its annual cash dividend on common stock for the year ended<\/span><\/p>\n

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January 31, 2000. The dividend was paid on February 9, 2000, to stockholders of record as of January<\/span><\/p>\n

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28, 2000. On what date should Rico decrease retained earnings by the amount of the dividend?<\/span><\/p>\n

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CPA-00976 Type1 M\/C A-D Corr Ans: A PM#4 F 7-02<\/span><\/strong><\/p>\n

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19. CPA-00976 FARE Nov 95 #18 Page 20<\/span><\/strong><\/p>\n

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Nest Co. issued 100,000 shares of common stock. Of these, 5,000 were held as treasury stock at<\/span><\/p>\n

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December 31, 1993. During 1994, transactions involving Nest’s common stock were as follows:<\/span><\/p>\n

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May 3 – 1,000 shares of treasury stock were sold.<\/span><\/p>\n

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August 6 – 10,000 shares of previously unissued stock were sold.<\/span><\/p>\n

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November 18 – A 2-for-1 stock split took effect.<\/span><\/p>\n

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Laws in Nest’s state of incorporation protect treasury stock from dilution. At December 31, 1994, how<\/span><\/p>\n

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many shares of Nest’s common stock were issued and outstanding?<\/span><\/p>\n

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CPA-00981 Type1 M\/C A-D Corr Ans: A PM#5 F 7-02<\/span><\/strong><\/p>\n

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20. CPA-00981 FARE Nov 95 #19 Page 13<\/span><\/strong><\/p>\n

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Cyan Corp. issued 20,000 shares of $5 par common stock at $10 per share. On December 31, 1993,<\/span><\/p>\n

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Cyan’s retained earnings were $300,000. In March 1994, Cyan reacquired 5,000 shares of its common<\/span><\/p>\n

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stock at $20 per share. In June 1994, Cyan sold 1,000 of these shares to its corporate officers for $25<\/span><\/p>\n

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per share. Cyan uses the cost method to record treasury stock. Net income for the year ended<\/span><\/p>\n

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December 31, 1994, was $60,000. At December 31, 1994, what amount should Cyan report as retained<\/span><\/p>\n

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earnings?<\/span><\/p>\n

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CPA-01003 Type1 M\/C A-D Corr Ans: C PM#7 F 7-02<\/span><\/strong><\/p>\n

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21. CPA-01003 FARE Nov 95 #21 Page 17<\/span><\/strong><\/p>\n

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A company issued rights to its existing shareholders without consideration. The rights allowed the<\/span><\/p>\n

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recipients to purchase unissued common stock for an amount in excess of par value. When the rights are<\/span><\/p>\n

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issued, which of the following accounts will be increased?<\/span><\/p>\n

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CPA-01004 Type1 M\/C A-D Corr Ans: C PM#8 F 7-02<\/span><\/strong><\/p>\n

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22. CPA-01004 FARE Nov 95 #22 Page 17<\/span><\/strong><\/p>\n

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In September 1989, West Corp. made a dividend distribution of one right for each of its 120,000 shares of<\/span><\/p>\n

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outstanding common stock. Each right was exercisable for the purchase of 1\/100 of a share of West’s<\/span><\/p>\n

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$50 variable rate preferred stock at an exercise price of $80 per share. On March 20, 1993, none of the<\/span><\/p>\n

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rights had been exercised, and West redeemed them by paying each stockholder $0.10 per right. As a<\/span><\/p>\n

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result of this redemption, West’s stockholders’ equity was reduced by:<\/span><\/p>\n

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CPA-01007 Type1 M\/C A-D Corr Ans: A PM#9 F 7-02<\/span><\/strong><\/p>\n

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23. CPA-01007 FARE Nov 94 #28 Page 17<\/span><\/strong><\/p>\n

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East Co. issued 1,000 shares of its $5 par common stock to Howe as compensation for 1,000 hours of<\/span><\/p>\n

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legal services performed. Howe usually bills $160 per hour for legal services. On the date of issuance,<\/span><\/p>\n

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the stock was trading on a public exchange at $140 per share. By what amount should the additional<\/span><\/p>\n

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paid-in capital account increase as a result of this transaction?<\/span><\/p>\n

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CPA-01009 Type1 M\/C A-D Corr Ans: A PM#10 F 7-02<\/span><\/strong><\/p>\n

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24. CPA-01009 FARE Nov 94 #29 Page 9<\/span><\/strong><\/p>\n

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During 1992, Brad Co. issued 5,000 shares of $100 par convertible preferred stock for $110 per share.<\/span><\/p>\n

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One share of preferred stock can be converted into three shares of Brad’s $25 par common stock at the<\/span><\/p>\n

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option of the preferred shareholder. On December 31, 1993, when the market value of the common stock<\/span><\/p>\n

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was $40 per share, all of the preferred stock was converted. What amount should Brad credit to<\/span><\/p>\n

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Common Stock and to Additional Paid-in Capital- Common Stock as a result of the conversion?<\/span><\/p>\n

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CPA-01011 Type1 M\/C A-D Corr Ans: A PM#11 F 7-02<\/span><\/strong><\/p>\n

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25. CPA-01011 FARE Nov 94 #30 Page 18<\/span><\/strong><\/p>\n

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When a company declares a cash dividend, retained earnings is decreased by the amount of the dividend<\/span><\/p>\n

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on the date of:<\/span><\/p>\n

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CPA-01014 Type1 M\/C A-D Corr Ans: B PM#12 F 7-02<\/span><\/strong><\/p>\n

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26. CPA-01014 FARE Nov 94 #31 Page 18<\/span><\/strong><\/p>\n

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Long Co. had 100,000 shares of common stock issued and outstanding at January 1, 1993. During 1993,<\/span><\/p>\n

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Long took the following actions:<\/span><\/p>\n

\u00a0<\/p>\n

March 15 – Declared a 2-for-1 stock split, when the fair value of the stock was $80 per share.<\/span><\/p>\n

\u00a0<\/p>\n

December 15 – Declared a $.50 per share cash dividend.<\/span><\/p>\n

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In Long’s statement of stockholders’ equity for 1993, what amount should Long report as dividends?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01018 Type1 M\/C A-D Corr Ans: C PM#13 F 7-02<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

27. CPA-01018 FARE Nov 94 #32 Page 13<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

If a corporation sells some of its treasury stock at a price that exceeds its cost, this excess should be:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01025 Type1 M\/C A-D Corr Ans: C PM#14 F 7-02<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

28. CPA-01025 FARE Nov 94 #37 Page 11<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

The primary purpose of a quasi-reorganization is to give a corporation the opportunity to:<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01028 Type1 M\/C A-D Corr Ans: D PM#15 F 7-02<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

29. CPA-01028 FARE May 94 #31 Page 18<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

East Corp., a calendar-year company, had sufficient retained earnings in 1993 as a basis for dividends,<\/span><\/p>\n

\u00a0<\/p>\n

but was temporarily short of cash. East declared a dividend of $100,000 on April 1, 1993, and issued<\/span><\/p>\n

\u00a0<\/p>\n

promissory notes to its stockholders in lieu of cash. The notes, which were dated April 1, 1993, had a<\/span><\/p>\n

\u00a0<\/p>\n

maturity date of March 31, 1994, and a 10% interest rate.<\/span><\/p>\n

\u00a0<\/p>\n

How should East account for the scrip dividend and related interest?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01031 Type1 M\/C A-D Corr Ans: B PM#16 F 7-02<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

30. CPA-01031 FARE May 94 #32 Page 18<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

On January 2, 1994, Lake Mining Co.’s board of directors declared a cash dividend of $400,000 to<\/span><\/p>\n

\u00a0<\/p>\n

stockholders of record on January 18, 1994, payable on February 10, 1994. The dividend is permissible<\/span><\/p>\n

\u00a0<\/p>\n

under law in the state where Lake is incorporated. Selected balances from its December 31, 1993<\/span><\/p>\n

\u00a0<\/p>\n

balance sheet are as follows:<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depletion $100,000<\/span><\/p>\n

\u00a0<\/p>\n

Capital stock 500,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 150,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 300,000<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01041 Type1 M\/C A-D Corr Ans: A PM#18 F 7-02<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

31. CPA-01041 Th Nov 93 #15 Page 17<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

On November 2, 1992, Finsbury, Inc. issued warrants to its stockholders giving them the right to purchase<\/span><\/p>\n

\u00a0<\/p>\n

additional $20 par value common shares at a price of $30. The stockholders exercised all warrants on<\/span><\/p>\n

\u00a0<\/p>\n

March 1, 1993. The shares had market prices of $33, $35, and $40 on November 2, 1992, December 31,<\/span><\/p>\n

\u00a0<\/p>\n

1992, and March 1, 1993, respectively. What were the effects of the warrants on Finsbury’s additional<\/span><\/p>\n

\u00a0<\/p>\n

paid-in capital and net income?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01043 Type1 M\/C A-D Corr Ans: C PM#19 F 7-02<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

32. CPA-01043 PI Nov 93 #48 Page 19<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Cobb Co. purchased 10,000 shares (2% ownership) of Roe Co. on February 12, 1993. Cobb received a<\/span><\/p>\n

\u00a0<\/p>\n

stock dividend of 2,000 shares on March 31, 1993, when the carrying amount per share on Roe’s books<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span>was $35 and the market value per share was $40. Roe paid a cash dividend of $1.50 per share on<\/span><\/p>\n

\u00a0<\/p>\n

September 15, 1993. In Cobb’s income statement for the year ended October 31, 1993, what amount<\/span><\/p>\n

\u00a0<\/p>\n

should Cobb report as dividend income?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01046 Type1 M\/C A-D Corr Ans: A PM#20 F 7-02<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

33. CPA-01046 PII May 93 #1 Page 13<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Rudd Corp. had 700,000 shares of common stock authorized and 300,000 shares outstanding at<\/span><\/p>\n

\u00a0<\/p>\n

December 31, 1991. The following events occurred during 1992:<\/span><\/p>\n

\u00a0<\/p>\n

January 31 Declared 10% stock dividend<\/span><\/p>\n

\u00a0<\/p>\n

June 30 Purchased 100,000 shares<\/span><\/p>\n

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August 1 Reissued 50,000 shares<\/span><\/p>\n

\u00a0<\/p>\n

November 30 Declared 2-for-l stock split<\/span><\/p>\n

\u00a0<\/p>\n

At December 31, 1992, how many shares of common stock did Rudd have outstanding?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01048 Type1 M\/C A-D Corr Ans: D PM#21 F 7-02<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

34. CPA-01048 PII May 93 #2 Page 13<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Beck Corp. issued 200,000 shares of common stock when it began operations in 1990 and issued an<\/span><\/p>\n

\u00a0<\/p>\n

additional 100,000 shares in 1991. Beck also issued preferred stock convertible to 100,000 shares of<\/span><\/p>\n

\u00a0<\/p>\n

common stock. In 1992, Beck purchased 75,000 shares of its common stock and held it in Treasury. At<\/span><\/p>\n

\u00a0<\/p>\n

December 31, 1992, how many shares of Beck’s common stock were outstanding?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01050 Type1 M\/C A-D Corr Ans: A PM#22 F 7-02<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

35. CPA-01050 Th May 93 #2 Page 18<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

A property dividend should be recorded in retained earnings at the property’s:<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

36. CPA-01052 PII May 93 #3 Page 11<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

The following changes in Vel Corp.’s account balances occurred during 1992:<\/span><\/p>\n

\u00a0<\/p>\n

Increase<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Assets $89,000<\/span><\/p>\n

\u00a0<\/p>\n

Liabilities 27,000<\/span><\/p>\n

\u00a0<\/p>\n

Capital stock 60,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 6,000<\/span><\/p>\n

\u00a0<\/p>\n

Except for a $13,000 dividend payment and the year’s earnings, there were no changes in retained<\/span><\/p>\n

