siAK-2

QUIZ 1 (Financial Instrument)

1. Dividend received from fair value through other comprehensive income financial asset
recognised in...
a. other comprehensive income
b. profit or loss
c. retained earnings
d. Liability

2. When can the classification of a financial asset, which has been determined on initial
recognition, be?
a. Reclassifications are only permitted where a category becomes tainted.
b. Reclassifications are only permitted on the change of the contractual cash flows.
c. Reclassifications are only permitted on the change of an entity' s business model and
are expected to occur only infrequently.
d. Reclassifications are not permitted.

3. When can the classification of a financial liability, which has been determined on initial
recognition, be changed?
a. Reclassifications are only permitted where a category becomes tainted.
b. Reclassifications are only permitted on the change of the contractual cash flows.
c. Reclassifications are only permitted on the change of an entity' s business model and
are expected to occur only infrequently.
d. Reclassifications are not permitted.

4. A gain or loss incurred on financial liability carried at amortised cost is recognised

when...
a. financial liability is derecognised.
b. no gain or loss recognition
c. initial recognition.
d. change in fair value of financial liability.

5. How does PSAK 71 distinguish between the measurement methods to be used in a

financial asset?
a. By reviewing the business model of each entity and the contractual cash flow
characteristics of the instrument
B. By reviewing the realisability of the instrument and risks and rewards of owne
C. By reviewing the realiis classisability and the contractual cash flow characteristics of
the
D. By reviewing the business model of each entity and the risks and rewards of the
transaction
6. Based on PSAK 71, financial liability is classified as..
a. current or fair value through profit or loss
b. fair value through profit or loss or amortised cost
c. current or amortised cost
d. fair value through profit or loss or long-term

7. Based on PSAK 71, a financial assets can be classified as...

a. fair value through profit or loss, available-for-sale, or amortised cost.
B. held-to-maturity, fair value through profit r loss,or fair value through other
comprehensive income.
c. held-to-maturity, fair value through profit or loss, or available-for-sale.
D. Fair value through profit or loss, fair value through other comprehensive income, or
amortised cost.

8. Which of the following is not a financial instrument?

a. Convertible debt
b. Prepayments
c. Accounts receivable
d. An option to sell shares of entity

9. A fair value through profit or loss financial instrument is required to measure initially at...
a. fair value
b. fair value plus transaction cost
c. cost
d. fair value less cost to sell

10. PSAK 71 imposes impairment requirements on financial instruments classified as...

a. amortised cost.
b. available-for-sale.
c. fair value through profit or loss
d. answer amortised cost and available-for-sale

11. Financial instrument is…

a. A contract that results in a financial asset of one entity and a liability instrumen
entity.
b. A contract that gives rise to a financial liability or equity instrument of one entity
an asset of another entity.
c. a contract that gives rise to equity instruments of two entities.
d. a contract that results in a financial asset of one entity and equity instrument of
another entity.

12. Derivative financial asset is classified as...

 a. fair value through profit or loss
b. available-for-sale
c. fair value through other comprehensive income
d. amortised cost

13. Which of the following is not a financial asset?

a. Forward contract with positive value
b.Cash
c. Notes receivable
d. Bonds Payable

14. Financial liability is subsequently measured at amortised cost using...

a. straight line method
b. effective interest method
c. declining method
d. equity method

15. Which of the following is not an example of when an entity has transferred substantially
all the risks and rewards of ownership of financial asset?
a. a sale if a financial asset together with a put or call option that is deeply out of the
money.
b. a sale of receivables in which entity guarantees to compensate the buyer for any
credit losses.
c. an unconditional sale of financial asset.
d. a sale of a financial asset together with an option to repurchase at its fair value at the
time of Repurchase.

16. An amortised cost financial instrument is required to measure initially at…

a. fair value
b. Cost
c. fair value less cost to sell
d. fair value plus transaction cost

17. Changes in fair value of fair value through profit or loss financial asset recognised in…
a. Liability
b. retained earnings
c. profit or loss
d. other comprehensive income

18. Investment in equity instrument can be classified as...

a. amortised cost or fair value through profit or loss
b. amortised cost or available-for-sale
c. fair value through other comprehensive income or amortised cost
 d. fair value through profit or loss or fair value through other comprehensive income

19. Impairment loss of amortised cost financial asset recognised in...

a. liability
b. profit or loss
c. other comprehensive income
d. retained earnings

20. Which of the following is not a financial asset?

a. Notes receivable
b. Forward contract with positive value
c. Cash
d. Investment in joint venture

21. Which of the following is not a financial instrument?

a. Convertible debt
b. An option to sell shares of entity
c. Investment in associate entity
d. Accounts receivable

22. An financial asset for which the busines model is hold the financial instrument and collect
cash flows is fulfilled is classified as.
a. fair value through other comprehensive income
b. amortised cost
c. fair value through profit or loss
D.available-for-sale

KUIS 2 (chapter )

