accounting assignment

1) Michelo Corporation invested $100,000 to acquire 20,000 shares of Vatsala Technologies on March 1, 2015. On June 3, 2015, Vatsala pays a cash dividend of $0.25 per share. The investment is classified as an available-for-sale investment. How would Michelo record this transaction of June 3 on its books? A) Cash 5,000 Long-term Investments—Trading Investments 5,000 B) Cash 5,000 Long-term Investments—Available-for-Sale 5,000 C) Cash 5,000 Long-term Investments—Held-to-Maturity 5,000 D) Cash 5,000 Dividend Revenue 5,000 2) What is the effect of receiving a dividend payment on investments classified as available for sale: A) the total assets will remain unaffected. B) the long-term assets will decrease. C) Increase in total Equity . D) decrease in total liabilities 3) Maryland Financial Services invested $15,000 to acquire 3,750 shares of Delaware Investments on March 15, 2012. This investment represents less than 20% of the investee's voting stock. On May 7, 2016, Maryland Financial Services sells 1,750 shares for $12,250. When the transaction is recorded in a journal entry: A) Credit Gain on Disposal . B) Credit Long-term Investments—Available-for-Sale C) Credit Cash D) Debit Long-term Investments—Held-to-Maturity . 4) Norman Geological Services had previously acquired five thousand shares of treasury stock at $14 per share. It now sells them at $21 per share. The entry to record this transaction will include a a. credit to Treasury Stock for $100,000. b. debit to Paid-In Capital from Treasury Stock for $35,000. c. debit to Treasury Stock for $70,000. d. credit to Paid-In Capital from Treasury Stock for $35,000. 5) Peter Corporation pays $500,000 to acquire 40% of the equity securities of Venkat Technologies on May 5, 2015. Which of the following will be included in the journal entry to record this transaction? A) Debit Long-term Investments—Trading Investments $500,000. B) Debit Long-term Investments—Venkat Technologies $500,000. C) Debit Long-term Investments—Available-for-Sale $500,000. D) Credit Long-term Investments—Available-for-Sale $500,000. 6) Benjamin Investments purchased 40% of the common stock of Sadie Corporation on March 1, 2013. Sadie Corporation reports a net income of $675,000 for the 2014 year. Which of the following is the correct journal entry? A) Long-term Investments—Sadie Corporation 270,000 Revenue from Investments 270,000 B) Cash 270,000 Revenue from Investments 270,000 C) Revenue from Investments 270,000 Cash 270,000 D) Revenue from Investments 270,000 Long-term Investments—Sadie Corporation 270,000 7) Benjamin Investments purchased 40% of the common stock of Sadie Corporation on March 1, 2014. Sadie Corporation reports a net income of $675,000 for the 2015 year. Based on the information provided, which of the following is true of the balance sheet on December 31, 2015? A) Total assets will remain unchanged. B) Total liabilities will decrease. C) Total equity will increase. D) Cash will increase. 8) Trang Corporation reported trading investments of $15,000 on December 31, 2014. The company realizes a decrease of $3,000 in the fair value of the trading investments by the end of the year 2015. Which of the following is the correct journal entry? A) Trading Investments 3,000 Unrealized Holding Loss—Trading 3,000 B) Unrealized Holding Loss—Trading 3,000 Trading Investments 3,000 C) Unrealized Holding Loss—Trading 3,000 Fair Value Adjustment—Trading 3,000 D) Fair Value Adjustment—Trading 3,000 Unrealized Holding Loss—Trading 3,000 9) Unrealized holding gain on available-for-sale investments is reported as : A) stockholders' equity on the balance sheet is adjusted . B) Debit long-term assets C) the income statement has a separate line item D) Credit short-term assets . 10) Comprehensive income includes: A) foreign currency translation adjustments B) owners investments C) purchase of capital assets D) payment of dividend 11) Morgana Engineering reported the balance sheet for the year 2014. What is the rate of return on total assets for Morgana Engineering based on the information below: Total Assets, December 31, 2014 $580,682 Total Assets, December 31, 2013 $499,148 For Year Ended December 31, 2014 Interest Expense $24,352 Net Income $64,734 Retained Earnings $ 223,214 A) 11.15% B) 8.21% C) 16.50% D) 7.50% 12) On January 1, 2015, EZ Auto Sales issued $15,000 in bonds for $15,800. They were 10-year bonds with a stated rate of 9%, and pay interest on a semiannual basis. EZ Auto Sales uses the straight-line method to amortize the bond premium. On June 30, 2015, when EZ makes the first payment to bondholders, how much will they report as Interest Expense? A) $635 B) $675 C) $275 D) $280 13) On January 1, 2015, EZ Auto Sales issued $15,000 in bonds for $15,800. They were 8-year bonds with