\u00a0<\/p>\n

earnings for 1992. What was Vel’s net income for 1992?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01056 Type1 M\/C A-D Corr Ans: B PM#24 F 7-02<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

37. CPA-01056 PII May 93 #4 Page 9<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

At December 31, 1991 and 1992, Carr Corp. had outstanding 4,000 shares of $100 par value 6%<\/span><\/p>\n

\u00a0<\/p>\n

cumulative preferred stock and 20,000 shares of $10 par value common stock. At December 31, 1991,<\/span><\/p>\n

\u00a0<\/p>\n

dividends in arrears on the preferred stock were $12,000. Cash dividends declared in 1992 totaled<\/span><\/p>\n

\u00a0<\/p>\n

$44,000. Of the $44,000, what amounts were payable on each class of stock?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01058 Type1 M\/C A-D Corr Ans: A PM#25 F 7-02<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

38. CPA-01058 PII May 93 #5 Page 11<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

At December 31, 1991, Eagle Corp. reported $1,750,000 of appropriated retained earnings for the<\/span><\/p>\n

\u00a0<\/p>\n

construction of a new office building, which was completed in 1992 at a total cost of $1,500,000. In 1992,<\/span><\/p>\n

\u00a0<\/p>\n

Eagle appropriated $1,200,000 of retained earnings for the construction of a new plant. Also, $2,000,000<\/span><\/p>\n

\u00a0<\/p>\n

of cash was restricted for the retirement of bonds due in 1993. In its 1992 balance sheet, Eagle should<\/span><\/p>\n

\u00a0<\/p>\n

report what amount of appropriated retained earnings?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01061 Type1 M\/C A-D Corr Ans: A PM#26 F 7-02<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

39. CPA-01061 PI May 93 #6 Page 8<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

On April 1, 1993, Hyde Corp., a newly formed company, had the following stock issued and outstanding:<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 Common stock, no par, $1 stated value, 20,000 shares originally issued for $30 per share.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 Preferred stock, $10 par value, 6,000 shares originally issued for $50 per share.<\/span><\/p>\n

\u00a0<\/p>\n

Hyde’s April 1, 1993, statement of stockholders’ equity should report:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01094 Type1 M\/C A-D Corr Ans: C PM#27 F 7-02<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

40. CPA-01094 Th May 93 #10 Page 15<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

In 1990, Fogg, Inc. issued $10 par value common stock for $25 per share. No other common stock<\/span><\/p>\n

\u00a0<\/p>\n

transactions occurred until March 31, 1992, when Fogg acquired some of the issued shares for $20 per<\/span><\/p>\n

\u00a0<\/p>\n

share and retired them. Which of the following statements correctly states an effect of this acquisition<\/span><\/p>\n

\u00a0<\/p>\n

and retirement?<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01095 Type1 M\/C A-D Corr Ans: D PM#28 F 7-02<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

41. CPA-01095 PI May 93 #11 Page 15<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

On December 1, 1992, Line Corp. received a donation of 2,000 shares of its $5 par value common stock<\/span><\/p>\n

\u00a0<\/p>\n

from a stockholder. On that date, the stock’s market value was $35 per share. The stock was originally<\/span><\/p>\n

\u00a0<\/p>\n

issued for $25 per share. By what amount would this donation cause total stockholders’ equity to<\/span><\/p>\n

\u00a0<\/p>\n

decrease?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01097 Type1 M\/C A-D Corr Ans: D PM#29 F 7-02<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

42. CPA-01097 Th May 93 #13 Page 9<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Quoit, Inc. issued preferred stock with detachable common stock warrants. The issue price exceeded the<\/span><\/p>\n

\u00a0<\/p>\n

sum of the warrants’ fair value and the preferred stock’s par value. The preferred stock’s fair value was<\/span><\/p>\n

\u00a0<\/p>\n

not determinable. What amount should be assigned to the warrants outstanding?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01099 Type1 M\/C A-D Corr Ans: D PM#30 F 7-02<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

43. CPA-01099 Th May 93 #14 Page 22<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

In a compensatory stock option plan for which the grant and exercise dates are different, the stock<\/span><\/p>\n

\u00a0<\/p>\n

options outstanding account should be reduced at the:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-04681 Type1 M\/C A-D Corr Ans: A PM#31 F 7-02<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

44. CPA-04681 Released 2005 Page 19<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Universe Co. issued 500,000 shares of common stock in the current year. Universe declared a 30%<\/span><\/p>\n

\u00a0<\/p>\n

stock dividend. The market value was $50 per share, the par value was $10, and the average issue price<\/span><\/p>\n

\u00a0<\/p>\n

was $30 per share. By what amount will Universe decrease stockholders’ equity for the dividend? <\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-04682 Type1 M\/C A-D Corr Ans: B PM#32 F 7-02<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

45. CPA-04682 Released 2005 Page 13<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

Murphy Co. had 200,000 shares outstanding of $10 par common stock on March 30 of the current year.<\/span><\/p>\n

\u00a0<\/p>\n

Murphy reacquired 30,000 of those shares at a cost of $15 per share, and recorded the transaction using<\/span><\/p>\n

\u00a0<\/p>\n

the cost method on April 15. Murphy reissued the 30,000 shares at $20 per share, and recognized a<\/span><\/p>\n

\u00a0<\/p>\n

$50,000 gain on its income statement on May 20. Which of the following statements is correct?<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-05228 Type1 M\/C A-D Corr Ans: B PM#33 F 7-02<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

46. CPA-05228 Released 2006 Page 13<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Porter Co. began its business last year and issued 10,000 shares of common stock at $3 per share. The<\/span><\/p>\n

\u00a0<\/p>\n

par value of the stock is $1 per share. During January of the current year, Porter bought back 500 shares<\/span><\/p>\n

\u00a0<\/p>\n

at $6 per share, which were reported by Porter as treasury stock. The treasury stock shares were<\/span><\/p>\n

\u00a0<\/p>\n

reissued later in the current year at $10 per share. Porter used the cost method to account for its equity<\/span><\/p>\n

\u00a0<\/p>\n

transactions. What amount should Porter report as paid-in capital related to its treasury stock<\/span><\/p>\n

\u00a0<\/p>\n

transactions on its balance sheet for the current year?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-05442 Type1 M\/C A-D Corr Ans: A PM#35 F 7-02<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

47. CPA-05442 Released 2007 Page 13<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Baker Co. issued 100,000 shares of common stock in the current year. On October 1, Baker<\/span><\/p>\n

\u00a0<\/p>\n

repurchased 20,000 shares of its common stock on the open market for $50.00 per share. At that date,<\/span><\/p>\n

\u00a0<\/p>\n

the stock’s par value was $1.00 and the average issue price was $40.00 per share. Baker uses the cost<\/span><\/p>\n

\u00a0<\/p>\n

method for treasury stock transactions. On December 1, Baker reissued the stock for $60.00 per share.<\/span><\/p>\n

\u00a0<\/p>\n

What amount should Baker report as treasury stock gain at December 31?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01102 Type1 M\/C A-D Corr Ans: A PM#1 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

48. CPA-01102 FARE R01 #9 Page 29<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Deck Co. had 120,000 shares of common stock outstanding at January 1, 1998. On July 1, 1998, it<\/span><\/p>\n

\u00a0<\/p>\n

issued 40,000 additional shares of common stock. Outstanding all year were 10,000 shares of<\/span><\/p>\n

\u00a0<\/p>\n

nonconvertible cumulative preferred stock. What is the number of shares that Deck should use to<\/span><\/p>\n

\u00a0<\/p>\n

calculate 1998 earnings per share?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01105 Type1 M\/C A-D Corr Ans: B PM#2 F 7-03<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

49. CPA-01105 FARE C98 #10 Page 29<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Which of the following items, if dilutive and if other conditions are met, would enter into the determination<\/span><\/p>\n

\u00a0<\/p>\n

of the weighted average shares outstanding to be used in the basic earnings per share (basic EPS)<\/span><\/p>\n

\u00a0<\/p>\n

calculation?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

I. Stock options.<\/span><\/p>\n

\u00a0<\/p>\n

II. Contingent shares.<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01107 Type1 M\/C A-D Corr Ans: C PM#3 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

50. CPA-01107 FARE C98 #11 Page 28<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Elizabeth Corporation acquired Allen Corporation at the end of 19X8. Under terms of the acquisition<\/span><\/p>\n

\u00a0<\/p>\n

agreement, Elizabeth agreed to provide former Allen shareholders 1,000 additional shares of Elizabeth<\/span><\/p>\n

\u00a0<\/p>\n

stock for each new retail outlet opened during 19X9. Two new outlets were opened during 19X9:<\/span><\/p>\n

\u00a0<\/p>\n

\u0095 <\/span>One on May 1, 19X9<\/span><\/p>\n

\u00a0<\/p>\n

\u0095 <\/span>One on September 1, 19X9<\/span><\/p>\n

\u00a0<\/p>\n

What number of shares related to the openings of the new retail outlets should enter into the calculation<\/span><\/p>\n

\u00a0<\/p>\n

of Elizabeth’s basic earnings per share as of December 31, 19X9, the end of its fiscal year?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01123 Type1 M\/C A-D Corr Ans: A PM#4 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

51. CPA-01123 FARE R98 #5 Page 28<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

In computing the weighted-average number of shares outstanding during the year, which of the following<\/span><\/p>\n

\u00a0<\/p>\n

midyear events must be treated as if it had occurred at the beginning of the year?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01193 Type1 M\/C A-D Corr Ans: B PM#5 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

52. CPA-01193 FARE C97 #1 Page 35<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Earnings per share disclosure is required for which of the following:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01195 Type1 M\/C A-D Corr Ans: B PM#6 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

53. CPA-01195 FARE C97 #3 Page 34<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Which one of the following is not <\/strong>considered contingent shares for purposes of computing EPS?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01201 Type1 M\/C A-D Corr Ans: A PM#10 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

54. CPA-01201 Th Nov 93 #16 Page 27<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

When computing the weighted average of common shares outstanding for basic earnings per share,<\/span><\/p>\n

\u00a0<\/p>\n

convertible securities are:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01203 Type1 M\/C A-D Corr Ans: B PM#11 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

55. CPA-01203 PI May 93 #60 Page 29<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

The following information pertains to Jet Corp.’s outstanding stock for 1992:<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $5 par value<\/span><\/p>\n

\u00a0<\/p>\n

Shares outstanding, 1\/1\/92 20,000<\/span><\/p>\n

\u00a0<\/p>\n

2-for-1 stock split, 4\/1\/92 20,000<\/span><\/p>\n

\u00a0<\/p>\n

Shares issued, 7\/1\/92 10,000<\/span><\/p>\n

\u00a0<\/p>\n

Preferred stock, $10 par value, 5% cumulative<\/span><\/p>\n

\u00a0<\/p>\n

Shares outstanding, 1\/1\/92 4,000<\/span><\/p>\n

\u00a0<\/p>\n

What are the number of shares Jet should use to calculate 1992 earnings per share?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01205 Type1 M\/C A-D Corr Ans: C PM#12 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

56. CPA-01205 FARE Nov 92 #23 Page 28<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

On January 31, 1992, Pack, Inc. split its common stock 2 for 1, and Young, Inc. issued a 5% stock<\/span><\/p>\n

\u00a0<\/p>\n

dividend. Both companies issued their December 31, 1991, financial statements on March 1, 1992.<\/span><\/p>\n

\u00a0<\/p>\n

Should Pack’s 1991 earnings per share (EPS) take into consideration the stock split, and should Young’s<\/span><\/p>\n

\u00a0<\/p>\n

1991 EPS take into consideration the stock dividend?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01209 Type1 M\/C A-D Corr Ans: B PM#13 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

57. CPA-01209 PI Nov 91 #60 Page 29<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Strauch Co. has one class of common stock outstanding and no other securities that are potentially<\/span><\/p>\n

