Question 1
PART I (20 Points, 1 Points each) Multiple Choice: Indicate the answer that best completes the opening statement. 1. A variable cost is a cost that a. varies per unit at every level of activity. b. occurs at various times during the year. c. varies in total in proportion to changes in the level of activity. d. may or may not be incurred, depending on management's discretion. 2. A cost which remains constant in total at various levels of activity is a a. variable cost. b. fixed cost. c. mixed cost. d. manufacturing cost. 3. Which of the following costs are variable? Cost 10,000 Units 30,000 Units 1. $100,000 $300,000 2. 40,000 240,000 3. 90,000 90,000 4. 50,000 150,000 a. 1 and 2. b. 1 and 4. c. only 1. d. only 2. 4. The high-low method is often employed in analyzing a. fixed costs. b. mixed costs. c. variable costs. d. conversion costs. 5. Contribution margin a. is always the same as gross profit margin. b. excludes variable selling costs from its calculation. c. is calculated by subtracting total manufacturing costs per unit from sales revenue per unit. d. equals sales revenue minus variable costs. 6. If a company had a contribution margin of $150,000 and a contribution margin ratio of 40%, total variable costs must have been a. $225,000. b. $90,000. c. $375,000. d. $60,000. 7. A company has contribution margin per unit of $12 and a contribution margin ratio of 40%. What is the unit selling price? a. $20.00. b. $30.00. c. $4.80. d. Cannot be determined. 8. Sales are $250,000 and variable costs are $175,000. What is the contribution margin ratio? a. 43% b. 30% c. 70% d. cannot be determined because amounts are not expressed per unit. 9. A company has total fixed costs of $150,000 and a contribution margin ratio of 20%. The total sales necessary to break even are a. $600,000. b. $750,000. c. $187,500. d. $180,000. 10. A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $80,000. The number of units the company must sell to break even is a. 40,000 units. b. 16,000 units. c. 160,000 units. d. 26,667 units. 11. Fixed costs are $600,000 and the contribution margin per unit is $150. What is the break-even point? a. $1,500,000. b. $4,000,000. c. 1,500 units. d. 4,000 units. 12. A company is considering the following alternatives: Alternative 1 Alternative 2 Revenues $120,000 $120,000 Variable costs 60,000 70,000 Fixed costs 35,000 35,000 Which of the following are relevant in choosing between the alternatives? a. Variable costs b. Revenues c. Fixed costs d. Variable costs and fixed costs 13. A company has a process that results in 6,000 pounds of Product A that can be sold for $8 per pound. An alternative would be to process Product A further at a cost of $40,000 and then sell it for $14 per pound. Should management sell Product A now or should Product A be processed further and then sold? What is the effect of the action? a. Sell now, the company will be better off by $4,000. b. Process further, the company will be better off by $4,000. c. Process further, the company will be better off by $36,000. d. Sell now, the company will be better off by $40,000. 14. A company can produce and sell only one of the following two products: Machine Contribution Hours Required Margin Per Unit Product 1 3 $30 Product 2 2 $25 If the company has machine capacity of 2,000 hours, what is the total contribution margin of the product it should produce to maximize net income? a. $20,000. b. $24,000. c. $25,000. d. $16,000. 15. Which one of the following is NOT a benefit of budgeting? a. It facilitates the coordination of activities. b. It provides assurance that the company will achieve its objectives. c. It provides definite objectives for evaluating performance. d. It requires all levels of management to plan ahead on a recurring basis. 16. A master budget consists of a. an interrelated long-term plan and operating budgets. b. financial budgets and a long-term plan. c. interrelated financial budgets and operating budgets. d. all the accounting journals and ledgers used by a company. 17. The starting point in preparing a master budget is the preparation of the a. production budget. b. sales budget. c. purchasing budget. d. personnel budget. 18. An overly optimistic sales budget may result in a. increases in selling prices late in the year. b. insufficient inventories. c. increased sales during the year. d. excessive inventories. 19. The cash budget reflects a. all revenues and all expenses for a period. b. all the items that appear on a budgeted income statement. c. expected cash receipts and cash disbursements from all sources. d. all the items that appear on a budgeted balance sheet. 