1. On January 1, 2020, Girl Group makes a loan to Boy Co. and receives in exchange a
three-year, $5,000 note bearing interest at 12% annually. The market rate of interest for
a note of similar risk is 10%. The present value of $1 for three periods: at 10% is 0.75, at
12% is 0.71 . The present value of an ordinary annuity for three periods: at 10% is 2.49,
at 12% is 2.40. What would be the debit to Notes Receivable in the journal entry at
January 1, 2020?
a. $4,750.
b. $5,244.
C. $5,600.
d.$5,000.
Premium
5.000 x 0,75 = 3750
5.000 x 12% x 2,49 = 1.494
NR
 CASH

2. On January 1, 2020, Girl Group makes a loan to Boy Co. and receives in exchange a
three-year, $5,000 note bearing interest at 12% annually. The market rate of interest for
a note of similar risk is 10%. The present value of $1 for three periods: at 10% is 0.75, at
12% is 0.71. The present value of an ordinary annuity for three periods: at 10% is 2.49,
at 12% is 2.40. What amount of interest revenue should be included in Girl's 2020 of
profit or loss?
a. $500.
b. $629.
c. $600.
d. $524.
CA = 5244 x 10% = 524,4
Cash ( 12% x 5.000 ) 600
NR 75,6
Inrterest revenue ( 5244 x 10% ) 524,4

3. On January 1, 2020, Girl Group makes a loan to Boy Co. and receives in exchange a
three-year, $5,000 note bearing interest at 10% annually. The market rate of interest for
a note of similar risk is 12%. The present value of $1 for three periods: at 10% is 0.75, at
12% is 0.71. The present value of an ordinary annuity for three periods: at 10% is 2.49,
at 12% is 2.40. What amount of interest revenue should be included in Girl's 2020 of
profit or loss?
a. $500.
b. $570.
c. $475.
d.$600.
5.000 x 0,71 = 3.550
5.000 x 10% x 2,40 = 1200
CA = 4750
Interest rev 4.750 x 12% = 570
Cash
NR
Interest revenue ( 4.750 x 12%)

4. Smile Company had a 12/31/2020 balance in the Accounts Receivable of $10,000.

Using ECL method, Prince estimated that 5% of its outstanding receivables would be
uncollectible. The journal entry to record estimated credit loss of account receivable at
12/31/2020...
a. Debits: Bad Debt Expense, $500. Credits: Allowance for Doubtful Accounts, $500.
b. Debits: Accounts Receivable, $500. Credits: Allowance for Doubtful Accounts, $500.
c. Debits: Allowance for Doubtful Accounts, $500. Credits: Bad Debt Expense, $500.
d. Debits: Allowance for Doubtful Accounts, $500. Credits: Accounts Receivable, $500.
5. On January 1, 2020, Girl Group makes a loan to Boy Co. and receives in exchange a
three-year, $5,000 note bearing interest at 10% annually. The market rate of interest for
a note of similar risk is 12%. The present value of $1 for three periods: at 10% is 0.75, at
12% is 0.71 . The present value of an ordinary annuity for three periods: at 10% is 2.49,
at 12% is 2.40. What would be the debit to Notes Receivable in the journal entry at
January 1, 2020?
a. $5,244.
b. $5,600.
C. $5,000.
d. $4,750.
NR 4750
Cash 4750

6. NY Co established a petty cash fund in the amount of $100, and contains $10 in cash
and $89 in receipts for disbursements when it is replenished. The journal entry to record
replenishment should include credits to the following accounts...
a. Petty Cash, $89.
b. Cash, $89.
c. Cash, $89; Cash Short and Over, $1.
d. Cash, $90.

7. Smart Corporation had a 1/1/2021 credit balance in the Allowance for Doubtful Accounts
of $5,000. At March 1, 2021, Smart wrote off $1,000 of accounts receivable. The journal
entry to record accounts receivable write-off...
a. Debits: Bad Debt Expense, $1,000. Credits: Allowance for Doubtful Accounts, $1,000.
b. Debits: Allowance for Doubtful Accounts, $1,000. Credits: Bad Debt Expense, $1,000.
c. Debits: Accounts Receivable, $1,000. Credits: Allowance for Doubtful Accounts,
$1,000.
d. Debits: Allowance for Doubtful Accounts, $1,000. Credits: Accounts Receivable,
$1,000.

8. Girl Corp sold $50,000 of goods and accepted the customer's $50,000, 10%, 1-year note
in exchange. Assuming 10% approximates the market rate of return, how much interest
revenue would be recorded for the year ending December 31, 2020, if the sale was
made on September 30, 2021?
a. $0.
b. $1,250.
c. $2,500.
d. $5,000.

9. Sun Inc. factors $150,000 of its accounts receivables without guarantee (recourse) for a
finance charge of 2%. The finance company retains an amount equal to 3% of the
 accounts receivable for possible adjustments. What would be the debit to Cash in the
journal entry to record this transaction?
a. $150,000.
b. $142,500.
C. $145,500.
d.$147,000.