\u00a0<\/p>\n

convertible into common stock. During 1989, 100,000 shares of common stock were outstanding. In<\/span><\/p>\n

\u00a0<\/p>\n

1990, two distributions of additional common shares occurred: On April 1, 20,000 shares of treasury stock<\/span><\/p>\n

\u00a0<\/p>\n

were sold, and on July 1, a 2-for-1 stock split was issued. Net income was $410,000 in 1990 and<\/span><\/p>\n

\u00a0<\/p>\n

$350,000 in 1989. What amounts should Strauch report as earnings per share in its 1990 and 1989<\/span><\/p>\n

\u00a0<\/p>\n

comparative income statements?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01210 Type1 M\/C A-D Corr Ans: A PM#14 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

58. CPA-01210 FARE May 91 #29 Page 32<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

In determining earnings per share, interest expense, net of applicable income taxes, on convertible debt<\/span><\/p>\n

\u00a0<\/p>\n

that is dilutive should be:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01211 Type1 M\/C A-D Corr Ans: B PM#15 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

59. CPA-01211 FARE Nov 90 #34 Page 33<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

When computing diluted earnings per share, convertible securities are:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01213 Type1 M\/C A-D Corr Ans: B PM#16 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

60. CPA-01213 PI Nov 90 #52 Page 27<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Poe Co. had 300,000 shares of common stock issued and outstanding at December 31, 1988. No<\/span><\/p>\n

\u00a0<\/p>\n

common stock was issued during 1989. On January 1, 1989, Poe issued 200,000 shares of<\/span><\/p>\n

\u00a0<\/p>\n

nonconvertible preferred stock. During 1989, Poe declared and paid $75,000 cash dividends on the<\/span><\/p>\n

\u00a0<\/p>\n

common stock and $60,000 on the preferred stock. Net income for the year ended December 31, 1989<\/span><\/p>\n

\u00a0<\/p>\n

was $330,000. What should be Poe’s 1989 earnings per common share?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01214 Type1 M\/C A-D Corr Ans: D PM#17 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

61. CPA-01214 PII May 90 #51 Page 27<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Peters Corp.’s capital structure was as follows:<\/span><\/p>\n

\u00a0<\/p>\n

December 31<\/span><\/em><\/p>\n

\u00a0<\/p>\n

19X1 19X2<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Outstanding shares of stock:<\/span><\/p>\n

\u00a0<\/p>\n

Common 110,000 110,000<\/span><\/p>\n

\u00a0<\/p>\n

Convertible preferred 10,000 10,000<\/span><\/p>\n

\u00a0<\/p>\n

8% convertible bonds $1,000,000 $1,000,000<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

During 19X2, Peters paid dividends of $3.00 per share on its preferred stock. The preferred shares are<\/span><\/p>\n

\u00a0<\/p>\n

convertible into 20,000 shares of common stock. The 8% bonds are convertible into 30,000 shares of<\/span><\/p>\n

\u00a0<\/p>\n

common stock. Net income for 19X2 was $850,000. Assume that the income tax rate is 30%. The basic<\/span><\/p>\n

\u00a0<\/p>\n

earnings per share for 19X2 is:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01217 Type1 M\/C A-D Corr Ans: B PM#18 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

62. CPA-01217 PI Nov 89 #54 Page 32<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Jones Corp.’s capital structure was as follows:<\/span><\/p>\n

\u00a0<\/p>\n

December 31<\/span><\/em><\/p>\n

\u00a0<\/p>\n

1988 1987<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Outstanding shares of stock:<\/span><\/p>\n

\u00a0<\/p>\n

Common 110,000 110,000<\/span><\/p>\n

\u00a0<\/p>\n

Convertible preferred 10,000 10,000<\/span><\/p>\n

\u00a0<\/p>\n

8% convertible bonds $1,000,000 $1,000,000<\/span><\/p>\n

\u00a0<\/p>\n

During 1988, Jones paid dividends of $3.00 per share on its preferred stock. The preferred shares are<\/span><\/p>\n

\u00a0<\/p>\n

convertible into 20,000 shares of common stock. The 8% bonds are convertible into 30,000 shares of<\/span><\/p>\n

\u00a0<\/p>\n

common stock. Net income for 1988 is $850,000. Assume that the income tax rate is 30%.<\/span><\/p>\n

\u00a0<\/p>\n

The diluted earnings per share for 1988 is:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01218 Type1 M\/C A-D Corr Ans: B PM#19 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

63. CPA-01218 FARE Nov 88 #33 Page 30<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Dilutive stock options would generally be used in the calculation of:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Basic Diluted<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/em><\/p>\n

\u00a0<\/p>\n

earnings per share earnings per share<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/em><\/p>\n

\u00a0<\/p>\n

CPA-04775 Type1 M\/C A-D Corr Ans: B PM#20 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

64. CPA-04775 Released 2005 Page 27<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

During the current year, Comma Co. had outstanding: 25,000 shares of common stock, 8,000 shares of<\/span><\/p>\n

\u00a0<\/p>\n

$20 par, 10% cumulative preferred stock, and 3,000 bonds that are $1,000 par and 9% convertible. The<\/span><\/p>\n

\u00a0<\/p>\n

bonds were originally issued at par, and each bond was convertible into 30 shares of common stock.<\/span><\/p>\n

\u00a0<\/p>\n

During the year, net income was $200,000, no dividends were declared, and the tax rate was 30%. What<\/span><\/p>\n

\u00a0<\/p>\n

amount was Comma’s basic earnings per share for the current year?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-05417 Type1 M\/C A-D Corr Ans: A PM#20 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

65. CPA-05417 Released 2007 Page 27<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Jen Co. had 200,000 shares of common stock and 20,000 shares of 10%, $100 par value cumulative<\/span><\/p>\n

\u00a0<\/p>\n

preferred stock. No dividends on common stock were declared during the year. Net income was<\/span><\/p>\n

\u00a0<\/p>\n

$2,000,000. What was Jen’s basic earnings per share?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-05446 Type1 M\/C A-D Corr Ans: C PM#22 F 7-03<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

66. CPA-05446 Released 2007 Page 28<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

The following information pertains to Ceil Co., a company whose common stock trades in a public market:<\/span><\/p>\n

\u00a0<\/p>\n

Shares outstanding at 1\/1 100,000<\/span><\/p>\n

\u00a0<\/p>\n

Stock dividend at 3\/31 24,000<\/span><\/p>\n

\u00a0<\/p>\n

Stock issuance at 6\/30 5,000<\/span><\/p>\n

\u00a0<\/p>\n

What is the weighted-average number of shares Ceil should use to calculate its basic earnings per share<\/span><\/p>\n

\u00a0<\/p>\n

for the year ended December 31?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01219 Type1 M\/C A-D Corr Ans: B PM#1 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

67. CPA-01219 FARE R97 #3 Page 38<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

In its 1996 income statement, Kilm Co. reported cost of goods sold of $450,000. Changes occurred in<\/span><\/p>\n

\u00a0<\/p>\n

several balance sheet accounts as follows:<\/span><\/p>\n

\u00a0<\/p>\n

Inventory $160,000 decrease<\/span><\/p>\n

\u00a0<\/p>\n

Accounts payable-suppliers 40,000 decrease<\/span><\/p>\n

\u00a0<\/p>\n

What amount should Kilm report as cash paid to suppliers in its 1996 cash flow statement, prepared<\/span><\/p>\n

\u00a0<\/p>\n

under the direct method?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01221 Type1 M\/C A-D Corr Ans: D PM#2 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

68. CPA-01221 FARE Nov 95 #47 Page 36<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Mend Co. purchased a three-month U.S. Treasury bill. Mend’s policy is to treat as cash equivalents all<\/span><\/p>\n

\u00a0<\/p>\n

highly liquid investments with an original maturity of three months or less when purchased. How should<\/span><\/p>\n

\u00a0<\/p>\n

this purchase be reported in Mend’s statement of cash flows?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01223 Type1 M\/C A-D Corr Ans: D PM#3 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

69. CPA-01223 FARE Nov 95 #48 Page 42<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Which of the following is not <\/strong>disclosed on the statement of cash flows when prepared under the direct<\/span><\/p>\n

\u00a0<\/p>\n

method, either on the face of the statement or in a separate schedule?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01227 Type1 M\/C A-D Corr Ans: C PM#6 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

70. CPA-01227 FARE May 95 #49 Page 40<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

Which of the following information should be disclosed as supplemental information in the statement of<\/span><\/p>\n

\u00a0<\/p>\n

cash flows?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01228 Type1 M\/C A-D Corr Ans: C PM#7 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

71. CPA-01228 FARE Nov 94 #7 Page 42<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Which of the following should not <\/strong>be disclosed in an enterprise’s statement of cash flows prepared using<\/span><\/p>\n

\u00a0<\/p>\n

the indirect method?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01231 Type1 M\/C A-D Corr Ans: C PM#8 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

72. CPA-01231 FARE May 94 #5 Page 36<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

The primary purpose of a statement of cash flows is to provide relevant information about:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01232 Type1 M\/C A-D Corr Ans: B PM#9 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

73. CPA-01232 FARE May 94 #50 Page 40<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Fara Co. reported bonds payable of $47,000 at December 31, 1992, and $50,000 at December 31, 1993.<\/span><\/p>\n

\u00a0<\/p>\n

During 1993, Fara issued $20,000 of bonds payable in exchange for equipment. There was no<\/span><\/p>\n

\u00a0<\/p>\n

amortization of bond premium or discount during the year. What amount should Fara report in its 1993<\/span><\/p>\n

\u00a0<\/p>\n

statement of cash flows for redemption of bonds payable?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01233 Type1 M\/C A-D Corr Ans: A PM#10 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

74. CPA-01233 PI Nov 93 #5 Page 38<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Lino Co.’s worksheet for the preparation of its 1992 statement of cash flows included the following:<\/span><\/p>\n

\u00a0<\/p>\n

December 31 January 1<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Accounts receivable $29,000 $23,000<\/span><\/p>\n

\u00a0<\/p>\n

Allowance for uncollectible accounts 1,000 800<\/span><\/p>\n

\u00a0<\/p>\n

Prepaid rent expense 8,200 12,400<\/span><\/p>\n

\u00a0<\/p>\n

Accounts payable 22,400 19,400<\/span><\/p>\n

\u00a0<\/p>\n

Lino’s 1992 net income is $150,000. What amount should Lino include as net cash provided by operating<\/span><\/p>\n

\u00a0<\/p>\n

activities in the statement of cash flows?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01234 Type1 M\/C A-D Corr Ans: B PM#11 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

75. CPA-01234 PI Nov 93 #6 Page 38<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Karr, Inc. reported net income of $300,000 for 1992. Changes occurred in several balance sheet<\/span><\/p>\n

\u00a0<\/p>\n

accounts as follows:<\/span><\/p>\n

\u00a0<\/p>\n

Equipment $25,000 increase<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation 40,000 increase<\/span><\/p>\n

\u00a0<\/p>\n

Note payable 30,000 increase<\/span><\/p>\n

\u00a0<\/p>\n

Additional information:<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 During 1992, Karr sold equipment costing $25,000, with accumulated depreciation of $12,000, for a<\/span><\/p>\n

\u00a0<\/p>\n

gain of $5,000.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 In December 1992, Karr purchased equipment costing $50,000 with $20,000 cash and a 12% note<\/span><\/p>\n

\u00a0<\/p>\n

payable of $30,000.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 Depreciation expense for the year was $52,000.<\/span><\/p>\n

\u00a0<\/p>\n

In Karr’s 1992 statement of cash flows, net cash provided by operating activities should be:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01235 Type1 M\/C A-D Corr Ans: A PM#12 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

76. CPA-01235 PI Nov 93 #7 Page 39<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Karr, Inc. reported net income of $300,000 for 1992. Changes occurred in several balance sheet<\/span><\/p>\n