20. Which one of the following items would never appear on a cash budget? a. Office salaries expense b. Interest expense c. Depreciation expense d. Travel expense PART II (20 Points) Jim Wayman is considering opening a Kwik Oil Change Center. He estimates that the following costs will be incurred during his first year of operations: Rent $6,000, Depreciation on equipment $7,000, Wages $13,700, Motor oil $1.25 per quart. He estimates that each oil change will require 5 quarts of oil. Oil filters will cost $3.00 each. He must also pay The Kwik Corporation a franchise fee of $.95 per oil change since he will operate the business as a franchise. In addition, utility costs are expected to behave in relation to the number of oil changes as follows: Number of Oil Changes Utility Costs 4,000 $6,000 6,000 $7,300 9,000 $9,600 12,000 $12,600 19,000 $15,000 Mr. Wayman anticipates that he can provide the oil change service with a filter at $18.00 each. Instructions: (a) Using the high-low method for utility costs, determine the variable and fixed costs for utilities. (b) Compute the total variable costs per oil change and total fixed costs (don't forget to include the variable and fixed utility costs determine in "a"). (c) Determine the break-even point in number of oil changes and sales dollars. (d) Without regard to your answers in parts (a), (b) and (c), determine the oil changes required to earn net income of $20,000, assuming fixed costs are $28,000 and the contribution margin per unit is $8. PART III (20 Points) The Unruh Company reports the following results for the month of November: Sales (10,000 units) $600,000 Variable costs 420,000 Contribution margin 180,000 Fixed costs 110,000 Net income $ 70,000 Management is considering the following independent courses of action to increase net income. 1. Increase selling price by 10% with no change in total variable costs. 2. Reduce variable costs to 60% of sales. 3. Reduce fixed costs by $30,000. Instructions: If maximizing net income is the objective, which is the best course of action? Show all of your computations. PART IV (10 points) Carter Company manufactures cappuccino makers. For the first eight months of the year the company reported the following operating results while operating at 80% of plant capacity: Sales (500,000 units) $75,000,000 Cost of goods sold 45,000,000 Gross profit 30,000,000 Operating expenses 24,000,000 Net income $ 6,000,000 An analysis of costs and expenses reveals that variable cost of goods sold is $80 per unit and variable operating expenses are $30 per unit. In September, Carter Company receives a special order for 40,000 machines at $120 each from a major coffee shop franchise. Acceptance of the order would result in $10,000 of shipping costs but no increase in fixed expenses. Instructions (a) Prepare an incremental analysis for the special order. (b) Should Carter Company accept the special order? Justify your answer. PART V (10 points) Barnes Company manufactured 6,000 units of a component part that is used in its product and incurred the following costs: Direct materials $35,000 Direct labor 15,000 Variable manufacturing overhead 10,000 Fixed manufacturing overhead 20,000 $80,000 Another company has offered to sell the same component part to the company for $12.00 per unit. The fixed manufacturing overhead consists mainly of depreciation on the equipment used to manufacture the part and would not be reduced if the component part was purchased from the outside firm. If the component part is purchased from the outside firm, Barnes Company has the opportunity to use the factory equipment to produce another product which is estimated to have a contribution margin of $16,000. Instructions Prepare an incremental analysis report for Barnes Company which can serve as informational input into this make or buy decision. PART VI (20 Points) The Gannon Company has budgeted sales revenues as follows: June July August Credit sales $27,000 $29,000 $18,000 Cash sales 18,000 51,000 39,000 Total sales $45,000 $80,000 $57,000 Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are: June $60,000 July 50,000 August 21,000 Other cash disbursements budgeted: (a) selling and administrative expenses of $9,500 each month, (b) dividends of $22,700 will be paid in July, and (c) purchase of a computer in August for $5,000 cash. The company MUST maintain a minimum cash balance of $10,000 at the end of each month. The company borrows money from the bank at 9% per year interest if necessary to maintain the minimum cash balance of $10,000. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $10,000 of which none is borrowed. Instructions: Prepare a cash budget for the months of July and August. Prepare separate schedules for expected collections from customers and expected payments for purchases of inventory.,I cannot open the first document you sent can you save it in a different version of word? Also i cannot have my answers on an excel spreadsheet please save that to a word document as well. Thank you
Question 2
? What type of research uses numeric measurement data? __________ ? What type of research uses a research hypothesis? ___________ ? How is a research question similar to a research hypothesis? _________________________________________________ ? What type of research does not use statistical data analysis? ________ ? What type of research preempts all other types of research endeavors? _________________ ? Business research is a type of ________________ inquiry. ? The sole purpose of business research is to increase profit margins? ______ True ______False ? When conducting business research the investigator must make his/her opinions known about possible results? _____True ______False ? When one is conducting business research the most important factor is developing a reasonable researchable question? _____True ____False ? Business research should always begin with an alternate hypothesis? ____True ____False ? The number of widgets produced by 9 employees in an eight hour shift is recorded below. Find the mean number of widgets produced. 