a stated rate of 9%, and pay semiannual interest. EZ Auto Sales uses the straight-line method to amortize the Bond Premium. The following are the balances in the ledger after the bonds are issued What will be the balance in the Premium Account be after the first interest payment is made on June 30, 2015 ? A) debit of $50 B) debit of $900 C) credit of $625 D) credit of $750 14) On January 1, 2013, Johnson Sales issued $15,000 in bonds for $14,300. They were 10-year bonds with a stated rate of 9%, and pay semiannual interest. Johnson Sales uses the straight-line method to amortize the bond discount. After the second interest payment on December 31, 2013, what was the bond carrying amount? A) $14,388 B) $14,344 C) $15,000 D) $14,370 15) On November 1, 2015, Brielle Financial Services issued $300,000 of 8-year bonds with a stated rate of 9% at par. The bonds make semiannual payments on April 30 and October 31. At December 31, 2015, Brielle Financial made an adjusting entry to accrue interest at year-end. How much Interest Expense will be recorded at December 31, 2015? A) $27,000 B) $4,500 C) $13,500 D) $14,200 16) Blanding Company issues $1,000,000 of 8%, 10-year bonds at 98 on February 28, 2014. The bonds pay interest on February 28 and August 31. The journal entry to record the issuance would include a: A) debit to Cash for $1,000,000. B) credit to Bonds Payable for $980,000. C) credit to Discount on Bonds Payable for $20,000. D) debit to Cash for $980,000. 17) Phan Company issues $800,000 of 7%, 10-year bonds on March 31, 2013. The bond pays interest on March 31 and September 30. Which of the following statements is true? A) If the market rate of interest is 8%, the bonds will issue at a premium. B) If the market rate of interest is 8%, the bonds will issue at a discount. C) If the market rate of interest is 8%, the bonds will issue at par. D) If the market rate of interest is 8%, the bonds will issue above par. 18) In 2015, its first year of operations Chesapeake Company had the following transactions in 2015. • Issued 20,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $14.00 per share. • Issued 1,000 shares of $100 par value preferred stock. Shares were issued at par. • Earned net income of $35,000. • Paid no dividends. • Paid Accounts Payable of $10,215 • Purchased a truck for $10,000. Signed a 5 year promissory note for the entire amount • Hired a new Vice President on December 15 for a salary of $100,000. The Vice President begins employment on January 3, 2016 At the end of 2015, what is the total amount of stockholders' equity? A) $415,000 B) $120,000 C) $260,000 D) $380,000 19) Nottingham Corporation has 10,000 shares of 10%, $75 par noncumulative preferred stock outstanding and 20,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $180,000. Allocate the dividends between preferred and common stockholders? A) The dividend is allocated $5,000 to preferred shareholders and $115,000 to common shareholders. B) The dividend is allocated $75,000 to preferred shareholders and $105,000 to common shareholders. C) The dividend is allocated $60,000 to preferred shareholders and $120,000 to common shareholders. D) The dividend is allocated $72,000 to preferred shareholders and $108,000 to common shareholders. 20) On November 1, 2015, Elli Company declared a dividend of $3.00 per share. Elli Company has 20,000 shares of common stock outstanding and no preferred stock. The date of record is November 15, and the payment date is November 30, 2015. On November 30, Elli made the following journal entry: A) Debit Retained Earnings $60,000 and credit Dividends Payable—Common $60,000. B) Debit Dividends Payable—Common $60,000 and credit Cash $60,000. C) Debit Cash $60,000 and credit Dividends Payable—Common $60,000. D) Debit Retained Earnings $60,000 and credit Cash $60,000. 21) Maharaja Corp. was incorporated on January 1, 2012. Maharaja issued 4,000 shares of common stock and 500 shares of preferred stock on that date. The preferred shares are cumulative, $100 par, with an 8% dividend rate. Maharaja has not paid any dividends yet. In 2015, Maharaja had its first profitable year, and on November 1, 2015, Maharaja declared a total dividend of $28,000. The total amount that will be paid out to preferred shareholders is: A) $4,000 B) $16,000 C) $3,200 D) $28,000 22) Dr. Jakob’s Medical Services originally issued 20,000 shares of $5 par value common stock at $9 per share. The board of directors declares a 5% stock dividend when the market price of the stock is $6 a share. How does Jakob record the declaration of a stock dividend? A) Retained Earnings is debited for $6,000. B) Retained Earnings is credited for $6,000. C) Retained Earnings is debited for $9,000. D) Paid-in Capital in Excess of Par—Common is credited for $9,000. 