\u00a0<\/p>\n

accounts as follows:<\/span><\/p>\n

\u00a0<\/p>\n

Equipment $25,000 increase<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation 40,000 increase<\/span><\/p>\n

\u00a0<\/p>\n

Note payable 30,000 increase<\/span><\/p>\n

\u00a0<\/p>\n

Additional information:<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 During 1992, Karr sold equipment costing $25,000, with accumulated depreciation of $12,000, for a<\/span><\/p>\n

\u00a0<\/p>\n

gain of $5,000.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 In December 1992, Karr purchased equipment costing $50,000 with $20,000 cash and a 12% note<\/span><\/p>\n

\u00a0<\/p>\n

payable of $30,000.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 Depreciation expense for the year was $52,000.<\/span><\/p>\n

\u00a0<\/p>\n

In Karr’s 1992 statement of cash flows, net cash used in investing activities should be:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01239 Type1 M\/C A-D Corr Ans: C PM#13 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

77. CPA-01239 PI Nov 93 #8 Page 40<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

During 1992, Xan, Inc. had the following activities related to its financial operations:<\/span><\/p>\n

\u00a0<\/p>\n

Payment for the early retirement of long-term<\/span><\/p>\n

\u00a0<\/p>\n

bonds payable (carrying amount $370,000) $375,000<\/span><\/p>\n

\u00a0<\/p>\n

Distribution in 1992 of cash dividend declared in 1991 to preferred shareholders 31,000<\/span><\/p>\n

\u00a0<\/p>\n

Carrying amount of convertible preferred stock in Xan, converted into common shares 60,000<\/span><\/p>\n

\u00a0<\/p>\n

Proceeds from sale of Treasury stock (carrying amount at cost, $43,000) 50,000<\/span><\/p>\n

\u00a0<\/p>\n

In Xan’s 1992 statement of cash flows, net cash used in financing operations should be:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01241 Type1 M\/C A-D Corr Ans: D PM#14 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

78. CPA-01241 PI Nov 93 #9 Page 38<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Duke Co. reported cost of goods sold of $270,000 for 1992. Additional information is as follows:<\/span><\/p>\n

\u00a0<\/p>\n

December 31 January 1<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Inventory $60,000 $45,000<\/span><\/p>\n

\u00a0<\/p>\n

Accounts payable 26,000 39,000<\/span><\/p>\n

\u00a0<\/p>\n

If Duke uses the direct method, what amount should Duke report as cash paid to suppliers in its 1992<\/span><\/p>\n

\u00a0<\/p>\n

statement of cash flows?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01242 Type1 M\/C A-D Corr Ans: A PM#15 F 7-04<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

79. CPA-01242 Th Nov 93 #41 Page 39<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

In a statement of cash flows, if used equipment is sold at a gain, the amount shown as a cash inflow from<\/span><\/p>\n

\u00a0<\/p>\n

investing activities equals the carrying amount of the equipment:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01244 Type1 M\/C A-D Corr Ans: C PM#16 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

80. CPA-01244 Th Nov 93 #42 Page 40<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

On July 1, 1992, Dewey Co. signed a 20-year building lease that it reported as a capital lease. Dewey<\/span><\/p>\n

\u00a0<\/p>\n

paid the monthly lease payments when due. How should Dewey report the effect of the lease payments<\/span><\/p>\n

\u00a0<\/p>\n

in the financing activities section of its 1992 statement of cash flows?<\/span><\/p>\n

\u00a0<\/p>\n

a. An inflow equal to the present value of future lease payments at July 1, 1992, less 1992 principal and<\/span><\/p>\n

\u00a0<\/p>\n

interest payments.<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01245 Type1 M\/C A-D Corr Ans: D PM#17 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

81. CPA-01245 Th May 93 #32 Page 39<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

On September 1, 1992, Canary Co. sold used equipment for a cash amount equaling its carrying amount<\/span><\/p>\n

\u00a0<\/p>\n

for both book and tax purposes. On September 15, 1992, Canary replaced the equipment by paying cash<\/span><\/p>\n

\u00a0<\/p>\n

and signing a note payable for new equipment. The cash paid for the new equipment exceeded the cash<\/span><\/p>\n

\u00a0<\/p>\n

received for the old equipment. How should these equipment transactions be reported in Canary’s 1992<\/span><\/p>\n

\u00a0<\/p>\n

statement of cash flows?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01247 Type1 M\/C A-D Corr Ans: C PM#18 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

82. CPA-01247 Th May 93 #33 Page 38<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

How should a gain from the sale of used equipment for cash be reported in a statement of cash flows<\/span><\/p>\n

\u00a0<\/p>\n

using the indirect method?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04657 Type1 M\/C A-D Corr Ans: C PM#19 F 7-04<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

83. CPA-04657 Released 2005 Page 37<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

In its cash flow statement for the current year, Ness Co. reported cash paid for interest of $70,000. Ness<\/span><\/p>\n

\u00a0<\/p>\n

did not capitalize any interest during the current year. Decreases occurred in several balance sheet<\/span><\/p>\n

\u00a0<\/p>\n

accounts as follows:<\/span><\/p>\n

\u00a0<\/p>\n

Accrued interest payable $17,000<\/span><\/p>\n

\u00a0<\/p>\n

Prepaid interest 23,000<\/span><\/p>\n

\u00a0<\/p>\n

In its income statement for the current year, what amount should Ness report as interest expense?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04691 Type1 M\/C A-D Corr Ans: D PM#20 F 7-04<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

84. CPA-04691 Released 2005 Page 36<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

The following are held by Smite Co.:<\/span><\/p>\n

\u00a0<\/p>\n

Cash in checking account $20,000<\/span><\/p>\n

\u00a0<\/p>\n

Cash in bond sinking fund account 30,000<\/span><\/p>\n

\u00a0<\/p>\n

Post-dated check from customer dated one month from balance sheet date 250<\/span><\/p>\n

\u00a0<\/p>\n

Petty cash 200<\/span><\/p>\n

\u00a0<\/p>\n

Commercial paper (matures in two months) 7,000<\/span><\/p>\n

\u00a0<\/p>\n

Certified of deposit (matures in six months) 5,000<\/span><\/p>\n

\u00a0<\/p>\n

What amount should be reported as cash and cash equivalents on Smite’s balance sheet?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04653 Type1 M\/C A-D Corr Ans: B PM#20 F 7-04<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

85. CPA-04653 Released 2005 Page 36<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Reed Co.’s 2001 statement of cash flows reported cash provided from operating activities of $400,000.<\/span><\/p>\n

\u00a0<\/p>\n

For 2001, depreciation of equipment was $190,000, amortization of goodwill was $5,000, and dividends<\/span><\/p>\n

\u00a0<\/p>\n

paid on common stock were $100,000. In Reed’s 2001 statement of cash flows, what amount was<\/span><\/p>\n

\u00a0<\/p>\n

reported as net income?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-05202 Type1 M\/C A-D Corr Ans: C PM#22 F 7-04<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

86. CPA-05202 Released 2006 Page 37<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Payne Co. prepares its statement of cash flows using the indirect method. Payne’s unamortized bond<\/span><\/p>\n

\u00a0<\/p>\n

discount account decreased by $25,000 during the year. How should Payne report the change in<\/span><\/p>\n

\u00a0<\/p>\n

unamortized bond discount in its statement of cash flows?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-05219 Type1 M\/C A-D Corr Ans: C PM#23 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

87. CPA-05219 Released 2006 Page 37<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Which of the following items is included in the financing activities section of the statement of cash flows?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-05229 Type1 M\/C A-D Corr Ans: C PM#24 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

88. CPA-05229 Released 2006 Page 37<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

New England Co. had net cash provided by operating activities of $351,000; net cash used by investing<\/span><\/p>\n

\u00a0<\/p>\n

activities of $420,000; and cash provided by financing activities of $250,000. New England’s cash<\/span><\/p>\n

\u00a0<\/p>\n

balance was $27,000 on January 1. During the year, there was a sale of land that resulted in a gain of<\/span><\/p>\n

\u00a0<\/p>\n

$25,000 and proceeds of $40,000 were received from the sale. What was New England’s cash balance<\/span><\/p>\n

\u00a0<\/p>\n

at the end of the year?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-05423 Type1 M\/C A-D Corr Ans: A PM#26 F 7-04<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

89. CPA-05423 Released 2007 Page 39<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Paper Co. had net income of $70,000 during the year. Dividend payment was $10,000. The following<\/span><\/p>\n

\u00a0<\/p>\n

information is available:<\/span><\/p>\n

\u00a0<\/p>\n

Mortgage repayment $20,000<\/span><\/p>\n

\u00a0<\/p>\n

Available-for-sale securities purchased 10,000 increase<\/span><\/p>\n

\u00a0<\/p>\n

Bonds payable – issued 50,000 increase<\/span><\/p>\n

\u00a0<\/p>\n

Inventory 40,000 increase<\/span><\/p>\n

\u00a0<\/p>\n

Accounts payable 30,000 decrease<\/span><\/p>\n

\u00a0<\/p>\n

What amount should Paper report as net cash provided by operating activities in its statement of cash<\/span><\/p>\n

\u00a0<\/p>\n

flows for the year?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-05450 Type1 M\/C A-D Corr Ans: D PM#27 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

90. CPA-05450 Released 2007 Page 39<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Savor Co. had $100,000 in cash-basis pretax income for 1999. At December 31, 1999, accounts<\/span><\/p>\n

\u00a0<\/p>\n

receivable had increased by $10,000 and accounts payable had decreased by $6,000 from their<\/span><\/p>\n

\u00a0<\/p>\n

December 31, 1998, balances. Compared to the accrual basis method of accounting, Savor’s cash<\/span><\/p>\n

\u00a0<\/p>\n

pretax income is:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-05462 Type1 M\/C A-D Corr Ans: B PM#28 F 7-04<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

91. CPA-05462 Released 2007 Page 39<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

During the current year, Ace Co. amortized a bond discount. Ace prepares its statement of cash flows<\/span><\/p>\n

\u00a0<\/p>\n

using the indirect method. In which section of the statement should Ace report the amortization of the<\/span><\/p>\n

\u00a0<\/p>\n

bond discount?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01458 Type1 M\/C A-D Corr Ans: D PM#1 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

92. CPA-01458 Nov 89 #20 Page 10<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

A corporation was organized in January 1988 with authorized capital of $10 par value common stock. On<\/span><\/p>\n

\u00a0<\/p>\n

February 1, 1988, shares were issued at par for cash. On March 1, 1988, the corporation’s attorney<\/span><\/p>\n

\u00a0<\/p>\n

accepted 5,000 shares of the common stock in settlement for legal services with a fair value of $60,000.<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital would increase on:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/em><\/p>\n

\u00a0<\/p>\n

CPA-01460 Type1 M\/C A-D Corr Ans: B PM#2 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

93. CPA-01460 Nov 89 #21 Page 18<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

A corporation declared a dividend, a portion of which was liquidating. How would this declaration affect<\/span><\/p>\n

\u00a0<\/p>\n

each of the following?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01463 Type1 M\/C A-D Corr Ans: A PM#3 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

94. CPA-01463 May 90 #14 Page 18<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Pott Co. owned shares in Rose Co. On December 1, 1989, Pott declared and distributed a property<\/span><\/p>\n

\u00a0<\/p>\n

dividend of Rose shares when their fair value exceeded the carrying amount. As a consequence of the<\/span><\/p>\n

\u00a0<\/p>\n

dividend declaration and distribution, the accounting effects would be:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01466 Type1 M\/C A-D Corr Ans: B PM#4 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

95. CPA-01466 Nov 90 L #17 Page 20<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

All of the following distributions to stockholders are considered asset or capital distributions, except<\/strong>:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01467 Type1 M\/C A-D Corr Ans: C PM#5 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

96. CPA-01467 Nov 90 #32 Page 19<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

How would the declaration of a 15% stock dividend by a corporation affect each of the following?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