135, 120, 116, 119, 121, 125, 135, 131, 123 ? What is the range of widgets produced given in problem presented above? ? What is the mode of the number of widgets produced presented above? ? What is the median of the number of widgets produced presented above? ? The mean price of 5 items is $7.00. The prices of the first four items are $6.50, $8.00, $5.50 and $6.00. How much does the fifth item cost? ? The range of a set of numbers is 1,362. The greatest number is 2,172. What is the least number? ? The mean of a set of 7 numbers is 13. What is the sum of the numbers? ? Find the mode of the following test scores: 89, 78, 91, 82, 75, 89, 84, 95, 89, 93 ? The mean of a set of data is 174.25 and the sum of the data is 1,394. How many numbers are in the set? ? The grade point averages of 10 students are listed below. Find the median grade point average. 3.15, 3.62, 2.54, 2.81, 3.97, 1.85, 1.93, 2.63, 2.50, 2.80 ? A large mass of data can best be summarized pictorially by means of: a. the range b. a histogram c. the frequency table d. mean and standard deviation ? For a symmetric distribution, the mean and median are a. the same b. always different c. possibly the same, possibly different d. insufficient information. ? A distribution of 7 scores has a median of 21. If the highest score increases 3 points, the median will become ___________. a. 21 b. 21.5 c. 24 d. Cannot be determined without additional information. e. none of these ? If you are told a population has a mean of 25 and a variance of 0, what must you conclude? a. Someone has made a mistake. b. There is only one element in the population. c. There are no elements in the population. d. All the elements in the population are 25. e. None of the above. ? Which of the following measures of central tendency tends to be most influenced by an extreme score? a. median b. mode c. mean ? Which of the following is not a measure of central tendency? a. mean d. standard deviation b. median e. none of these c. mode ? The following data represent scores of 50 students in an applied business statistics test. 72 72 93 70 59 78 74 65 73 80 57 67 72 57 83 76 74 56 68 67 74 76 79 72 61 72 73 76 67 49 71 53 67 65 100 83 69 61 72 68 65 51 75 68 75 66 77 61 64 74 a. Prepare the frequency distribution table and the frequency histogram for this data set. b. Compute the sample mean, sample median X(M), sample range, and sample variance. c. Does the data set represent a sample or a population? If it is a sample, describe the population from which it has been drawn. ? Two workers on the same job show the following results over a long period of time. Worker Worker A B ----------------------------------------------------------------------------------- Mean time of completing the job (minutes) 30 25 Standard deviation (minutes) 6 4 a. Which worker appears to be more consistent in the time he requires to complete the job? Explain. ________________________________________________ ________________________________________________ _________________________________________________ b. Which worker appears to be faster in completing the job? Explain. _________________________________________________ _________________________________________________ _________________________________________________ ? Suppose the manager of a plant is concerned with the total number of man-hours lost due to accidents for the past 12 months. The company statistician has reported the mean number of man-hours lost per month but did not keep a record of the total sum. Should the manager order the study repeated to obtain the desired information? Explain your answer clearly. ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________. ? Explain why histograms and frequency polygons are used in business statistics. ________________________________________________________ ________________________________________________________ ________________________________________________________ ? A graphical presentation may accomplish ALL BUT which of the following objectives? a) Illustrate the amount of variation in the data. b) Illustrate approximately where the mean is. c) Allow comparison with similar data. d) Will have the exact same shape regardless of what units are used on the axes. ? A coach in a large high school thinks that ballet training will improve the batting performance of his baseball team. He decides to have a randomly selected half of the team take six weeks of ballet training before the baseball season begins, while the other half does not take such training. He will then compare the season batting averages of group A (those with ballet training) and group B (those without ballet training) by comparing the mean of group A with the mean of group B. An independent variable is: a. ballet training b. batting average c. runs batted in d. the size of the school e. the grades the players make in the ballet school ? Explain the differences between longitudinal and cross sectional business research studies. _________________________________________________________ ___________________________________________________________ ? Which two types of probability sampling are best suited for business research and statistical data analysis, and why? ____________________________________________________ ? What are the three main types of non-probability sampling used in