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Cl0; Introduction to Computers; Assignment 4 Rubric
CATEGORY Exemplary Satisfactory Unsatisfactory Unacceptable
Justificalion:20 20 points: Three or 13 points: Two items 6 points: One item in o points: None of the
points more items in the in the proposal the proposal includes 'items in the proposalproposal include an include an an expIanaIion of why incJude an explanation
explanation of why explanation of why that particular choice of why that particular
that particular choice that particular choice wasmade_ choice was made.
wasmade._ was made.
Quality of 20 points: 13 points: Information 6 points: Information o points: Information
Infonnation: 20 Information clearly clearty relates to the clear1yrelates to the had little or nothing to 'relates to the main main topic. It main topic.. Supporting do with the main topic.
points topic. It includes includes one or two details and/or
three or more items items with supporting examples are not
with supporting details andfor incJlided_
I
details andfor examples_
examples.
Accuracy: 20 20 points: All of the 13 points:. Most ofthe 6 points: Some of the o points: None or
points technical technical technical ,~ almost none of thedescriptions and descriptions and and details are technical descriptions
details are described details are described described accurately and details are
accurately and accurately and and match tDday\'s described accurateJy
match today\'s match today\'s available technology. and match today\'s I
available technology.. available technology- available technology.
Format: 10 10 points: The 7 points: The 4 points: The proposal o points: The proposal I
points proposal covers aD proposal covers 3 or covers 1or 2 of the covers none of the Iof the five 4 of the five five requirements five requirements I
requirements requirements requested by the requested by the
requested by the requested by the Custol1lelC (Budget, customer. (Budget.
I
customer. (Budget. customer. (Budget, Security, HardWare, Seclriy, I-fardware.
Security, Hardware, Sea.riy, Hardware, OS, Mobile OS, Mobile
OS, Mobile OS,Mobile Computing) Computing)
Computing) Computing)
Mechanics: 10 10 points: No 7 points: One to two 4 points: Three to four o points: FIVeor more
points grammatical, grammalical,. grammatical, spelling, grammatic-aJ. spelling,spelling. spacing, spelling. spacing. spacing, capilalizalion spacing" capiIaization I
capitalization or capitalization or or punctuation errors. or punctuation errors. I
_ punctuation errors. punctuation errors. I
Acronyms: 10 10 points: All of the 7 points: Most of the 4 points: Some of the o poin1s: None of the
points acronyms. acronyms, acronyms, acronyms,abbreviations or abbreviations or abbreviations or abbreViations or
I
technical terms are technical terms are technical terms are technical terms are
either spelled out or either speIed out or either spefled out or either spelled out or
explained in a way explained in a way explained in a way explained in a ...
.08 mjm 1. On August 31, Jenks Co. partially refunded $1.docx
1. .08 mjm
1. On August 31, Jenks Co. partially refunded $180,000 of its
outstanding 10% note payable made one year ago to Arma State
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 Jenks
Co. makes reversing entries when appropriate.
(2)
Prepare the adjusting entry at December 31, assuming straight-
line amortization of the discount.
2. Below are three independent situations.
1. In August, 2012 a worker was injured in the factory in an
accident partially the result of his own negligence. The worker
has sued Wesley Co. for $800,000. Counsel believes it is
reasonably possible that the outcome of the suit will be
unfavorable and that the settlement would cost the company
from $250,000 to $500,000.
2. A suit for breach of contract seeking damages of $2,400,000
was filed by an author against Greer Co. on October 4, 2012.
Greer's legal counsel believes that an unfavorable outcome is
probable. A reasonable estimate of the award to the plaintiff is
2. between $600,000 and $1,800,000. No amount within this range
is a better estimate of potential damages than any other amount.
3. Quinn is involved in a pending court case. Peete’s lawyers
believe it is probable that Quinn will be awarded damages of
$1,000,000.
Instructions
Discuss the proper accounting treatment, including any required
disclosures, for each situation. Give the rationale for your
answers.
3. ESSAY QUESTION: What accounting treatment is required
for convertible
debt? Why? What accounting treatment is required for debt
issued with stock warrants? Why?
4. On July 1, 2012, Spear Co. issued 1,000 of its 10%, $1,000
bonds at 99 plus accrued interest. The bonds are dated April 1,
2012 and mature on April 1, 2022. Interest is payable
semiannually on April 1 and October 1. What amount did Spear
receive from the bond issuance?
5. Parker Corporation has issued 2,000 shares of common stock
and 400 shares of preferred stock for a lump sum of $72,000
cash.
Instructions
(a)
Give the entry for the issuance assuming the par value of the
common was $5 and the market value $30, and the par value of
the preferred was $40 and the market value $50. (Each valuation
is on a per share basis and there are ready markets for each
stock.)
3. (b)
Give the entry for the issuance assuming the same facts as (a)
above except the preferred stock has no ready market and the
common stock has a market value of $25 per share.
6. Weighted average shares outstanding.
On January 1, 2012, Warren 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 2012.