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CPA-01471 Type1 M\/C A-D Corr Ans: D PM#6 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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97. CPA-01471 May 91 I #12 Page 13<\/span><\/strong><\/p>\n

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\u00a0<\/p>\n

Mag, Inc.’s December 31, 1990, unadjusted current assets and stockholders’ equity sections are as<\/span><\/p>\n

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follows:<\/span><\/p>\n

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Current Assets:<\/span><\/em><\/p>\n

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Cash $ 15,000<\/span><\/p>\n

\u00a0<\/p>\n

Investments in marketable equity securities<\/span><\/p>\n

\u00a0<\/p>\n

(including $75,000 of Mag, Inc. common stock) 100,000<\/span><\/p>\n

\u00a0<\/p>\n

Trade accounts receivable 85,000<\/span><\/p>\n

\u00a0<\/p>\n

Inventories 37,000<\/span><\/p>\n

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Total $237,000<\/span><\/p>\n

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Stockholders’ Equity:<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Common stock $556,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings (deficit) (56,000)<\/span><\/p>\n

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Total $500,000<\/span><\/p>\n

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The investments and inventories are reported at their costs, which approximate market values.<\/span><\/p>\n

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Mag’s stockholders’ equity at December 31,1990, should be:<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01490 Type1 M\/C A-D Corr Ans: A PM#7 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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98. CPA-01490 May 91 I #19 Page 13<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Pugh Co. reported the following in its statement of stockholders’ equity on January 1, 1990:<\/span><\/p>\n

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Common stock, $5 par value, authorized 200,000 shares, issued 100,000 shares $ 500,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 1,500,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 516,000<\/span><\/p>\n

\u00a0<\/p>\n

2,516,000<\/span><\/p>\n

\u00a0<\/p>\n

Less treasury stock, at cost, 5,000 shares (40,000)<\/span><\/p>\n

\u00a0<\/p>\n

Total stockholders’ equity $2,476,000<\/span><\/p>\n

\u00a0<\/p>\n

The following events occurred in 1990:<\/span><\/p>\n

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May 1 – 1,000 shares of treasury stock were sold for $10,000.<\/span><\/p>\n

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July 9 – 10,000 shares of previously unissued common stock were sold for $12 per share.<\/span><\/p>\n

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October 1 – The distribution of a 2-for-1 stock split resulted in the common stock’s per share par value<\/span><\/p>\n

\u00a0<\/p>\n

being halved.<\/span><\/p>\n

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Pugh accounts for treasury stock under the cost method. Laws in the state of Pugh’s incorporation<\/span><\/p>\n

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protect shares held in treasury from dilution when stock dividends or stock splits are declared.<\/span><\/p>\n

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In Pugh’s December 31, 1990, statement of stockholders’ equity, the par value of the issued common<\/span><\/p>\n

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stock should be:<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01491 Type1 M\/C A-D Corr Ans: D PM#8 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

99. CPA-01491 May 91 I #20 Page 13<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Pugh Co. reported the following in its statement of stockholders’ equity on January 1, 1990:<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $5 par value, authorized 200,000 shares, issued 100,000 shares $ 500,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 1,500,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 516,000<\/span><\/p>\n

\u00a0<\/p>\n

2,516,000<\/span><\/p>\n

\u00a0<\/p>\n

Less treasury stock, at cost, 5,000 shares (40,000)<\/span><\/p>\n

\u00a0<\/p>\n

Total stockholders’ equity $2,476,000<\/span><\/p>\n

\u00a0<\/p>\n

The following events occurred in 1990:<\/span><\/p>\n

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May 1 – 1,000 shares of treasury stock were sold for $10,000.<\/span><\/p>\n

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July 9 – 10,000 shares of previously unissued common stock were sold for $12 per share.<\/span><\/p>\n

\u00a0<\/p>\n

October 1 – The distribution of a 2-for-1 stock split resulted in the common stock’s per share par value<\/span><\/p>\n

\u00a0<\/p>\n

being halved.<\/span><\/p>\n

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Pugh accounts for treasury stock under the cost method. Laws in the state of Pugh’s incorporation<\/span><\/p>\n

\u00a0<\/p>\n

protect shares held in treasury from dilution when stock dividends or stock splits are declared.<\/span><\/p>\n

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The number of outstanding common shares at December 31, 1990, should be:<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01492 Type1 M\/C A-D Corr Ans: B PM#9 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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100. CPA-01492 May 91 II #12 Page 19<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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The following stock dividends were declared and distributed by Sol Corp.:<\/span><\/p>\n

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Percentage of common<\/span><\/em><\/p>\n

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\u00a0<\/span><\/em><\/p>\n

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shares outstanding at<\/span><\/em><\/p>\n

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declaration date Fair value Par value<\/span><\/em><\/p>\n

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10 $15,000 $10,000<\/span><\/p>\n

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28 40,000 30,800<\/span><\/p>\n

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What aggregate amount should be debited to retained earnings for these stock dividends?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01493 Type1 M\/C A-D Corr Ans: A PM#10 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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101. CPA-01493 Nov 91 II #1 Page 20<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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Of the 125,000 shares of common stock issued by Vey Corp., 25,000 shares were held as treasury stock<\/span><\/p>\n

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at December 31, 1989. During 1990, transactions involving Vey’s common stock were as follows:<\/span><\/p>\n

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January 1 through October 31 – 13,000 treasury shares were distributed to officers as part of a stock<\/span><\/p>\n

\u00a0<\/p>\n

compensation plan.<\/span><\/p>\n

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November 1 – A 3-for-1 stock split took effect.<\/span><\/p>\n

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December 1 – Vey purchased 5,000 of its own shares to discourage an unfriendly takeover. These<\/span><\/p>\n

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shares were not retired.<\/span><\/p>\n

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At December 31, 1990, how many shares of Vey’s common stock were issued and outstanding?<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01494 Type1 M\/C A-D Corr Ans: D PM#11 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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102. CPA-01494 Nov 91 II #3 Page 18<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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Hoyt Corp.’s current balance sheet reports the following stockholders’ equity:<\/span><\/p>\n

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5% cumulative preferred stock, par value $100 per share;<\/span><\/p>\n

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2,500 shares issued and outstanding $250,000<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, par value $3.50 per share; 100,000 shares issued and outstanding 350,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital in excess of par value of common stock 125,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 300,000<\/span><\/p>\n

\u00a0<\/p>\n

Dividends in arrears on the preferred stock amount to $25,000. If Hoyt were to be liquidated, the<\/span><\/p>\n

\u00a0<\/p>\n

preferred stockholders would receive par value plus a premium of $50,000. The book value per share of<\/span><\/p>\n

\u00a0<\/p>\n

common stock is:<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01495 Type1 M\/C A-D Corr Ans: D PM#12 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

103. CPA-01495 Nov 91 II #6 Page 18<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Ole Corp. declared and paid a liquidating dividend of $100,000. This distribution resulted in a decrease in<\/span><\/p>\n

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Ole’s:<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01496 Type1 M\/C A-D Corr Ans: C PM#13 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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104. CPA-01496 Nov 91 #39 Page 13<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Posy Corp. acquired treasury shares at an amount greater than their par value, but less than their original<\/span><\/p>\n

\u00a0<\/p>\n

issue price. Compared to the cost method of accounting for treasury stock, does the par value method<\/span><\/p>\n

\u00a0<\/p>\n

report a greater amount for additional paid-in capital and a greater amount for retained earnings?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01520 Type1 M\/C A-D Corr Ans: C PM#14 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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105. CPA-01520 Nov 91 #40 Page 13<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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Grid Corp. acquired some of its own common shares at a price greater than both their par value and<\/span><\/p>\n

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original issue price but less than their book value. Grid uses the cost method of accounting for treasury<\/span><\/p>\n

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stock. What is the impact of this acquisition on total stockholders’ equity and the book value per common<\/span><\/p>\n

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share?<\/span><\/p>\n

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\u00a0<\/span><\/em><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01521 Type1 M\/C A-D Corr Ans: C PM#15 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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106. CPA-01521 May 92 II #4 Page 18<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

On December 1, 1991, Nilo Corp. declared a property dividend of marketable securities to be distributed<\/span><\/p>\n

\u00a0<\/p>\n

on December 31, 1991, to stockholders of record on December 15, 1991. On December 1, 1991, the<\/span><\/p>\n

\u00a0<\/p>\n

marketable securities had a carrying amount of $60,000 and a fair value of $78,000. What is the effect of<\/span><\/p>\n

\u00a0<\/p>\n

this property dividend on Nilo’s 1991 retained earnings, after all nominal accounts are closed?<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01523 Type1 M\/C A-D Corr Ans: A PM#16 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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107. CPA-01523 May 92 I #3 Page 19<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

The following format was used by Gee, Inc. for its 1991 statement of owners’ equity:<\/span><\/p>\n

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Common Additional<\/span><\/em><\/p>\n

\u00a0<\/p>\n

stock paid-in Retained<\/span><\/em><\/p>\n

\u00a0<\/p>\n

$1 par capital earnings<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Balance at 1\/1\/91 $90,000 $800,000 $175,000<\/span><\/p>\n

\u00a0<\/p>\n

Additions and deductions:<\/span><\/p>\n

\u00a0<\/p>\n

100% stock dividend<\/span><\/p>\n

\u00a0<\/p>\n

5% stock dividend<\/span><\/p>\n

\u00a0<\/p>\n

Balance at 12\/31\/9<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

When both the 100% and the 5% stock dividends were declared, Gee’s common stock was selling for<\/span><\/p>\n

\u00a0<\/p>\n

more than its $1 par value.<\/span><\/p>\n

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How would the 5% stock dividend affect the additional paid-in capital and retained earnings amounts<\/span><\/p>\n

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reported in Gee’s 1991 statement of owners’ equity?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01527 Type1 M\/C A-D Corr Ans: A PM#17 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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108. CPA-01527 May 92 II #6 Page 11<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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The following information pertains to Meg Corp.:<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 Dividends on its 1,000 shares of 6%, $10 par value cumulative preferred stock have not been<\/span><\/p>\n

\u00a0<\/p>\n

declared or paid for 3 years.<\/span><\/p>\n

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\u2022 Treasury stock that cost $15,000 was reissued for $8,000.<\/span><\/p>\n

\u00a0<\/p>\n

What amount of retained earnings should be appropriated as a result of these items?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01530 Type1 M\/C A-D Corr Ans: D PM#18 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

109. CPA-01530 May 92 #36 Page 18<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Instead of the usual cash dividend, Evie Corp. declared and distributed a property dividend from its<\/span><\/p>\n

\u00a0<\/p>\n

overstocked merchandise. The excess of the merchandise’s carrying amount over its market value<\/span><\/p>\n

\u00a0<\/p>\n

should be:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

CPA-01532 Type1 M\/C A-D Corr Ans: D PM#19 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

110. CPA-01532 May 92 #43 Page 9<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

For the last 10 years, Woody Co. has owned cumulative preferred stock issued by Hadley, Inc. During<\/span><\/p>\n

\u00a0<\/p>\n

1991, Hadley declared and paid both the 1991 dividend and the 1990 dividend in arrears. How should<\/span><\/p>\n

\u00a0<\/p>\n

Woody report the 1990 dividend in arrears that was received in 1991?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01534 Type1 M\/C A-D Corr Ans: C PM#20 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

111. CPA-01534 May 92 II #1 Page 16<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

On March 1, 1992, Rya Corp. issued 1,000 shares of its $20 par value common stock and 2,000 shares<\/span><\/p>\n

\u00a0<\/p>\n

of its $20 par value convertible preferred stock for a total of $80,000. At this date, Rya’s common stock<\/span><\/p>\n

\u00a0<\/p>\n

was selling for $36 per share, and the convertible preferred stock was selling for $27 per share. What<\/span><\/p>\n

\u00a0<\/p>\n

amount of the proceeds should be allocated to Rya’s convertible preferred stock?<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01538 Type1 M\/C A-D Corr Ans: A PM#21 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