business research? ____________________________________________________________ ? What type of t test seeks to determine whether or not a relationship exists in one sample over two conditions? _______________ ? The null hypothesis states that a difference, effect or relationship exists in a research situation? ______True _____False ? The confidence level expresses the degree of certainty that an interval will include the actual value of the population parameter? ____True ____False ? What is the difference between a null hypothesis and an alternate hypothesis? _______________________________________________________________ ? Explain what is meant by the critical value of a statistical value. _______________________________________________________________ ? If a production manager wanted to determine whether or not the first shift was processing more widgets than the second shift, what type of statistical process would be used? _____________________________________________ ? What is the difference between a t test for independent means and a correlated t test? ___________________________________________________________ ? Explain the .05 confidence level. ________________________________________________________________ ? In a situation with a confidence level .01 what percent of the measurement results are left to chance? _____________________________________ ? What is the most important ingredient in a statistical testing procedure? _______________________________. ? Describe each of the following statistical terms, and where applicable, define with the appropriate equation: a. Range _______________________________________________ b. Variance _____________________________________________ c. Standard Deviation ______________________________________ ? Given the following raw scores, calculate the following values, show your calculations: Scores: 9, 7, 8, 4, 8, 8,7, 8, 9, 6, 3 a. Range _____________________ b. Variance ____________________ c. Standard Deviation _____________________ ? Give a brief definition and an example of the following: a. Descriptive Statistics b. Inferential Statistics ? Levels of Measurement/Scaling?Identify which level of scaling is present in the examples below N = Nominal, O = Ordinal, I = Interval, R = Ratio _____ A high temperature of 83 degrees Fahrenheit _____ A survey result that 24 students work full time, 36, part time. _____ Bill is consistently rated most effective communicator of his group. _____ Gallup says that 60% of the voters support the incumbent. _____ Pick up three pounds of ground beef please. _____ Patty acts as expected based on her first-born family position. _____ Seattle at an altitude of 67 feet is higher than Death Valley at an altitude of ? 120. _____ The door is 37 inches wide, the door frame is 36 inches wide. ? Place an ?X? in front of those issues that only relate to selecting a specific statistical test. (Do not put an ?X? in front of items common to all tests or not applying to statistical tests.) _____ The distribution (shape) of the population (e.g., normal, skewed, flat, etc.) _____ The measurement scale/nature of the data being evaluated (nominal, ordinal, interval or ratio) _____ The size of the population (assuming it is much larger than any samples) _____ The level of significance (_) you wish to place on the test results _____ Whether you have matched/related or unmatched/unrelated samples _____ The degrees of freedom (sample size) associated with your sample(s) _____ The statement of the null and research hypotheses _____ Whether the sample was stratified or not ? For the following list, place a ?P? beside the items which apply to Populations and an ?S? beside the items which apply to Samples. (P = Populations S = Samples) _____ A parameter _____ ?Roman? letters, i.e.: x, s _____ A bounded, defined complete group (people, objects, etc.) having something in common to be described in its totality _____ ?Greek? letters, i.e.: ?, ? _____ One or more subsets of a larger defined group, used to represent the larger group _____ 170 Republicans selected randomly from King County voter records _____ All Democrats in the state of Washington (totality) ? What does the correlation coefficient r describe? What about r squared? ? Research Design Considerations a. Describe some of the issues or concerns (at least three) which would be addressed in deciding how to perform a statistical test of a hypothesis: b. As an Argosy student, you are designing a training program to help develop team cohesiveness in a healthcare facility. You have a before and after test which measures behaviors indicating team cohesiveness. For this scenario, match the appropriate hypothesis symbol to the statements/examples below: Place an ?N? in front of those items representing the Null Hypothesis and an ?R? in front of those items representing the Research Hypothesis _____ H1 _____ There is no significant difference in the teaming behavior before and after the training. _____ H0 _____ There is a significant difference in the teaming behavior before and after the training. ? Discuss the implications of: magnitude (from 0 to 1); sign ( + or -); and probability versus causality for the Correlation Coefficient (also known as the Pearson Product-Moment Correlation Coefficient). ? Describe how you would develop a random sample from among Argosy students.
