Mathematics and Statistics: Accounting Quiz

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Which of the following is generally associated with payables classified as accounts payable?

Periodic Payment Secured

of Interest by Collateral

No No

No Yes

Yes No

Yes Yes

On January 1, 2016, Moyano Co. leased a building to Maple Corp. for a ten-year term at an annual rental of $80,000. At inception of the lease, Moyano received $320,000 covering the first two years’ rent of $160,000 and a security deposit of $160,000. This deposit will not be returned to Maple upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the $320,000 should be shown as a current and long-term liability, respectively, in Moyano’s December 31, 2016 balance sheet?

Current Liability Long-term Liability

$0 $320,000

$80,000 $160,000

$160,000 $160,000

$160,000 $80,000

On September 1, 2016, Demich Co. issued a note payable to National Bank in the amount of $2,400,000, bearing interest at 12%, and payable in three equal annual principal payments of $800,000. On this date, the bank’s prime rate was 11%. The first payment for interest and principal is scheduled for September 1, 2017. At December 31, 2016, Demich should record accrued interest payable of

$58,000.

$54,000.

$64,000.

$96,000

Lewis Company’s salaried employees are paid biweekly. Occasionally, advances made to employees are paid back by payroll deductions. Information relating to salaries for the calendar year 2016 is as follows:

12/31/15 12/31/16

Employee advances $12,000 $ 18,000

Accrued salaries payable 75,000 ?

Salaries expense during the year 650,000

Salaries paid during the year (gross) 625,000

At December 31, 2016, what amount should Lewis report for accrued salaries payable?

$100,000.

$84,000.

$92,000.

$55,000.

Close Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to unearned service contract revenues. This account had a balance of $480,000 at December 31, 2015 before year-end adjustment. Service contract costs are charged as incurred to the service contract expense account, which had a balance of $120,000 at December 31, 2015. Outstanding service contracts at December 31, 2015 expire as follows:

During 2016 During 2017 During 2018

$100,000 $160,000 $70,000

What amount should be reported as unearned service contract revenues in Close’s December 31, 2015 balance sheet?

$360,000.

$330,000.

$240,000.

$220,000.

Camacho Trading Stamp Co. records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees. Camacho’s past experience indicates that only 80% of the stamps sold to licensees will be redeemed. Camacho’s liability for stamp redemptions was $7,500,000 at December 31, 2015. Additional information for 2016 is as follows:

Stamp service revenue from stamps sold to licensees $5,000,000

Cost of redemptions $3,400,000

If all the stamps sold in 2015 were presented for redemption in 2016, the redemption cost would be $2,500,000. What amount should Camacho report as a liability for stamp redemptions at December 31, 2016?

$9,100,000.

$6,600,000.

$6,100,000.

$4,100,000.

Use the following information for questions 7 and 8:

On January 1, 2016, Daley Co. issued eight-year bonds with a face value of $1,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are:

Present value of 1 for 8 periods at 6% .627

Present value of 1 for 8 periods at 8% .540

Present value of 1 for 16 periods at 3% .623

Present value of 1 for 16 periods at 4% .534

Present value of annuity for 8 periods at 6% 6.210

Present value of annuity for 8 periods at 8% 5.747

Present value of annuity for 16 periods at 3% 12.561

Present value of annuity for 16 periods at 4% 11.652

The present value of the principal is

$534,000.

$540,000.

$623,000.

$627,000.

The present value of the interest is

$344,820.

$349,560.

$372,600.

$376,830.

The term used for bonds that are unsecured as to principal is

junk bonds.

debenture bonds.

indebenture bonds.

callable bonds.

Best, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten

years from date of issue. If the bonds were issued at a premium, this indicates that

the effective yield or market rate of interest exceeded the stated (nominal) rate.

the nominal rate of interest exceeded the market rate.

the market and nominal rates coincided.

no necessary relationship exists between the two rates.

The rate of interest actually earned by bondholders is called the

stated rate.

yield rate.

effective rate.

effective, yield, or market rate.

In a corporate form of business organization, legal capital is best defined as

the amount of capital the state of incorporation allows the company to accumulate over its existence.

the par value of all capital stock issued.

the amount of capital the federal government allows a corporation to generate.

the total capital raised by a corporation within the limits set by the Securities and Exchange Commission.