MULTIPLE CHOICE.
1. Which of the following is generally associated with payables
classified as accounts payable?
Periodic Payment
Secured
of Interest
5. inception of the lease, Beyer 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 Heins 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 Beyer's December 31, 2012 balance sheet?
Current Liability
Long-term Liability
a.
$0
$320,000
b.
$80,000
$160,000
c.
$160,000
$160,000
d.
$160,000
6. $80,000
3. On September 1, 2012, Herman Co. issued a note payable
to National Bank in the amount of $1,200,000, bearing interest
at 12%, and payable in three equal annual principal payments of
$400,000. On this date, the bank's prime rate was 11%. The first
payment for interest and principal was made on September 1,
2013. At December 31, 2013, Herman should record accrued
interest payable of
a.
$48,000.
b.
$44,000.
c.
$32,000.
d.
$29,334.
4. Included in Vernon Corp.'s liability account balances at
December 31, 2012, were the following:
7% note payable issued October 1, 2012, maturing September
30, 2013: $250,000
8% note payable issued April 1, 2012, payable in six equal
annual
installments of $150,000 beginning April 1, 2013: 600,000
Vernon's December 31, 2012 financial statements were issued
on March 31, 2013. On January 15, 2013, the entire $600,000
7. balance of the 8% note was refinanced by issuance of a long-
term obligation payable in a lump sum. In addition, on March
10, 2013, Vernon consummated a noncancelable agreement with
the lender to refinance the 7%, $250,000 note on a long-term
basis, on readily determinable terms that have not yet been
implemented. On the December 31, 2012 balance sheet, the
amount of the notes payable that Vernon should classify as
short-term obligations is
a.
$175,000.
b.
$125,000.
c.
$50,000.
d.
$0.
5. Edge 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 2013 is as follows:
12/31/12
12/31/13
Employee advances
8. $12,000
$ 18,000
Accrued salaries payable
65,000
?
Salaries expense during the year
650,000
Salaries paid during the year (gross)
625,000
At December 31, 2013, what amount should Edge report for
accrued salaries payable?
a.
$90,000.
b.
$84,000.
c.
$72,000.
d.
$25,000.
6. Risen Corp.'s payroll for the pay period ended October 31,
2012 is summarized as follows:
9. Federal
Amount of Wages Subject
Department
Total Income Tax
to Payroll Taxes
Payroll
Wages
Withheld
F.I.C.A.
Unemployment
Factory
$ 75,000
$ 9,000
$70,000
$22,000
Sales
22,000
3,000
16,000
2,000
11. c.
$13,880.
d.
$7,300.
7. Felton 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, 2011 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, 2011. Outstanding service contracts at December
31, 2011 expire as follows:
During 2012
During 2013
During 2014
$100,000
$160,000
$70,000
What amount should be reported as unearned service contract
revenues in Felton's December 31, 2011 balance sheet?
a.
$360,000.
b.
$330,000.
c.
$240,000.
12. d.
$220,000.
8. Yount Trading Stamp Co. records stamp service revenue and
provides for the cost of redemptions in the year stamps are sold
to licensees. Yount's past experience indicates that only 80% of
the stamps sold to licensees will be redeemed. Yount's liability
for stamp redemptions was $7,500,000 at December 31, 2011.
Additional information for 20120 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 2012 were presented for redemption in
2013, the redemption cost would be $2,500,000. What amount
should Yount report as a liability for stamp redemptions at
December 31, 2012?
a.
$9,100,000.
b.
$6,600,000.
c.
$6,100,000.
d.
$4,100,000.
Use the following information for questions 9 through 11:
13. On January 1, 2012, Ellison 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
14. 9. The present value of the principal is
a.
$534,000.
b.
$540,000.
c.
$623,000.
d.
$627,000.
10. The present value of the interest is
a.
$344,820.
b.
$349,560.
c.
$372,600.
d.
$376,830.
11. The issue price of the bonds is
a.
$883,560.
b.
$884,820.
15. c.
$889,560.
d.
$999,600.
12. The term used for bonds that are unsecured as to principal is
a. junk bonds.
b. debenture bonds.
c. indebenture bonds.
d. callable bonds.
13. Bonds for which the owners' names are not registered with
the issuing corporation are called
a. bearer bonds.
b. term bonds.
c. debenture bonds.
d. secured bonds.
14.
Reich, 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
a.
the effective yield or market rate of interest exceeded the stated
(nominal) rate.
16. b.
the nominal rate of interest exceeded the market rate.
c.
the market and nominal rates coincided.
d.
no necessary relationship exists between the two rates.
15. The interest rate written in the terms of the bond indenture
is known as the
a.
coupon rate.
b.
nominal rate.
c.
stated rate.
d.
coupon rate, nominal rate, or stated rate.
16. The rate of interest actually earned by bondholders is called
the
a.
stated rate.
b.
yield rate.
c.
effective rate.