112. CPA-01538 Nov 92 I #7 Page 8<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

On September 1, 1992, Hyde Corp., a newly formed company, had the following stock issued and<\/span><\/p>\n

\u00a0<\/p>\n

outstanding:<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 Common stock, no par, $1 stated value, 5,000 shares originally issued for $15 per share.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 Preferred stock, $10 par value, 1,500 shares originally issued for $25 per share.<\/span><\/p>\n

\u00a0<\/p>\n

Hyde’s September 1, 1992, statement of stockholders, equity should report:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01543 Type1 M\/C A-D Corr Ans: C PM#22 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

113. CPA-01543 Nov 92 II #42 Page 15<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Cross Corp. had outstanding 2,000 shares of 11% preferred stock, $50 par. On August 8, 1992, Cross<\/span><\/p>\n

\u00a0<\/p>\n

redeemed and retired 25% of these shares for $22,500. On that date, Cross’ additional paid-in capital<\/span><\/p>\n

\u00a0<\/p>\n

from preferred stock totaled $30,000. To record this transaction, Cross should debit (credit) its capital<\/span><\/p>\n

\u00a0<\/p>\n

accounts as follows:<\/span><\/p>\n

\u00a0<\/p>\n

Preferred Additional Retained<\/span><\/em><\/p>\n

\u00a0<\/p>\n

stock paid-in capital earnings<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01545 Type1 M\/C A-D Corr Ans: D PM#23 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

114. CPA-01545 Nov 92 II #45 Page 18<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Mio Corp was the sole stockholder of Plasti Corp. On September 30, 1991, Mio declared a property<\/span><\/p>\n

\u00a0<\/p>\n

dividend of Plasti’s 2,000 outstanding shares of $1 par value common stock, distributable to Mio’s<\/span><\/p>\n

\u00a0<\/p>\n

stockholders. On that date, the book value of Plasti’s stock was $1.50 per share. Immediately after the<\/span><\/p>\n

\u00a0<\/p>\n

distribution, the market value of Plasti’s stock was $4.50 per share. What amount should Mio report in its<\/span><\/p>\n

\u00a0<\/p>\n

1991 financial statements as gain on disposal of the Plasti stock?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01548 Type1 M\/C A-D Corr Ans: B PM#24 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

115. CPA-01548 Nov 92 #18 Page 16<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

When collectibility is reasonably assured, the excess of the subscription price over the stated value of the<\/span><\/p>\n

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no par common stock subscribed should be recorded as:<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

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CPA-01559 Type1 M\/C A-D Corr Ans: C PM#25 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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116. CPA-01559 Nov 92 #22 Page 19<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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A corporation issuing stock should charge retained earnings for the market value of the shares issued in<\/span><\/p>\n

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a(an):<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01561 Type1 M\/C A-D Corr Ans: D PM#26 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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117. CPA-01561 May 94 #8 Page 9<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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At December 31, 1992 and 1993, Apex Co. had 3,000 shares of $100 par, 5% cumulative preferred stock<\/span><\/p>\n

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outstanding. No dividends were in arrears as of December 31, 1991. Apex did not declare a dividend<\/span><\/p>\n

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during 1992. During 1993, Apex paid a cash dividend of $10,000 on its preferred stock. Apex should<\/span><\/p>\n

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report dividends in arrears in its 1993 financial statements as a(an):<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01562 Type1 M\/C A-D Corr Ans: D PM#27 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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118. CPA-01562 Nov 94 #39 Page 19<\/span><\/strong><\/p>\n

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Stock dividends on common stock should be recorded at their fair market value by the investor when the<\/span><\/p>\n

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related investment is accounted for under which of the following methods?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01563 Type1 M\/C A-D Corr Ans: A PM#28 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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119. CPA-01563 Nov 88 I #41 Page 23<\/span><\/strong><\/p>\n

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On January 1, 2004, Ward Corp. granted stock options to corporate executives for the purchase of<\/span><\/p>\n

\u00a0<\/p>\n

20,000 shares of the company’s $20 par value common stock at $48 per share. All stock options were<\/span><\/p>\n

\u00a0<\/p>\n

exercised on December 28, 2004. Using an acceptable option pricing model, Ward calculated total<\/span><\/p>\n

\u00a0<\/p>\n

compensation cost of $240,000. The quoted market prices of Ward’s $20 par value common stock were<\/span><\/p>\n

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as follows:<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

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January 1, 2004 $45<\/span><\/p>\n

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December 28, 2004 60<\/span><\/p>\n

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As a result of the grant and exercise of the stock options and the issuance of the common stock, Ward’s<\/span><\/p>\n

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additional paid-in capital increased by:<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01565 Type1 M\/C A-D Corr Ans: C PM#29 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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120. CPA-01565 May 91 I #51 Page 23<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

On January 1, 20X1, Lord Corp. granted stock options for 10,000 shares at $38 per share as additional<\/span><\/p>\n

\u00a0<\/p>\n

compensation for services to be rendered over the next three years. Using an acceptable option pricing<\/span><\/p>\n

\u00a0<\/p>\n

model, Lord calculated total compensation cost of $90,000. The options are exercisable during a 4-year<\/span><\/p>\n

\u00a0<\/p>\n

period beginning January 1, 20X4, by grantees still employed by Lord. Market price of Lord’s stock was<\/span><\/p>\n

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$47 per share at the grant date. No stock options were terminated during 20X1. In Lord’s 20X1 income<\/span><\/p>\n

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statement, what amount should be reported as compensation expense pertaining to the options?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01566 Type1 M\/C A-D Corr Ans: C PM#30 F 7-99<\/span><\/strong><\/p>\n

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121. CPA-01566 Nov 91 II #20 Page 22<\/span><\/strong><\/p>\n

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Wall Corp.’s employee stock purchase plan specifies the following:<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

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\u2022 For every $1 withheld from employees’ wages for the purchase of Wall’s common stock, Wall<\/span><\/p>\n

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contributes $2.<\/span><\/p>\n

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\u2022 The stock is purchased from Wall’s treasury stock at market price on the date of purchase.<\/span><\/p>\n

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The following information pertains to the plan’s 1990 transactions:<\/span><\/p>\n

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\u2022 Employee withholdings for the year $ 350,000<\/span><\/p>\n

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\u2022 Market value of 150,000 shares issued 1,050,000<\/span><\/p>\n

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\u2022 Carrying amount of treasury stock issued (cost) 900,000<\/span><\/p>\n

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Before payroll taxes, what amount should Wall recognize as expense in 1990 for the stock purchase<\/span><\/p>\n

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plan?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01567 Type1 M\/C A-D Corr Ans: D PM#31 F 7-99<\/span><\/strong><\/p>\n

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122. CPA-01567 Nov 91 #38 Page 17<\/span><\/strong><\/p>\n

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Tem Co. issued rights to its existing stockholders without consideration. A stockholder received a right to<\/span><\/p>\n

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buy one share for each 20 shares held. The exercise price was in excess of par value, but less than the<\/span><\/p>\n

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current market price. Retained earnings decreases when:<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01569 Type1 M\/C A-D Corr Ans: B PM#32 F 7-99<\/span><\/strong><\/p>\n

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123. CPA-01569 Nov 92 II #56 Page 21<\/span><\/strong><\/p>\n

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On June 1, 20X1, Oak Corp. granted stock options to certain key employees as additional compensation.<\/span><\/p>\n

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The options were for 1,000 shares of Oak’s $2 par value common stock at an option price of $15 per<\/span><\/p>\n

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share. Market price of this stock on June 1,20X1, was $17 per share. Using an acceptable option pricing<\/span><\/p>\n

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model Oak determined that total compensation cost under the stock option plan was $5,000. The options<\/span><\/p>\n

\u00a0<\/p>\n

were exercisable beginning January 2, 20X2, and expire on December 31,20X3. On April 1, 20X2, when<\/span><\/p>\n

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Oak’s stock was trading at $21 per share, all the options were exercised. What amount of pretax<\/span><\/p>\n

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compensation should Oak report in 20X1 in connection with the options?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01570 Type1 M\/C A-D Corr Ans: A PM#33 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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124. CPA-01570 Nov 93 I #12 Page 17<\/span><\/strong><\/p>\n

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On March 4, 1992, Evan Co. purchased 1,000 shares of LVC common stock at $80 per share. On<\/span><\/p>\n

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September 26, 1992, Evan received 1,000 stock rights to purchase an additional 1,000 shares at $90 per<\/span><\/p>\n

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share. The stock rights had an expiration date of February 1, 1993. On September 30, 1992, LVC’s<\/span><\/p>\n

\u00a0<\/p>\n

common stock had a market value, ex-rights, of $95 per share and the stock rights had a market value of<\/span><\/p>\n

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$5 each. What amount should Evan report on its September 30, 1992, balance sheet for investment in<\/span><\/p>\n

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stock rights?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01572 Type1 M\/C A-D Corr Ans: B PM#34 F 7-99<\/span><\/strong><\/p>\n

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125. CPA-01572 Nov 94 #33 Page 21<\/span><\/strong><\/p>\n

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On January 2, 20X1, Farm Co. granted an employee an option to purchase 1,000 shares of Farm’s<\/span><\/p>\n

\u00a0<\/p>\n

common stock at $40 per share. The option became exercisable on December 31, 20X2, after the<\/span><\/p>\n

\u00a0<\/p>\n

employee had completed two years of service, and was exercised on that date. The market prices of<\/span><\/p>\n

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Farm’s stock were as follows:<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

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January 2, 20X1 $48<\/span><\/p>\n

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December 31, 20X1 63<\/span><\/p>\n

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December 31, 20X2 65<\/span><\/p>\n

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Using an acceptable option pricing model, Farm determined that the fair value of the options granted was<\/span><\/p>\n

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$10,000. What amount should Farm recognize as compensation expense for 20X2?<\/span><\/p>\n

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\u00a0<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-01573 Type1 M\/C A-D Corr Ans: D PM#35 F 7-99<\/span><\/strong><\/p>\n

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126. CPA-01573 May 92 II #3 Page 18<\/span><\/strong><\/p>\n

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Bal Corp. declared a $25,000 cash dividend on May 8, 1991, to stockholders of record on May 23, 1991,<\/span><\/p>\n

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payable on June 3, 1991. As a result of this cash dividend, working capital:<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

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CPA-01574 Type1 M\/C A-D Corr Ans: D PM#36 F 7-99<\/span><\/strong><\/p>\n

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127. CPA-01574 May 92 #37 Page 11<\/span><\/strong><\/p>\n

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A retained earnings appropriation can be used to:<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-05432 Type1 M\/C A-D Corr Ans: B PM#50 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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128. CPA-05432 Released 2007 Page 51<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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Stent Co. had total assets of $760,000, capital stock of $150,000, and retained earnings of $215,000.<\/span><\/p>\n

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What was Stent’s debt-to-equity ratio?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-05460 Type1 M\/C A-D Corr Ans: B PM#51 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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129. CPA-05460 Released 2007 Page 48<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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The controller of Peabody, Inc. has been asked to present an analysis of accounts receivable collections<\/span><\/p>\n

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at the upcoming staff meeting. The following information is used:<\/span><\/p>\n

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12\/31, year 2 12\/31, year 1<\/span><\/em><\/p>\n

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Accounts receivable $100,000 $130,000<\/span><\/p>\n

\u00a0<\/p>\n

Allowance, doubtful accounts (20,000) (40,000)<\/span><\/p>\n

\u00a0<\/p>\n

Sales 400,000 200,000<\/span><\/p>\n

\u00a0<\/p>\n

Cost of goods sold 350,000 70,000<\/span><\/p>\n

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What is the receivables turnover ratio as of December 31, year 2?<\/span><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/strong><\/p>\n

