Q1. Roberto Corporation was organized on January 1, 2011. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2011, Roberto had the following transactions relating to shareholders' equity:
Issued 10,000 shares of common stock at $7 per share.
Issued 20,000 shares of common stock at $8 per share.
Reported a net income of $100,000.
Paid dividends of $50,000.
Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8).
What is total shareholders' equity at the end of 2011?
A. $270,000.
B. $300,000.
C. 250,000.
D. $200,000.
Q2. The changes in account balances for Elder Company for 2011 are as follows:
|
Assets
|
$480,000 debit
|
|
Common stock
|
250,000 credit
|
|
Liabilities
|
160,000 credit
|
|
Paid-in capital - excess of par
|
30,000 credit
|
Assuming the only changes in retained earnings in 2011 were for net income and a $50,000 dividend, what was net income for 2011?
A. $40,000.
B. $60,000.
C. $70,000.
D. $90,000.
Q3. The shareholders' equity of Green Corporation includes $200,000 of $1 par common stock and $400,000 of 6% cumulative preferred stock. The board of directors of Green declared cash dividends of $50,000 in 2011 after paying $20,000 cash dividends in each of 2010 and 2009. What is the amount of dividends common shareholders will receive in 2011?
A. $18,000.
B. $26,000.
C. $28,000.
D. $32,000.
Q4. Coy, Inc. initially issued 200,000 shares of $1 par value stock for $1,000,000 in 2009. In 2010, the company repurchased 20,000 shares for $200,000. In 2011, 10,000 of the repurchased shares were resold for $160,000. In its balance sheet dated December 31, 2011, Coy, Inc.'s treasury stock account shows a balance of:
A. $0.
B. $40,000.
C. $100,000.
D. $200,000.
Q5. A U.S. company purchased inventory from a Greek company in a transaction denominated in drachmas. The U.S. company concurrently entered into a forward exchange contract for the future purchase of drachmas in the next fiscal year. The forward rate exceeded the spot rate on the date of the hedge. Which of the following is correct?
A. The Greek company could experience a transaction gain or loss when receiving payment on account.
B. The forward exchange contract was acquired at a discount.
C. Any current year gain or loss on the forward exchange contract will be based on the change in the forward rate between the date of purchase and the fiscal year end.
D. Any gain or loss on the forward exchange contract will be based on the change in the spot rate between the date of purchase and the fiscal year end.
Q6. Which one of the following does not suggest the presence of significant influence?
A. One company holds 15 percent of the common stock of another company, but the remaining shares are widely dispersed.
B. One company acquires 75 percent of another company's convertible bonds.
C. A majority of the board of directors of one company is also on the board of directors of another company.
D. One company holds an investment of 25 percent of the common stock of another company.
Q7. When using the equity method of accounting for an investment, as compared to the cost method, an investor will:
A. record a greater amount of investment income
B. record a smaller amount of investment income
C. record either a greater or smaller amount of investment income
D. record the same amount of investment income
Q8. In the consolidated income statement of Push Company and its subsidiary, Shove Corporation, the noncontrolling interest was assigned $24,000 of income for 2009. What amount of net income did Shove report for 2009 if Push owns 80 percent of Shove?
A. $144,000.
B. $120,000.
C. $30,000.
D. $19,200.