17. d.
effective, yield, or market rate.
17. In a troubled debt restructuring in which the debt is
continued with modified terms and the carrying amount of the
debt is less than the total future cash flows,
a.
a loss should be recognized by the debtor.
b.
a gain should be recognized by the debtor.
c.
a new effective-interest rate must be computed.
d.
no interest expense or revenue should be recognized in the
future.
18. The residual interest in a corporation belongs to the
a.
management.
b.
creditors.
c.
common stockholders.
d.
preferred stockholders.
18. 19.
The pre-emptive right of a common stockholder is the right to
a.
share proportionately in corporate assets upon liquidation.
b.
share proportionately in any new issues of stock of the same
class.
c.
receive cash dividends before they are distributed to preferred
stockholders.
d.
exclude preferred stockholders from voting rights.
20.
In a corporate form of business organization, legal capital is
best defined as
a.
the amount of capital the state of incorporation allows the
company to accumulate over its existence.
b.
the par value of all capital stock issued.
c.
the amount of capital the federal government allows a
corporation to generate.
d.
the total capital raised by a corporation within the limits set by
the Securities and Exchange Commission.
21. The cumulative feature of preferred stock
19. a.
limits the amount of cumulative dividends to the par value of
the preferred stock.
b.
requires that dividends not paid in any year must be made up in
a later year before dividends are distributed to common
shareholders.
c.
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.
d.
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 Hale Corporation,
question 22 - 23:
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
20. 1,500,000
Treasury Common Stock (at cost)
150,000
22.
The total stockholders' equity of Hale Corporation is
a.
$8,600,000.
b.
$8,750,000.
c.
$7,100,000.
d.
$7,250,000.
23.
The total paid-in capital (cash collected) related to the common
stock is
a.
$4,300,000.
b.
$4,850,000.
c.
$5,250,000.
d.
21. $4,700,000.
24. The payout ratio can be calculated by dividing
a.
dividends per share by earnings per share.
b.
cash dividends by net income less preferred dividends.
c.
cash dividends by market price per share.
d.
dividends per share by earnings per share and dividing cash
dividends by net income less preferred dividends.
25. Younger 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
a.
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.
b.
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.
c.
the payment of a previously declared cash dividend on the
common stock.
22. d.
a 2-for-1 split of the common stock.
26.
Assume common stock is the only class of stock outstanding in
the Manley Corporation. Total stockholders' equity divided by
the number of common stock shares outstanding is called
a.
book value per share.
b.
par value per share.
c.
stated value per share.
d.
market value per share.
27. With respect to the computation of earnings per share,
which of the following would be most indicative of a simple
capital structure?
a.
Common stock, preferred stock, and convertible securities
outstanding in lots of even thousands
b.
Earnings derived from one primary line of business
c.
Ownership interest consisting solely of common stock
d.
23. None of these
28.
In computing earnings per share for a simple capital structure, if
the preferred stock is cumulative, the amount that should be
deducted as an adjustment to the numerator (earnings) is the
a.
preferred dividends in arrears.
b.
preferred dividends in arrears times (one minus the income tax
rate).
c.
annual preferred dividend times (one minus the income tax
rate).
d.
none of these.
29.
In computations of weighted average of shares outstanding,
when a stock dividend or stock split occurs, the additional
shares are
a.
weighted by the number of days outstanding.
b.
weighted by the number of months outstanding.
c.
considered outstanding at the beginning of the year.
24. d.
considered outstanding at the beginning of the earliest year
reported.
30.
What effect will the acquisition of treasury stock have on
stockholders' equity and earnings per share, respectively?
a.
Decrease and no effect
b.
Increase and no effect
c.
Decrease and increase
d.
Increase and decrease
31. Due to the importance of earnings per share information,
it is required to be reported by all
Public CompaniesNonpublic Companies
a.
Yes
Yes
b.
Yes
No
25. c.
No
No
d.
No
Yes
32.
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
DilutiveAntidilutive
a.
Yes
Yes
b.
Yes
No
c.
No
Yes
d.
No
26. No
33.
When computing diluted earnings per share, convertible bonds
are
a.
ignored.
b.
assumed converted whether they are dilutive or antidilutive.
c.
assumed converted only if they are antidilutive.
d.
assumed converted only if they are dilutive.
34.
Stockholders of a business enterprise are said to be the residual
owners. The term residual owner means that shareholders
a.
are entitled to a dividend every year in which the business earns
a profit.
b.
have the rights to specific assets of the business.
c.
bear the ultimate risks and uncertainties and receive the benefits
of enterprise ownership.
d.
can negotiate individual contracts on behalf of the enterprise.
27. 35. Hill Corp. had 600,000 shares of common stock
outstanding on January 1, issued 900,000 shares on July 1, and
had income applicable to common stock of $1,050,000 for the
year ending December 31, 2012. Earnings per share of common
stock for 2012 would be
a.
$1.75.
b.
$.83.
c.
$1.00.
d.
$1.17.
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