Question 3
Here are all 30 multiple choice questions. I also attached the questions in file herewith. QUIZ ? Advanced Accounting 1. Which of the following situations best describes a business combination to be accounted for as a statutory merger? Both companies in a combination continue to operate as separate, but related, legal entities. Only one of the combining companies survives and the other loses its separate identity. Two companies combine to form a new third company, and the original two companies are dissolved. One company transfers assets to another company it has created. 2. The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called poison pill. pac-man defense. greenmail. white knight. 3. The third period of business combinations started after World War II and is called horizontal integration. merger mania. operating integration. vertical integration. 4. The excess of the amount offered in an acquisition over the prior stock price of the acquired firm is the bonus. goodwill. implied offering price. takeover premium. 5. If the value implied by the purchase price of an acquired company exceeds the fair values of identifiable net assets, the excess should be allocated to reduce any previously recorded goodwill and classify any remainder as an ordinary gain. allocated to reduce current and long-lived assets. allocated to reduce long-lived assets. accounted for as goodwill. 6. In a business combination in which the total fair value of the identifiable assets acquired over liabilities assumed is greater than the consideration paid, the excess fair value is: classified as an extraordinary gain. allocated first to eliminate any previously recorded goodwill, and any remaining excess over the consideration paid is classified as an ordinary gain. allocated first to reduce proportionately non-current assets then to non-monetary current assets, and any remaining excess over cost is classified as a deferred credit. allocated first to reduce proportionately non-current, depreciable assets to zero, and any remaining excess over cost is classified as a deferred credit. 7. If an impairment loss is recorded on previously recognized goodwill due to the transitional goodwill impairment test, the loss should be treated as a(n): loss from a change in accounting principles. extraordinary loss loss from continuing operations. loss from discontinuing operations. 8. Under SFAS 141R, what value of the assets and liabilities are reflected in the financial statements on the acquisition date of a business combination? Carrying value Fair value Book value Average value 9. The fair value of net identifiable assets exclusive of goodwill of a reporting unit of X Company is $300,000. On X Company's books, the carrying value of this reporting unit's net assets is $350,000, including $60,000 goodwill. If the fair value of the reporting unit is $335,000, what amount of goodwill impairment will be recognized for this unit? $0 $10,000 $25,000 $35,000 10. Majority-owned subsidiaries should be excluded from the consolidated statements when control does not rest with the majority owner. the subsidiary operates under governmentally imposed uncertainty. a foreign subsidiary is domiciled in a country with foreign exchange restrictions or controls. any of these circumstances exist. 11. Under the economic entity concept, consolidated financial statements are intended primarily for the benefit of the stockholders of the parent company. creditors of the parent company. minority stockholders. all of the above. 12. A newly acquired subsidiary has pre-existing goodwill on its books. The parent company?s consolidated balance sheet will: treat the goodwill the same as other intangible assets of the acquired company. will always show the pre-existing goodwill of the subsidiary at its book value. not show any value for the subsidiary?s pre-existing goodwill. do an impairment test to see if any of it has been impaired. 13. The Difference between Implied and Book Value account is: an account necessary for the preparation of consolidated working papers. used in allocating the amounts paid for recorded balance sheet accounts that are different than their fair values. the excess implied value assigned to goodwill. the unamortized excess that cannot be assigned to any related balance sheet accounts 14. An investor adjusts the investment account for the amortization of any difference between cost and book value under the cost method. complete equity method. partial equity method. complete and partial equity methods. 15. Under the partial equity method, the entry to eliminate subsidiary income and dividends includes a debit to Dividend Income. Dividends Declared - S Company. Equity in Subsidiary Income. Retained Earnings - S Company. 16. On the consolidated statement of cash flows, the parent?s acquisition of additional shares of the subsidiary?s stock directly from the subsidiary is reported as an investing activity. a financing activity. an operating activity. none of these. 