23) Total Stockholders' Equity will decrease by A) cash dividend declared B) cash dividend paid C) stock dividend declared D) repayment of loan 24) Norman Company issued $500,000 of 6%, 10-year bonds on one of its interest dates for $431,850 to yield an effective annual rate of 8%. Norman uses the effective-interest method of amortization. Interest is paid annually. What is the amount of discount (to the nearest dollar)that should be amortized for the first interest period? a. $14,089 b. $6,815 c. $9,096 d. $4,548 25) Rajiv Services invests its excess cash in Shamina Technologies and acquires 1,000 shares for $53.25. Rajiv Services owns less than 1% of Shamina’s voting stock and plans to hold the stock for two years. Which entry below will record this transaction? A) Long-term Investments—Available-for-Sale will be debited for $53,250. B) Long-term Investments—Held-to-Maturity will be debited for $53,250. C) Long-term Investments—Trading Investments will be credited for $53,250. D) Long-term Investments—Significant Interest Investments will be debited for $53,250. The End!! SEE ANSWER SHEET ON NEXT PAGE Answer Sheet Part 1(Do Not show your computations here in Part 1. Computations must be shown in Part 2 of this Answer Sheet) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Part 2 Supporting Computations (5 point penalty if computations are not shown in this section) Please show your supporting computations here below on all questions that require computations. Eg: if your answer to a question is 10 and you had to add 5+5=10 to get to the answer, then I need to see that. Please cross reference your supporting computations with the appropriate question number. These computations are an integral part of this quiz. Failure to include them here will result in a significant loss of points. The following questions do not need computations: 1,2,4,7,8,9,10,17,23 666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666 Business Math Question 1 . Suppose you borrow $5,000 at 7.25% interest for 14 month. What is the maturity value?

 . . . $5,075 . . . $5,422.92 . . . $422.92 . . . $75 . 
 Question 2 . On March 25, you borrow some money for 120 days. What is the maturity date?

 . . . July 23
 . . . July 25 . . . July 24 . . . July 22 . 
 Question 3 . Joann gets a 7.5% $1,300 loan on October 25, 2007. If Joann repays the money on April 18, 2008 (a leap year), how much interest does she owe? Assume the lender uses a 365-day year. 
 . . . $46.75 . . . $46.48
 . . . $47.01 . . . $47.28 . 
 Question 4 . You borrow $6,000 for 90 days at 6.5% interest. The lender uses a 365-day year. You make a payment of $1,400 on day 36 (36 days after getting the loan). Calculate your balance after the $1,400 payment is applied. 
 . . . $1,361.53 . . . $4,638.47 . . . $4,600 . . . $4,696.16 . 
 Question 5 . You get a 7.5% 60-day $3,000 loan. The lender uses a 365-day year and charges you a $300 set-up fee at the time you get the loan. What is your APR? 
 . . . 7.5% . . . 8.33% . . . 75.93% . . . 68.33% . 
 Question 6 . You get a loan using the discount method. You sign a note, agreeing to repay the lender $10,000 in 90 days. Assuming a discount rate of 9%, determine the APR. 
 . . . 9.13% . . . 9.21% . . . 9.34% . . . 9% . 
 Question 7 . You deposited $400 in a savings account 20 years ago, earning 5% compounded quarterly. Today, you withdrew the entire balance of $1,080.59. What is the present value?

 . . . $400 . . . $1080.59 . . . $1061.32 . . . $512.81 . 
 Question 8 . The average growth rate for a certain stock over the last 50 years is reported to be 12% compounded annually. If your grandfather had invested $600 in the stock 50 years ago, what would his investment be worth today? 
 . . . $234,950.04 . . . $962.11 . . . $986.78 . . . $173,401.31 . 
 Question 9 . Jack Townsend is a soda pop “addict” and wonders how much money he could accumulate if he stopped drinking soda pop and deposited the $90 per month he spends on the stuff into a savings plan. If Jack is 20 years old, what amount should he have at retirement, 50 years from now, if he deposited $90 at the end of each month and his savings plan earned 6.75% compounded monthly? 
 . . . $2,358.50 . . . $447,187.52 . . . $2,605.43 . . . $449,702.95 . 
 Question 10 . Tuition at a local college is currently $4,000 per year. If tuition rates are expected to increase at an annual rate of 3%, what will the annual tuition be 19 years from now? 
 . . . $6,740.64
 . . . $7,014.02 . . . $4,823.50 . . . $27,450.05 . 
 Question 11 . A corporation issues 25-year $1,000 zero-coupon bonds. If you buy one of these bonds you will receive no interest checks during the 25 years, but will receive the $1,000 maturity value in 25 years. Based on a prevailing 6% annual rate, what price must you pay for one of these bonds? 