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CPA-04574 Type1 M\/C A-L Corr Ans: K PM#53 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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130. CPA-04574 PI May 92 #4a 1A Page 3<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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Following are selected balance sheet accounts of Zach Corp. at December 31, 1991 and 1990, and the<\/span><\/p>\n

\u00a0<\/p>\n

increases or decreases in each account from 1990 to 1991. Also presented is selected income statement<\/span><\/p>\n

\u00a0<\/p>\n

information for the year ended December 31, 1991, and additional information.<\/span><\/p>\n

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Increase<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Selected balance sheet accounts 1991 1990 (Decrease)<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Assets:<\/span><\/p>\n

\u00a0<\/p>\n

Accounts receivable $ 34,000 $ 24,000 $10,000<\/span><\/p>\n

\u00a0<\/p>\n

Property, plant, and equipment 277,000 247,000 30,000<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation (178,000) (167,000) (11,000)<\/span><\/p>\n

\u00a0<\/p>\n

Liabilities and stockholders’ equity:<\/span><\/p>\n

\u00a0<\/p>\n

Bonds payable 49,000 46,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Dividends payable 8,000 5,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $1 par 22,000 19,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 9,000 3,000 6,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 104,000 91,000 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Selected income statement information for the year ended December 31, 1991<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Sales revenue $155,000<\/span><\/p>\n

\u00a0<\/p>\n

Depreciation 33,000<\/span><\/p>\n

\u00a0<\/p>\n

Gain on sale of equipment 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Net income 28,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional information<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 Accounts receivable relate to sales of merchandise.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, equipment costing $40,000 was sold for cash.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, $20,000 of bonds payable were issued in exchange for property, plant, and equipment.<\/span><\/p>\n

\u00a0<\/p>\n

There was no amortization of bond discount or premium.<\/span><\/p>\n

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This question represents an activity that will be reported in Zach’s statement of cash flows for the year<\/span><\/p>\n

\u00a0<\/p>\n

ended December 31, 1991. Determine the amount that should be reported in Zach’s 1991 statement of<\/span><\/p>\n

\u00a0<\/p>\n

cash flows.<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04575 Type1 M\/C O,I,F Corr Ans: O PM#54 F 7-99<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

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131. CPA-04575 PI May 92 #4a 1B Page 3<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Following are selected balance sheet accounts of Zach Corp. at December 31, 1991 and 1990, and the<\/span><\/p>\n

\u00a0<\/p>\n

increases or decreases in each account from 1990 to 1991. Also presented is selected income statement<\/span><\/p>\n

\u00a0<\/p>\n

information for the year ended December 31, 1991, and additional information.<\/span><\/p>\n

\u00a0<\/p>\n

Increase<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Selected balance sheet accounts 1991 1990 (Decrease)<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Assets:<\/span><\/p>\n

\u00a0<\/p>\n

Accounts receivable $ 34,000 $ 24,000 $10,000<\/span><\/p>\n

\u00a0<\/p>\n

Property, plant, and equipment 277,000 247,000 30,000<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation (178,000) (167,000) (11,000)<\/span><\/p>\n

\u00a0<\/p>\n

Liabilities and stockholders’ equity:<\/span><\/p>\n

\u00a0<\/p>\n

Bonds payable 49,000 46,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Dividends payable 8,000 5,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $1 par 22,000 19,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 9,000 3,000 6,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 104,000 91,000 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Selected income statement information for the year ended December 31, 1991<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Sales revenue $155,000<\/span><\/p>\n

\u00a0<\/p>\n

Depreciation 33,000<\/span><\/p>\n

\u00a0<\/p>\n

Gain on sale of equipment 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Net income 28,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional information<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 Accounts receivable relate to sales of merchandise.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, equipment costing $40,000 was sold for cash.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, $20,000 of bonds payable were issued in exchange for property, plant, and equipment.<\/span><\/p>\n

\u00a0<\/p>\n

There was no amortization of bond discount or premium.<\/span><\/p>\n

\u00a0<\/p>\n

This question represents an activity that will be reported in Zach’s statement of cash flows for the year<\/span><\/p>\n

\u00a0<\/p>\n

ended December 31, 1991. Determine the category (Operating activity [O]<\/strong>, Investing activity [I]<\/strong>, or<\/span><\/p>\n

\u00a0<\/p>\n

Financing activity [F]<\/strong>) in which the amount should be reported in the statement of cash flows.<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04576 Type1 M\/C A-L Corr Ans: H PM#55 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

132. CPA-04576 PI May 92 #4a 2A Page 3<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Following are selected balance sheet accounts of Zach Corp. at December 31, 1991 and 1990, and the<\/span><\/p>\n

\u00a0<\/p>\n

increases or decreases in each account from 1990 to 1991. Also presented is selected income statement<\/span><\/p>\n

\u00a0<\/p>\n

information for the year ended December 31, 1991, and additional information.<\/span><\/p>\n

\u00a0<\/p>\n

Increase<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Selected balance sheet accounts 1991 1990 (Decrease)<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Assets:<\/span><\/p>\n

\u00a0<\/p>\n

Accounts receivable $ 34,000 $ 24,000 $10,000<\/span><\/p>\n

\u00a0<\/p>\n

Property, plant, and equipment 277,000 247,000 30,000<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation (178,000) (167,000) (11,000)<\/span><\/p>\n

\u00a0<\/p>\n

Liabilities and stockholders’ equity:<\/span><\/p>\n

\u00a0<\/p>\n

Bonds payable 49,000 46,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Dividends payable 8,000 5,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $1 par 22,000 19,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 9,000 3,000 6,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 104,000 91,000 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Selected income statement information for the year ended December 31, 1991<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Sales revenue $155,000<\/span><\/p>\n

\u00a0<\/p>\n

Depreciation 33,000<\/span><\/p>\n

\u00a0<\/p>\n

Gain on sale of equipment 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Net income 28,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional information<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 Accounts receivable relate to sales of merchandise.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, equipment costing $40,000 was sold for cash.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, $20,000 of bonds payable were issued in exchange for property, plant, and equipment.<\/span><\/p>\n

\u00a0<\/p>\n

There was no amortization of bond discount or premium.<\/span><\/p>\n

\u00a0<\/p>\n

This question represents an activity that will be reported in Zach’s statement of cash flows for the year<\/span><\/p>\n

\u00a0<\/p>\n

ended December 31, 1991. Determine the amount that should be reported in Zach’s 1991 statement of<\/span><\/p>\n

\u00a0<\/p>\n

cash flows.<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04577 Type1 M\/C O,I,F Corr Ans: I PM#56 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

133. CPA-04577 PI May 92 #4a 2B Page 3<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Following are selected balance sheet accounts of Zach Corp. at December 31, 1991 and 1990, and the<\/span><\/p>\n

\u00a0<\/p>\n

increases or decreases in each account from 1990 to 1991. Also presented is selected income statement<\/span><\/p>\n

\u00a0<\/p>\n

information for the year ended December 31, 1991, and additional information.<\/span><\/p>\n

\u00a0<\/p>\n

Increase<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Selected balance sheet accounts 1991 1990 (Decrease)<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Assets:<\/span><\/p>\n

\u00a0<\/p>\n

Accounts receivable $ 34,000 $ 24,000 $10,000<\/span><\/p>\n

\u00a0<\/p>\n

Property, plant, and equipment 277,000 247,000 30,000<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation (178,000) (167,000) (11,000)<\/span><\/p>\n

\u00a0<\/p>\n

Liabilities and stockholders’ equity:<\/span><\/p>\n

\u00a0<\/p>\n

Bonds payable 49,000 46,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Dividends payable 8,000 5,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $1 par 22,000 19,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 9,000 3,000 6,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 104,000 91,000 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Selected income statement information for the year ended December 31, 1991<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Sales revenue $155,000<\/span><\/p>\n

\u00a0<\/p>\n

Depreciation 33,000<\/span><\/p>\n

\u00a0<\/p>\n

Gain on sale of equipment 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Net income 28,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional information<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 Accounts receivable relate to sales of merchandise.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, equipment costing $40,000 was sold for cash.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, $20,000 of bonds payable were issued in exchange for property, plant, and equipment.<\/span><\/p>\n

\u00a0<\/p>\n

There was no amortization of bond discount or premium.<\/span><\/p>\n

\u00a0<\/p>\n

This question represents an activity that will be reported in Zach’s statement of cash flows for the year<\/span><\/p>\n

\u00a0<\/p>\n

ended December 31, 1991. Determine the category (Operating activity [O]<\/strong>, Investing activity [I]<\/strong>, or<\/span><\/p>\n

\u00a0<\/p>\n

Financing activity [F]<\/strong>) in which the amount should be reported in the statement of cash flows.<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04578 Type1 M\/C A-L Corr Ans: F PM#57 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

134. CPA-04578 PI May 92 #4a 3A Page 3<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Following are selected balance sheet accounts of Zach Corp. at December 31, 1991 and 1990, and the<\/span><\/p>\n

\u00a0<\/p>\n

increases or decreases in each account from 1990 to 1991. Also presented is selected income statement<\/span><\/p>\n

\u00a0<\/p>\n

information for the year ended December 31, 1991, and additional information.<\/span><\/p>\n

\u00a0<\/p>\n

Increase<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Selected balance sheet accounts 1991 1990 (Decrease)<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Assets:<\/span><\/p>\n

\u00a0<\/p>\n

Accounts receivable $ 34,000 $ 24,000 $10,000<\/span><\/p>\n

\u00a0<\/p>\n

Property, plant, and equipment 277,000 247,000 30,000<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation (178,000) (167,000) (11,000)<\/span><\/p>\n

\u00a0<\/p>\n

Liabilities and stockholders’ equity:<\/span><\/p>\n

\u00a0<\/p>\n

Bonds payable 49,000 46,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Dividends payable 8,000 5,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $1 par 22,000 19,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 9,000 3,000 6,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 104,000 91,000 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Selected income statement information for the year ended December 31, 1991<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Sales revenue $155,000<\/span><\/p>\n

\u00a0<\/p>\n

Depreciation 33,000<\/span><\/p>\n

\u00a0<\/p>\n

Gain on sale of equipment 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Net income 28,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional information<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 Accounts receivable relate to sales of merchandise.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, equipment costing $40,000 was sold for cash.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, $20,000 of bonds payable were issued in exchange for property, plant, and equipment.<\/span><\/p>\n

\u00a0<\/p>\n

There was no amortization of bond discount or premium.<\/span><\/p>\n

\u00a0<\/p>\n

This question represents an activity that will be reported in Zach’s statement of cash flows for the year<\/span><\/p>\n

\u00a0<\/p>\n

ended December 31, 1991. Determine the amount that should be reported in Zach’s 1991 statement of<\/span><\/p>\n

\u00a0<\/p>\n

cash flows.<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04579 Type1 M\/C O,I,F Corr Ans: I PM#58 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

135. CPA-04579 PI May 92 #4a 3B Page 3<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Following are selected balance sheet accounts of Zach Corp. at December 31, 1991 and 1990, and the<\/span><\/p>\n

\u00a0<\/p>\n

increases or decreases in each account from 1990 to 1991. Also presented is selected income statement<\/span><\/p>\n

\u00a0<\/p>\n

information for the year ended December 31, 1991, and additional information.<\/span><\/p>\n

\u00a0<\/p>\n

Increase<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Selected balance sheet accounts 1991 1990 (Decrease)<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Assets:<\/span><\/p>\n

\u00a0<\/p>\n

Accounts receivable $ 34,000 $ 24,000 $10,000<\/span><\/p>\n

\u00a0<\/p>\n

Property, plant, and equipment 277,000 247,000 30,000<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation (178,000) (167,000) (11,000)<\/span><\/p>\n

\u00a0<\/p>\n

Liabilities and stockholders’ equity:<\/span><\/p>\n

\u00a0<\/p>\n

Bonds payable 49,000 46,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Dividends payable 8,000 5,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $1 par 22,000 19,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 9,000 3,000 6,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 104,000 91,000 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Selected income statement information for the year ended December 31, 1991<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Sales revenue $155,000<\/span><\/p>\n