17. P Company purchased 80% of the outstanding common stock of S Company on May 1, 2011, for a cash payment of $1,272,000. S Company?s December 31, 2010 balance sheet reported common stock of $800,000 and retained earnings of $540,000. During the calendar year 2011, S Company earned $840,000 evenly throughout the year and declared a dividend of $300,000 on November 1. What is the amount needed to establish reciprocity under the cost method in the preparation of a consolidated workpaper on December 31, 2011? $208,000 $260,000 $248,000 $432,000 18. In the preparation of a consolidated statements workpaper, dividend income recognized by a parent company for dividends distributed by its subsidiary is included with parent company income from other sources to constitute consolidated net income. assigned as a component of the noncontrolling interest. allocated proportionately to consolidated net income and the noncontrolling interest. eliminated. 19. When the implied value exceeds the aggregate fair values of identifiable net assets, the residual difference is accounted for as excess of implied over fair value. a deferred credit. difference between implied and fair value. goodwill. 20. The SEC requires the use of push down accounting when the ownership change is greater than 50% 80% 90% 95% 21. Under push down accounting, the workpaper entry to eliminate the investment account includes a debit to Goodwill. debit to Revaluation Capital. credit to Revaluation Capital. debit to Revaluation Assets. 22. In preparing consolidated working papers, beginning retained earnings of the parent company will be adjusted in years subsequent to acquisition with an elimination entry whenever: a noncontrolling interest exists. it does not reflect the equity method. the cost method has been used only. the complete equity method is in use. 23. Failure to eliminate intercompany sales would result in an overstatement of consolidated net income. gross profit. cost of sales. all of these. 24. The workpaper entry in the year of sale to eliminate unrealized intercompany profit in ending inventory includes a credit to Ending Inventory (Cost of Sales). credit to Sales. debit to Ending Inventory (Cost of Sales). debit to Inventory - Balance Sheet. 25. P Corporation acquired a 60% interest in S Corporation on January 1, 2011, at book value equal to fair value. During 2011, P sold merchandise that cost $135,000 to S for $189,000. One-third of this merchandise remained in S?s inventory at December 31, 2011. S reported net income of $120,000 for 2011. P?s income from S for 2011 is: $36,000. $50,400. $54,000. $61,200. 26. Paige, Inc. owns 80% of Sigler, Inc. During 2011, Paige sold goods with a 40% gross profit to Sigler. Sigler sold all of these goods in 2011. For 2011 consolidated financial statements, how should the summation of Paige and Sigler income statement items be adjusted? Sales and cost of goods sold should be reduced by the intercompany sales. Sales and cost of goods sold should be reduced by 80% of the intercompany sales. Net income should be reduced by 80% of the gross profit on intercompany sales. No adjustment is necessary. 27. In years subsequent to the year a 90% owned subsidiary sells equipment to its parent company at a gain, the noncontrolling interest in consolidated income is computed by multiplying the noncontrolling interest percentage by the subsidiary?s reported net income minus the net amount of unrealized gain on the intercompany sale. plus the net amount of unrealized gain on the intercompany sale. minus intercompany gain considered realized in the current period. plus intercompany gain considered realized in the current period. 28. In years subsequent to the upstream intercompany sale of nondepreciable assets, the necessary consolidated workpaper entry under the cost method is to debit the Noncontrolling interest and Retained Earnings (Parent) accounts, and credit the nondepreciable asset. Retained Earnings (Parent) account and credit the nondepreciable asset. Nondepreciable asset, and credit the Noncontrolling interest and Investment in Subsidiary accounts. No entries are necessary. 29. In 2011, P Company sells land to its 80% owned subsidiary, S Company, at a gain of $50,000. What is the effect of this sale of land on consolidated net income assuming S Company still owns the land at the end of the year? consolidated net income will be the same as if the sale had not occurred. consolidated net income will be $50,000 less than it would had the sale not occurred. consolidated net income will be $40,000 less than it would had the sale not occurred. consolidated net income will be $50,000 greater than it would had the sale not occurred. 30. Several years ago, P Company bought land from S Company, its 80% owned subsidiary, at a gain of $50,000 to S Company. The land is still owned by P Company. The consolidated working papers for this year will require: no entry because the gain happened prior to this year. a credit to land for $50,000. a debit to P?s retained earnings for $50,000. a debit to Noncontrolling interest for $50,000.
