Answer the following questions:
1. On January 1, 2013 Midwest Co. purchased a truck that cost $38,000. The truck had an expected useful life of 10 years and a $4,000 salvage value. The amount of depreciation expense recognized in 2014 assuming that Midwest uses the double declining-balance method is:
2. Easton Company purchased equipment that cost $55,000 cash on January 1, 2012. The equipment had an expected useful life of six years and an estimated salvage value of $4,000. Assuming that Easton depreciates its assets under the straight-line method, the amount of depreciation expense appearing on the 2015 income statement and the amount of accumulated depreciation appearing on the December 31, 2015 balance sheet would be:
Deprec Exp Acc. Depr.
A. 8,500 34.000
B. 8,500 8,500
C. 34,000 8,500
D. 8,500 25,500
3. Richard Company had 102,000 shares of $5 par value common stock issued and outstanding before repurchasing 10,200 shares for $76,500. Richard had received $2,040,000 cash from shareholders from the issuance of its common stock. Which of the following statements is true?
a. Richard's total paid in capital is $510,000.
b. Richard's total paid in capital is $2,116,500.
c. Richard's common stock account balance is $433,500.
d. Richard's total stockholder's equity is $2,116,500.
4&5&6 Vantage Company issued bonds with a $500,000 face value and a 6% stated rate of interest on January 1, 2013. The bonds carried a 5-year term and sold for 95. Vantage uses the straight-line method of amortization. Interest is payable on December 31 of each year.
4. The carrying value of the bond liability on the December 31, 2015 balance sheet was:
5. The amount of interest expense appearing on the December 31, 2015 income statement would be:
6. The amount of cash flow from operating activities on the December 31, 2015 statement of cash flows would be:
7. If Winfield issued the bonds for 96,
A. the market rate of interest was equal to the stated rate of interest.
B. the market rate of interest was higher than the stated interest rate.
C. the market rate of interest was lower than the stated rate of interest.
D. the bonds carried a variable or floating rate that changed in response to market conditions.
8. Frazier Corporation shows a total of $660,000 in its Common Stock account and $1,600,000 in its Paid-in Capital Excess account. The par value of Frazier's common stock is $4. How many shares of Frazier stock have been issued?
D. It cannot be determined
9. Garrison Corporation has the following stock outstanding:
4% Cumulative preferred stock $ 800,000
$20 stated value
Common Stock, $12 par $4.800,000
In 2013, Garrison paid $300,000 in dividends. No dividends were paid in 2011 or 2012.
a) Compute the total amount of dividends that was paid to each.
Hint: Must determine number of shares of preferred and common stock.
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1. The answer is option B.
2. The answer is option A.
3. The answer is option A.
4. The answer is option A....
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