\u00a0<\/p>\n

Depreciation 33,000<\/span><\/p>\n

\u00a0<\/p>\n

Gain on sale of equipment 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Net income 28,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional information<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 Accounts receivable relate to sales of merchandise.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, equipment costing $40,000 was sold for cash.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, $20,000 of bonds payable were issued in exchange for property, plant, and equipment.<\/span><\/p>\n

\u00a0<\/p>\n

There was no amortization of bond discount or premium.<\/span><\/p>\n

\u00a0<\/p>\n

This question represents an activity that will be reported in Zach’s statement of cash flows for the year<\/span><\/p>\n

\u00a0<\/p>\n

ended December 31, 1991. Determine the category (Operating activity [O]<\/strong>, Investing activity [I]<\/strong>, or<\/span><\/p>\n

\u00a0<\/p>\n

Financing activity [F]<\/strong>) in which the amount should be reported in the statement of cash flows.<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04580 Type1 M\/C A-L Corr Ans: B PM#59 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

136. CPA-04580 PI May 92 #4a 4A Page 3<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Following are selected balance sheet accounts of Zach Corp. at December 31, 1991 and 1990, and the<\/span><\/p>\n

\u00a0<\/p>\n

increases or decreases in each account from 1990 to 1991. Also presented is selected income statement<\/span><\/p>\n

\u00a0<\/p>\n

information for the year ended December 31, 1991, and additional information.<\/span><\/p>\n

\u00a0<\/p>\n

Increase<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Selected balance sheet accounts 1991 1990 (Decrease)<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Assets:<\/span><\/p>\n

\u00a0<\/p>\n

Accounts receivable $ 34,000 $ 24,000 $10,000<\/span><\/p>\n

\u00a0<\/p>\n

Property, plant, and equipment 277,000 247,000 30,000<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation (178,000) (167,000) (11,000)<\/span><\/p>\n

\u00a0<\/p>\n

Liabilities and stockholders’ equity:<\/span><\/p>\n

\u00a0<\/p>\n

Bonds payable 49,000 46,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Dividends payable 8,000 5,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $1 par 22,000 19,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 9,000 3,000 6,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 104,000 91,000 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Selected income statement information for the year ended December 31, 1991<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Sales revenue $155,000<\/span><\/p>\n

\u00a0<\/p>\n

Depreciation 33,000<\/span><\/p>\n

\u00a0<\/p>\n

Gain on sale of equipment 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Net income 28,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional information<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 Accounts receivable relate to sales of merchandise.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, equipment costing $40,000 was sold for cash.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, $20,000 of bonds payable were issued in exchange for property, plant, and equipment.<\/span><\/p>\n

\u00a0<\/p>\n

There was no amortization of bond discount or premium.<\/span><\/p>\n

\u00a0<\/p>\n

This question represents an activity that will be reported in Zach’s statement of cash flows for the year<\/span><\/p>\n

\u00a0<\/p>\n

ended December 31, 1991. Determine the amount that should be reported in Zach’s 1991 statement of<\/span><\/p>\n

\u00a0<\/p>\n

cash flows.<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04581 Type1 M\/C O,I,F Corr Ans: F PM#60 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

137. CPA-04581 PI May 92 #4a 4B Page 3<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Following are selected balance sheet accounts of Zach Corp. at December 31, 1991 and 1990, and the<\/span><\/p>\n

\u00a0<\/p>\n

increases or decreases in each account from 1990 to 1991. Also presented is selected income statement<\/span><\/p>\n

\u00a0<\/p>\n

information for the year ended December 31, 1991, and additional information.<\/span><\/p>\n

\u00a0<\/p>\n

Increase<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Selected balance sheet accounts 1991 1990 (Decrease)<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Assets:<\/span><\/p>\n

\u00a0<\/p>\n

Accounts receivable $ 34,000 $ 24,000 $10,000<\/span><\/p>\n

\u00a0<\/p>\n

Property, plant, and equipment 277,000 247,000 30,000<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation (178,000) (167,000) (11,000)<\/span><\/p>\n

\u00a0<\/p>\n

Liabilities and stockholders’ equity:<\/span><\/p>\n

\u00a0<\/p>\n

Bonds payable 49,000 46,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Dividends payable 8,000 5,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $1 par 22,000 19,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 9,000 3,000 6,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 104,000 91,000 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Selected income statement information for the year ended December 31, 1991<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Sales revenue $155,000<\/span><\/p>\n

\u00a0<\/p>\n

Depreciation 33,000<\/span><\/p>\n

\u00a0<\/p>\n

Gain on sale of equipment 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Net income 28,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional information<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 Accounts receivable relate to sales of merchandise.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, equipment costing $40,000 was sold for cash.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, $20,000 of bonds payable were issued in exchange for property, plant, and equipment.<\/span><\/p>\n

\u00a0<\/p>\n

There was no amortization of bond discount or premium.<\/span><\/p>\n

\u00a0<\/p>\n

This question represents an activity that will be reported in Zach’s statement of cash flows for the year<\/span><\/p>\n

\u00a0<\/p>\n

ended December 31, 1991. Determine the category (Operating activity [O]<\/strong>, Investing activity [I]<\/strong>, or<\/span><\/p>\n

\u00a0<\/p>\n

Financing activity [F]<\/strong>) in which the amount should be reported in the statement of cash flows.<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04582 Type1 M\/C A-L Corr Ans: D PM#61 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

138. CPA-04582 PI May 92 #4a 5A Page 3<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Following are selected balance sheet accounts of Zach Corp. at December 31, 1991 and 1990, and the<\/span><\/p>\n

\u00a0<\/p>\n

increases or decreases in each account from 1990 to 1991. Also presented is selected income statement<\/span><\/p>\n

\u00a0<\/p>\n

information for the year ended December 31, 1991, and additional information.<\/span><\/p>\n

\u00a0<\/p>\n

Increase<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Selected balance sheet accounts 1991 1990 (Decrease)<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Assets:<\/span><\/p>\n

\u00a0<\/p>\n

Accounts receivable $ 34,000 $ 24,000 $10,000<\/span><\/p>\n

\u00a0<\/p>\n

Property, plant, and equipment 277,000 247,000 30,000<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation (178,000) (167,000) (11,000)<\/span><\/p>\n

\u00a0<\/p>\n

Liabilities and stockholders’ equity:<\/span><\/p>\n

\u00a0<\/p>\n

Bonds payable 49,000 46,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Dividends payable 8,000 5,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $1 par 22,000 19,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 9,000 3,000 6,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 104,000 91,000 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Selected income statement information for the year ended December 31, 1991<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Sales revenue $155,000<\/span><\/p>\n

\u00a0<\/p>\n

Depreciation 33,000<\/span><\/p>\n

\u00a0<\/p>\n

Gain on sale of equipment 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Net income 28,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional information<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 Accounts receivable relate to sales of merchandise.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, equipment costing $40,000 was sold for cash.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, $20,000 of bonds payable were issued in exchange for property, plant, and equipment.<\/span><\/p>\n

\u00a0<\/p>\n

There was no amortization of bond discount or premium.<\/span><\/p>\n

\u00a0<\/p>\n

This question represents an activity that will be reported in Zach’s statement of cash flows for the year<\/span><\/p>\n

\u00a0<\/p>\n

ended December 31, 1991. Determine the amount that should be reported in Zach’s 1991 statement of<\/span><\/p>\n

\u00a0<\/p>\n

cash flows.<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-01269 Type1 M\/C A-D Corr Ans: B PM#62 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

139. CPA-01269 FARE R03 #3 Page 55<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Kline Co. had the following sales and accounts receivable balances at the end of the current year:<\/span><\/p>\n

\u00a0<\/p>\n

Cash sales $1,000,000<\/span><\/p>\n

\u00a0<\/p>\n

Net credit sales 3,000,000<\/span><\/p>\n

\u00a0<\/p>\n

Net accounts receivable, 1\/1 100,000<\/span><\/p>\n

\u00a0<\/p>\n

Net accounts receivable, 12\/31 400,000<\/span><\/p>\n

\u00a0<\/p>\n

What is Kline’s average collection period for its accounts receivable?<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

CPA-04583 Type1 M\/C O,I,F Corr Ans: F PM#62 F 7-99<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

140. CPA-04583 PI May 92 #4a 5B Page 3<\/span><\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/p>\n

Following are selected balance sheet accounts of Zach Corp. at December 31, 1991 and 1990, and the<\/span><\/p>\n

\u00a0<\/p>\n

increases or decreases in each account from 1990 to 1991. Also presented is selected income statement<\/span><\/p>\n

\u00a0<\/p>\n

information for the year ended December 31, 1991, and additional information.<\/span><\/p>\n

\u00a0<\/p>\n

Increase<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Selected balance sheet accounts 1991 1990 (Decrease)<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Assets:<\/span><\/p>\n

\u00a0<\/p>\n

Accounts receivable $ 34,000 $ 24,000 $10,000<\/span><\/p>\n

\u00a0<\/p>\n

Property, plant, and equipment 277,000 247,000 30,000<\/span><\/p>\n

\u00a0<\/p>\n

Accumulated depreciation (178,000) (167,000) (11,000)<\/span><\/p>\n

\u00a0<\/p>\n

Liabilities and stockholders’ equity:<\/span><\/p>\n

\u00a0<\/p>\n

Bonds payable 49,000 46,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Dividends payable 8,000 5,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Common stock, $1 par 22,000 19,000 3,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional paid-in capital 9,000 3,000 6,000<\/span><\/p>\n

\u00a0<\/p>\n

Retained earnings 104,000 91,000 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Selected income statement information for the year ended December 31, 1991<\/span><\/em><\/p>\n

\u00a0<\/p>\n

Sales revenue $155,000<\/span><\/p>\n

\u00a0<\/p>\n

Depreciation 33,000<\/span><\/p>\n

\u00a0<\/p>\n

Gain on sale of equipment 13,000<\/span><\/p>\n

\u00a0<\/p>\n

Net income 28,000<\/span><\/p>\n

\u00a0<\/p>\n

Additional information<\/span><\/em><\/p>\n

\u00a0<\/p>\n

\u2022 Accounts receivable relate to sales of merchandise.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, equipment costing $40,000 was sold for cash.<\/span><\/p>\n

\u00a0<\/p>\n

\u2022 During 1991, $20,000 of bonds payable were issued in exchange for property, plant, and equipment.<\/span><\/p>\n

\u00a0<\/p>\n

There was no amortization of bond discount or premium.<\/span><\/p>\n

\u00a0<\/p>\n

This question represents an activity that will be reported in Zach’s statement of cash flows for the year<\/span><\/p>\n

\u00a0<\/p>\n

ended December 31, 1991. Determine the category (Operating activity [O]<\/strong>, Investing activity [I]<\/strong>, or<\/span><\/p>\n

\u00a0<\/p>\n

Financing activity [F]<\/strong>) in which the amount should be reported in the statement of cash flows.<\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/span><\/p>\n

\u00a0<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

\u00a0 Question-Keller Graduate School of Management AC555ON Financial 7 PassMaster \u00a0 \u00a0 CPA-00928 Type1 M\/C A-D Corr Ans: A PM#1 F 7-01 \u00a0 \u00a0 \u00a0 1. CPA-00928 FARE R03 #4 Page 5 \u00a0 \u00a0 \u00a0 On November 2, 2001, Platt Co. entered into a 90-day futures contract to purchase 50,000 Swiss francs \u00a0 when the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-7354","post","type-post","status-publish","format-standard","hentry","category-homework-help"],"_links":{"self":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/7354","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/comments?post=7354"}],"version-history":[{"count":0,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/7354\/revisions"}],"wp:attachment":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/media?parent=7354"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/categories?post=7354"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/tags?post=7354"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}