Question 4
Bond: 1. Accrued interest: If there are 183 days between interest settlement dates and it is 50 days since the last payment. The coupon rate is 3.5%. The quoted price is $950. The face value is $1000. What is the clean price? What is the accrued interest? What is the price that investors pay? 2. A bond pays semi-annual coupon of $40. In half a year, price increases from $950 to $1000. a) what is the capital gain yield? b) what is the income yield? c) what is the holding period return in this half a year? Fixed Income: 3. Describe variables that affect demand and supply for bonds? How do the supply curve and demand curve shift if the variables increase? 4. Consider a bond with a 7 percent semi-annual coupon and a face value of $1000. Complete the following table. Note that yield to maturity is quoted annually. Describe the relation between bond price and yield to maturity. Years to Maturity Yield to Maturity(percent) Current Prices 3 5 3 7 6 7 9 8 9 950 5. One-year T-bill rates over the next four years are expected to be 3%, 4%, 5%, and 5.5%. If four-year T-bonds are yielding 4.5%, what is the liquidity premium on this bond? 6. If a 90 day Canadian promissory note for $1,000 is sold for a 1% discount. What is its effective yield? Note all yields are quoted annually. Equity: 7. Dividend at present is $4, equity cost is 10%, and growth rate is 5%. What is the equity price?
Question 5
(Entries for Available-for-Sale Securities) On January 1, 2009, Roosevelt Company purchased 12% bonds, having a maturity value of $507,000.00, for $545,438.10. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2009, and mature on January 1, 2014, with interest receivable December 31 of each year. Roosevelt Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows: 2009 $549,100.00 2010 $512,000.00 2011 $508,000.00 2012 $510,000.00 2013 $500,000.00 (a) Prepare the journal entry at the date of the bond purchase. (Round your answers to 2 decimal places, e.g. 2,510.25) Description/Account Debit Credit (b) Prepare the journal entries to record the interest received and recognition of fair value for 2009. (Round your answers to 2 decimal places, e.g. 25,250.10. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Credit (To record interest) (To record recognition of fair value for 2009) (c) Prepare the journal entry to record the recognition of fair value for 2010. Assume that the entry to record interest revenue has already been made. (Round your answers to 2 decimal places, e.g. 2,250.25. In computing amortized cost (carrying value) of the bonds at the end of each year, round your computation to 2 decimal places, e.f. 2.250.25 and use the rounded amount for subsequent computation.) Description/Account Debit Credit,In the question there is a part C but I do not see a part C in the solution you attached. from the problem above (To record interest) (To record recognition of fair value for 2009) (c) Prepare the journal entry to record the recognition of fair value for 2010. Assume that the entry to record interest revenue has already been made. (Round your answers to 2 decimal places, e.g. 2,250.25. In computing amortized cost (carrying value) of the bonds at the end of each year, round your computation to 2 decimal places, e.f. 2.250.25 and use the rounded amount for subsequent computation.) Description/Account Debit Credit
