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2102spring08midterm2Akey

# 2102spring08midterm2Akey - 2102 Exam 2 Version A Spring...

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2102 Exam 2 Version A Spring 2008/ KEY Select the best answer. Do not erase on your scantron (these are marked wrong from trace pencil lead). Use a new scantron to change your answer. Mis-marked scantrons are NOT fixed. Present Value tables attached. Name: _______ _ _______________________ Breakout section time (circle): 8 9 10 11 TA Name (circle one) : Ashley Emilee Leslie Vaughn Instructor: 1. Kerry Corporation has a forklift that it paid \$40,000 for a few years ago and the current book value (carrying value) is \$17,000. Kerry is going to sell the forklift for \$22,000. In recording this transaction, Kerry should record: a. a gain of \$5,000. b. a loss of \$18,000. c. a loss of \$23,000. d. a reduction of accumulated depreciation of \$17,000 e. a reduction of the asset account of \$17,000 Book value of \$17,000 vs. proceeds of \$22,000 = \$5,000 gain. Blue: Q. 37 2. Tofu, Inc. had Net Income of \$60,000 in 2006: Tofu had 4,000 shares of 3% \$75 par value preferred stock outstanding during 2006. Tofu declared preferred dividends in 2006. Tofu had 30,000 shares of common stock outstanding at the beginning of 2006 and had only one transaction during 2006—they reissued 3,000 shares held in treasury on Oct 1 st 2006. The basic earnings per share for 2006 is: a. \$ 1.77 b. \$ 1.87 c. \$ 1.95 d. \$ 1.66 60,000 – [.03 x \$75 x 4,000] / weighted average common shares 30,000 x 9/12 = 22,500 33,000 x 3/12 = 8,250 51,000 / 30,750 = 1.66 rounded Blue: Q. 38 Is Version “A” on your SCANTRON ? 1

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3. Brightmore Company purchased land and building for \$240,000. The appraised values of the land and building are \$80,000 and \$240,000, respectively. Based on this information, the journal entry to record the purchase would include a: a. debit to LAND for \$80,000. b. credit to BUILDING for \$60,000. c. debit to LAND for \$60,000. d. credit to BUILDING for \$180,000. Land 80,000/320,000 = \$60,000. Building 240,000/320,000 = \$180,000. Both are debits. Blue: Q. 39 4. Edna Enterprises sold a crane with an original cost of \$200,000, an estimated life of 10 years and no salvage. Edna used straight line depreciation. The sale transaction was at the end of the seventh year of the crane’s use and Edna received \$50,000 for the crane. In recording this transaction, Edna should record: a. a gain of \$90,000. b. a loss of \$10,000. c. a loss of \$60,000. d. a reduction in the asset account of \$60,000. e. a credit to cash of \$50,000. 200,000/10 = 20,000 per year x 7 years = \$140,000 accumulated deprecation. Book value of \$60,000 results in \$10,000 loss. Blue: Q. 40 Use the following information for the next 3 questions . Equipment with an 8-year useful life is acquired for \$125,000. The estimated salvage value is \$5,000. The equipment is expected to produce 25,000 units over its useful life. 5. Using the double-declining balance method, depreciation expense for Year 3 is: a. \$15,000. b. \$16,875. c. \$16,000. d. \$17,578. e. \$11,963. 125,000 x 2/8 = 31,250 year 1. 93,750 x 2/8 = 23,438 year 2. 70,313 x 2/8 = 17,578 year 3 Blue: Q. 1 6. If the equipment produces 3,800 units during 2003 (first year)and the units-of-production method is used, the book value (carrying value) at the End of Year 1 is: a. \$106,760. Is Version “A” on your SCANTRON ? 2
b. \$121,200. c. \$106,000. d. \$19,000. e. \$101,760. (125,000 – 5,000) x 3,800/25,000 = 18,240 year 1 deprec exp. BV \$125,000 – 18,240 = 106,760 Blue: Q. 2 7.

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2102spring08midterm2Akey - 2102 Exam 2 Version A Spring...

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