 . . . $262.14 . . . $697.98 . . . $784.44 . . . $233.00 . 
 Question 12 . You own a manufacturing business and are considering the purchase of a labor-saving device. You project that the device will last 12 years and save you $750 per month in labor costs (assume that the savings are realized at the end of each month). At the end of 12 years, you project you can sell the device for a salvage value of $12,000. Assuming that you can earn 9% compounded monthly on your money, what is the value of the device? 
 . . . $1,054,708.83 . . . $137,904.63 . . . $69,994.92 . . . $133,332.79 . 
 Question 13 . You want to accumulate $30,000 in 16 years for your child’s education, and you can earn 6% compounded monthly. What amount must you deposit each month if the first of your deposits is made today? 
 . . . $242.22 . . . $92.97 . . . $93.43 . . . $243.43 . 
 Question 14 . You want to start a bicycle repair business and estimate it will take $12,000 to get started. You currently have $3,500 and can deposit an additional $250 at the end of each month. If your savings plan will earn 4% compounded monthly, in how many months can you start your business? 
 . . . 15.98 months . . . 31.42 months . . . 30.89 months . . . 34 months . 
 Question 15 . Your uncle dies and your 58-year-old aunt receives $120,000 life insurance proceeds. She needs monthly income and expects to live for approximately 28 years. If she invests the insurance money, earning 6.25% compounded monthly, how much can she withdraw at the end of each month?
 . . . $757.18 . . . $4,616.94 . . . $3,403.44 . . . $7,500 . 
 Question 16 . Determine your monthly payment on a 4-year $14,000 car loan at 7.25% interest. 
 . . . $36.54 . . . $3,660.02 . . . $336.87 . . . $579.09 . 
 Question 17 . Determine your monthly payment on a 25-year $125,000 mortgage loan at 7 5/8% interest. 
 . . . $934.33 . . . $9,531.25 . . . $930.25 . . . $933.93 . 
 Question 18 . You are thinking about getting a 40-year $160,000 mortgage loan at 6.75% interest. How much interest would you pay over the 40 years? 
 . . . $965.37 . . . $303,377.60 . . . $463,377.60 . . . $432,000
 . 
 Question 19 . Juan and Lisa are getting prequalified for a mortgage loan. Juan earns $3,800 a month; Lisa is a homemaker. Based on the price home they hope to buy, the lender estimates property taxes at $2,450 a year and insurance at $680. Juan has a car payment of $322; Lisa’s car is paid off. They each have a minimum credit card payment of $10. Based on back-end ratio of 41%, what is the maximum monthly payment they qualify for? 
 . . . $1558.00
 . . . $955.17 . . . $1,297.17 . . . $2,242.00 . 
 Question 20 . You get a $370,000 mortgage loan at 6.75% with a monthly payment (PI) of $2,399.81. What is your balance after your first payment?
 . . . $369,681.44 . . . $367,600.19 . . . $2,081.25 . . . $369,544.88 . 
 Question 21 . You get a mortgage loan with a monthly payment (PI) of $1,421.48. The lender requires an escrow account. Property taxes are currently $1,418 per year and insurance is currently $598 per year. Calculate your total monthly payment (PITI). 
 . . . $3,437.48 . . . $168.00 . . . $2,016.00 . . . $1,589.48 . 
 Question 22 . You get a 30-year mortgage loan of $185, 000 at 5% interest. You make your first payment on March 1. Use your financial calculator to calculate the calendar-year interest for Year 2. 
 . . . $9,188.02 . . . $9,072.14 . . . $7,666.19 . . . $9,048.38 . 
 Question 23 . You get a 30-year ARM at a rate of 4.625%. The rate is adjusted each year to the 1-year T-bill rate plus ¾%. The loan has a 1% annual cap. One year later the T-bill rate is 5.23%. In 2 years the T-bill rate is 6.44%. What is your interest rate for the third year? 
 . . . 4.625% . . . . $57,600 . . 5.98% . . . 7.19% . . . 6.625% . 
 Question 24 . You apply for a home-equity loan. Your first mortgage has a current balance of $138,400. Based on an appraisal of $245,000 and an 80% LTV ratio, what is the maximum line of credit you can get?
 . 
 $57,600 $196,000 $106,600 $85,280 . Question 25 . You get a $290,000 mortgage loan and incur the following loan costs: ½% origination fee, 1¼ points, $75 credit report fee, $550 appraisal fee, $933 title insurance fee, $350 processing fee, $100 closing fee, and $80 for recording. What are your total loan costs? 
 . . . $5,075 . . . $7,163 . . . $6,873 . . . $7,718