The cumulative feature of preferred stock

limits the amount of cumulative dividends to the par value of the preferred stock.

requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders.

means that the shareholder can accumulate preferred stock until it is equal to the par value of common stock at which time it can be converted into common stock.

enables a preferred stockholder to accumulate dividends until they equal the par value of the stock and receive the stock in place of the cash dividends.

Presented below is information related to Lyndon Corporation, question 14:

Common Stock, $1 par $4,300,000

Paid-in Capital in Excess of Par—Common Stock 550,000

Preferred 8 1/2% Stock, $50 par 2,000,000

Paid-in Capital in Excess of Par—Preferred Stock 400,000

Retained Earnings 1,500,000

Treasury Common Stock (at cost) 150,000

The total stockholders’ equity of Lyndon Corporation is

$8,600,000.

$8,750,000.

$7,100,000.

$7,250,000.

Starr Company has outstanding both common stock and nonparticipating, non-

cumulative preferred stock. The liquidation value of the preferred is equal to its

par value. The book value per share of the common stock is unaffected by

the declaration of a stock dividend on preferred payable in preferred stock when the market price of the preferred is equal to its par value.

the declaration of a stock dividend on common stock payable in common stock when the market price of the common is equal to its par value.

the payment of a previously declared cash dividend on the common stock.

a 2-for-1 split of the common stock.

Assume common stock is the only class of stock outstanding in the Bosch Corporation. Total stockholders’ equity divided by the number of common stock shares outstanding is called

book value per share.

par value per share.

stated value per share.

market value per share.

In computations of weighted average of shares outstanding, when a stock dividend or stock split occurs, the additional shares are

weighted by the number of days outstanding.

weighted by the number of months outstanding.

considered outstanding at the beginning of the year.

considered outstanding at the beginning of the earliest year reported.

What effect will the acquisition of treasury stock have on stockholders’ equity and earnings per share, respectively?

Decrease and no effect

Increase and no effect

Decrease and increase

Increase and decrease

Due to the importance of earnings per share information, it is required to be reported by all

Public Companies Nonpublic Companies

Yes Yes

Yes No

No No

No Yes

A convertible bond issue should be included in the diluted earnings per share computation as if the bonds had been converted into common stock, if the effect of its inclusion is

Dilutive Antidilutive

Yes Yes

Yes No

No Yes

No No

PROBLEMS

On August 31, Able Co. partially refunded $180,000 of its outstanding 10% note payable made one year ago to Best Fededral Bank by paying $180,000 plus $18,000 interest, having obtained the $198,000 by using $52,400 cash and signing a new one-year $160,000 note discounted at 9% by the bank.

Instructions

(1) Make the entry to record the partial refunding. Assume Able Co. makes reversing entries when appropriate.

(2) Prepare the adjusting entry at December 31, assuming straight-line amortization of the discount.

On July 1, 2016, Wilcutts Co. issued 1,000 of its 10%, $1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, 2016 and mature on April 1, 2026. Interest is payable semiannually on April 1 and October 1. What amount did Wilcutts receive from the bond issuance?

Weighted average shares outstanding.

On January 1, 2016, Patrick Corporation had 1,000,000 shares of common stock outstanding. On March 1, the corporation issued 150,000 new shares to raise additional capital. On July 1, the corporation declared and issued a 2-for-1 stock split. On October 1, the corporation purchased on the market 600,000 of its own outstanding shares and retired them.

Instructions

Compute the weighted average number of shares to be used in computing earnings per share for 2016.

4 General Nuisance, Inc. shipped 100 million coupons in products it sold in 2016. The coupons are redeemable for thirty cents each. General anticipates that 70% of the coupons will be redeemed. The coupons expire on December 31, 2017. There were 45 million coupons redeemed in 2016, and 30 million redeemed in 2017.

4a. What was General’s coupon liability as of December 31, 2016?

4b. What was General’s coupon promotion expense in 2016?

4c. What was General’s coupon promotional expense in 2017?.

