Acct 301 Final Examination Answers – Umuc

ACCT 301 Final Examination Answers – UMUC

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(Multiple Choice)

On April 1, 20X6, Ratchford Industries issued $500,000 of 12%, 10-year bonds. The

bonds, which were issued at 103, pay interest on October 1 and April 1. The entry to

record issuance of the bonds includes:

A. a debit to Cash of $500,000.

B. a credit to Bonds Payable of $503,000.

C. a debit to Premium on Bonds Payable of $15,000.

D. All of the above.

E. None of these.

(Multiple Choice)

When interest income on a bond investment is less than the cash received:

A. the Investment in Bond account is credited.

B. the bond was likely purchased at a premium.

C. Interest Income is credited.

D. All of these.

E. None of these.

1. (Multiple Choice)

Stringer Corporation issued 5,000 shares of $2 par value common stock. The issue

price was $7.50 per share. The entry to record this transaction includes a:

A. debit to Cash for $10,000.

B. debit to Paid-in Capital in Excess of Par for $27,500.

C. debit to Common Stock for $10,000.

D. credit to Gain on Stock $37,500.

E. None of these.

2.

3.

(True or False)

The presence of goodwill in a balance sheet suggests that accounts of the subsidiary have not yet been consolidated with the parent company.

5. (Multiple Choice)

Which formula “calculates” the return on assets ratio?

1. (Net Income + Interest Expense)/Average Assets.

2. (Net Income + Extraordinary Items)/Average Assets

3. (Net Income + Discontinued Operations)/Average Assets

4. (Net Income + Income Tax Expense)/Average Assets.

5. None of these.

6. (Multiple Choice)

In an effort to concentrate its resources in more profitable areas, Southern Steel...