Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 774 views

    AC551 Quiz Week 7

    Uploaded by

    Natasha Declan
    Patton Company purchased $400,000 of bonds from Scott Co. on January 1, 2011 at a discount. Using the effective interest method over 2011, Patton should report interest revenue of $41,368 in its financial statements for the year ended December 31, 2011. Menke Co. purchased bonds on October 1, 2010 and reported interest income of $4,020 in its 2010 financial statements using straight-line amortization. Calhoun Co. reported an unrealized loss on its available-for-sale securities of $20,000 in stockholders' equity as of December 31, 2011.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd

    AC551 Quiz Week 7

    Uploaded by

    Natasha Declan
    774 views3 pages
    Patton Company purchased $400,000 of bonds from Scott Co. on January 1, 2011 at a discount. Using the effective interest method over 2011, Patton should report interest revenue of $41,368 in its financial statements for the year ended December 31, 2011. Menke Co. purchased bonds on October 1, 2010 and reported interest income of $4,020 in its 2010 financial statements using straight-line amortization. Calhoun Co. reported an unrealized loss on its available-for-sale securities of $20,000 in stockholders' equity as of December 31, 2011.

    Original Description:

    Intermediate Accounting II

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Patton Company purchased $400,000 of bonds from Scott Co. on January 1, 2011 at a discount. Using the effective interest method over 2011, Patton should report interest revenue of $41,368 in its financial statements for the year ended December 31, 2011. Menke Co. purchased bonds on October 1, 2010 and reported interest income of $4,020 in its 2010 financial statements using straight-line amortization. Calhoun Co. reported an unrealized loss on its available-for-sale securities of $20,000 in stockholders' equity as of December 31, 2011.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    774 views3 pages

    AC551 Quiz Week 7

    Uploaded by

    Natasha Declan
    Patton Company purchased $400,000 of bonds from Scott Co. on January 1, 2011 at a discount. Using the effective interest method over 2011, Patton should report interest revenue of $41,368 in its financial statements for the year ended December 31, 2011. Menke Co. purchased bonds on October 1, 2010 and reported interest income of $4,020 in its 2010 financial statements using straight-line amortization. Calhoun Co. reported an unrealized loss on its available-for-sale securities of $20,000 in stockholders' equity as of December 31, 2011.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    1.

    Question :

    (TCO B) Patton Company purchased $400,000 of 10% bonds of Scott Co. on January 1, 2011, paying $376,100. The bonds mature January 1, 2021; interest is payable each July 1 and January 1. The discount of $23,900 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity. For the year ended December 31, 2011, Patton Company should report interest revenue from the Scott Co. bonds of

    Student Answer:

    $42,392. $41,409. $41,368. $40,000. Chapter 17, $376,000 X .055 $20,686, ($376,000 + $686) X .055 $20,723 = $41,409

    Instructor Explanation: Points Received: Comments:

    5 of 5

    Question 2.Question :

    (TCO B) On October 1, 2010, Menke Co. purchased (to hold to maturity) 200, $1,000, 9% bonds for $208,000. An additional $6,000 was paid for accrued interest. Interest is paid semiannually on December 1 and June 1, and the bonds mature on December 1, 2014. Menke uses straight-line amortization. Ignoring income taxes, the amount reported in Menke's 2010 income statement from this investment should be $4,500. $4,020. $4,980.

    Student Answer:

    Instructor Explanation: Points Received: Comments:

    $5,460. Chapter 17, ($200,000 X .09 X 3/12) ($8,000 X 3/50) = $4,020

    5 of 5

    Question 3.Question :

    (TCO B) On its December 31, 2010 balance sheet, Calhoun Company appropriately reported a $10,000 debit balance in its Securities Fair Value Adjustment (Available-for-Sale) account. There was no change during 2011 in the composition of Calhoun's portfolio of marketable equity securities held as available-for-sale securities. The following information pertains to that portfolio:

    Security X Y Z

    Cost $125,000 100,000 175,000 $400,000

    Fair Value at 12/31/11 $160,000 95,000 125,000 $380,000

    What amount of unrealized loss on these securities should be included in Calhoun's stockholders' equity section of the balance sheet at December 31, 2011?

    Student Answer:

    $30,000. $20,000. $10,000. $0.

    Chapter 17, ($400,000 $380,000) = $20,000 Instructor Explanation: Points Received: 5 of 5

    Comments: Question 4.Question :


    (TCO B) Valet Corp. began operations in 2010. An analysis of Valet's equity securities portfolio acquired in 2010 shows the following totals at December 31, 2010 for trading and available-for-sale securities: Trading For-Sale Securities Aggragate Cost Aggragate Fair Value $90,000 65,000 Securities $110,000 95,000 Available-

    What amount should Valet report in its 2010 income statement for unrealized holding loss?

    Student Answer:

    $40,000. $10,000. $15,000. $25,000.

    Chapter 17, $90,000 $65,000 = $25,000 Instructor Explanation: Points Received: 5 of 5

    Comments:

    Question 5.Question :

    (TCO B) On January 1, 2010, Reston Co. purchased 25% of Ace Corp.'s common stock; no goodwill resulted from the purchase. Reston appropriately carries this investment at equity, and the balance in Reston's investment account was $720,000 at December 31, 2010. Ace reported net income of $450,000 for the year ended December 31, 2010, and paid common stock dividends totaling $180,000 during 2010. How much did Reston pay for its 25% interest in Ace? $652,500 $765,000 $787,500 $877,500

    Student Answer:

    Chapter 17, $720,000 ($450,000 X 25%) + ($180,000 X 25%) = $662,500 Instructor Explanation: Points Received: 5 of 5

    Comments:

    You might also like