Determine the price of a $200,000 bond issue under each of the following independent assumptions:

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Mathematics and Statistics

INSTRUCTIONS

The quiz is worth 100 points. There are 10problems. This quiz is open book and open notes. This means that you may refer to your textbook, notes, and online classroom materials, but you must work independently and may not consult anyone(and confirm this with your submission). You may take as much time as you wish, provided you turn in your quiz no later than Sunday, 29 January.

Show work/explanation where indicated. Answers without any work may earn little, if any, credit. You may type or write your work in your copy of the quiz, or if you prefer, create a document containing your work. Scanned work is acceptable also. In your document, be sure to include your name and the assertion of independence of work.

General quiz tips and instructions for submitting work are posted in the Quizzes module.

Read each question carefully. If you have any questions, please feel free to contact me.

(4 pts) Which of these graphs of relations describe y as a function of x?

That is, which are graphs of functions? Answer(s): ____________

(no explanation required.) (There may be more than one graph which represents a function.)

(A)

(B)

(C)

(D)

(10 pts) Consider the points (2, -3) and (6, 4).

(a) State the midpoint of the line segment with the given endpoints.Show work.

(b) If the point you found in (a) is the center of a circle, and the other two points are points on the circle, find the length of the radius of the circle. (That is, find the distance between the center point and a point on the circle.) Find the exact answer and simplify as much as possible.Show work.

(12 pts) Consider the following graph of y = f(x).

(no explanations required)

(a) State the x-intercept(s).

(b) State the y-intercept(s).

(c) State the domain.

(d) State the range.

(8 pts) Let =

(a) Calculate . Show work.

(b) State the domain of the function =

(c) Find and simplify as much as possible. Show work.

(7 pts) f is a function that takes a real number xand performs these four steps in the order given:

(1) Multiply by -2.

(2) Add4.

(3) Take the square root.

(4) Take the reciprocal. (That is, make the quantity the denominator of a fraction with numerator 1.)

(a) Find an expression for f (x). (no explanation required)

(b) State the domain of f. (no explanation required)

(6 pts) Given and , which of the following is the domain of the quotient function ? Explain.

(6 pts) For income x (in dollars), a particular state’s income tax T (in dollars) is given by

(a) What is the tax on an income of $6,800? Show work.

(b) What is the tax on an income of $68,000? Show work.

(20 pts) Let y = 3-3×2.

(a) Find the x-intercept(s) of the graph of the equation, if any exist.

(b) Find the y-intercept(s) of the graph of the equation, if any exist.

(c) Create a table of sample points on the graph of the equation (include at least five points), and create a graph of the equation. (You may use the grid shown below, hand-draw and scan, or you may use the free Desmos graphing calculator described under Course Resource to generate a graph, save as a jpg and attach.)

x y (x, y)

(d) Is the graph symmetric with respect to the y-axis? _____ (yes or no).If no, state a point on the graph and state the appropriate reflection point which fails to be on the graph, as done in section 1.2 homework in the textbook.

(e) Is the graph symmetric with respect to the x-axis? _____ (yes or no).If no, state a point on the graph and state the appropriate reflection point which fails to be on the graph, as done in section 1.2 homework in the textbook.

(f) Is the graph symmetric with respect to the origin? _____ (yes or no).If no, state a point on the graph and state the appropriate reflection point which fails to be on the graph, as done in section 1.2 homework in the textbook.

(12 pts) Let f (x) = 2×2+x–4 and g(x) = 1 – 2x.

(a) Evaluate the function g – f for x = –3. That is, find (g – f)(–3). Show work.

(b) Evaluate the function fg for x = –3. That is, find (fg)( –3). Show work.

(c) Find the difference function (f – g)(x) and simplify the results. Show work.

(15 pts) (See textbook page 82 for definitions of the economic functions used in this problem.)

The cost, in dollars, for a company to producexwidgets is given by C(x) = 6x+ 3600 for

x³ 0, and the price-demand function, in dollars per widget, is p(x) = 50- 0.02x for 0 £x£2500.

(a) Find and interpret C(250).

(b) Find and interpret (250). (Note that (x) is the average cost function.)

(c) Find and simplify the expression for the revenue function R(x).

(d) Find and simplify the expression for the profit function P(x).Note that p(x) and P(x) are different functions.

(e) Find and interpret P(250), where P(x) is the profit function in part (d).