10. Before adjustment entries, Prince Company had a 12/31/2020 balance in the Accounts
Receivable of $50,000 and credit balance in the Allowance for Doubtful Accounts of
$2,000. Using ECL method, Prince estimated that 5% of its outstanding receivables
would be uncollectible. What should Prince report on its statement of financial position at
December 31, 2020, as accounts receivable...
a. $49,500.
b. $47,500.
c. $48,000.
d.$50,000.

11. CP Co established a petty cash fund in the amount of $100, and contains $20 in cash
and $82 in receipts for disbursements when it is replenished. The journal entry to record
replenishment should include debits to the following accounts...
a. Petty Cash, $82.
b. Petty Cash, $80.
c. Expenses, $82.
d. Expenses, $80; Cash Short and Over, $2.

12. Star Inc. factors $100,000 of its accounts receivables with guarantee (recourse) for a
finance charge of 2%. The finance company retains an amount equal to 3% of the
accounts receivable for possible adjustments. What would be the credit accounts in the
journal entry to record this transaction?
a. Cash, $95,000.
b. Cash, $100,000.
c. Accounts receivable, $100,000.
d. Liability, $100,000.

13. KT Corp's book balance of cash on January 31, 2021 showed a balance of $30,000. KT
Corp also had the following information available: a deposit of $1,000 was in transit to
bank at January 31 and a check for $350 was erroneously charged by KT against the
account of cash for $450. Cash balance of KT reported at statement of financial position
January 31, 2021 is...
a. $29,900
b. $30,100
c. $29,000
d.$30,000
14. Before adjustment entries, Prince Company had a 12/31/2020 balance in the Accounts
Receivable of $50,000 and credit balance in the Allowance for Doubtful Accounts of
$2,000. Using ECL method, Prince estimated that 5% of its outstanding receivables
would be uncollectible. The journal entry to record estimated credit loss of accounts
receivable at 12/31/2020...
a. Debits: Bad Debt Expense, $500. Credits: Allowance for Doubtful Accounts, $500.
b. Debits: Allowance for Doubtful Accounts, $500. Credits: Accounts Receivable, $500.
c. Debits: Allowance for Doubtful Accounts, $2,500. Credits: Accounts Receivable,
$2,500.
d. Debits: Bad Debt Expense, $2,500. Credits: Allowance for Doubtful Accounts, $2,500.

15. On January 1, 2019, King Co. exchanged equipment for a $400,000

zero-interest-bearing note due on January 1, 2022. The prevailing rate of interest for a
note of this type at January 1, 2019 was 10%. The present value of $1 at 10% for three
periods is 0.75. What amount of interest revenue should be included in King's 2019 of
profit or loss?
a. $33,000.
b. $30,000.
c. $40,000.
d. $0.
400.000 x 0,75 = 300.000
CA= 300.000
NR
Interest revenue ( 300.000 x 10 % ) 30.000
16. AZ Corp has Petty Cash $500, Cash in Bank - checking account of $10,000, Post-dated
checks received totaling $2,500, and Certificates of Deposit with maturity of 3 months
totaling $200,000. AZ Corp should report cash and cash equivalents of...
a. $210,500
b. $10,500
c. $13,000
d. $213,000

17. The month-end cash in bank statement of HR Corp shows a balance of $50,000,
outstanding checks are $1,000, a deposit of $1,500 was in transit at month end, and a
check of HS Corp for $500 was erroneously charged by the bank against the account of
HR. Cash balance of HR in the bank reported at statement of financial position month
end is...
a. $50,500
b. $51,500
c. $51,000
d. $50,000
Quiz 3
1. Academic Magazines sold 100 of annual subscriptions at $240 each on October 1, 2020.
The October 1, 2020, journal entry to record annual subscriptions receipt for Academic
Magazines include...
a. a debit to Revenue for $24,000.
b. a debit to Prepaid Expense for $24,000.
c. a credit to Unearned Revenue for $24,000.
d. a credit to Cash for $24,000.

2. On January 1, 2020, Ciecie Company issued $10,000,000 of 10-year, 10% bonds, for
$8,852,960, a yield of 12%. Interest is payable semiannually on January 1 and July 1.
How much interest expense will be recognized during January 1 until July 1, 2020?
a.$442,648
b.$600,000
c. $531,178
d.$500,000

3. On March 31, 2020, Smart Company signed a $100,000, one-year zero-interest-bearing

note at First Love Bank. Market borrowing rate on such obligations is 12% (.89286
present value factor). The March 31, 2021, journal entry to record payment of the note
would include...
a. a credit to Notes Payable for $89,286.
b. a debit to Cash for $100,000.
c. a credit to Cash for $89,286.
d. a debit to Notes Payable for $100,000.

4. On July 1, 2020, Chacha Company issued $10,000,000 of 10-year, 12% bonds, for
$11,246,226, a yield of 10%. Interest is payable semiannually on July 1 and January 1.
How much interest expense will be recognized in 2020?
a.$600,000
b.$500,000
c. $674,774
d. $562,311

5. On July 1, 2020, Chacha Company issued $10,000,000 of 10-year, 12% bonds, for
$11,246,226, a yield of 10%. Interest is payable semiannually on July 1 and January 1.
What will the carrying value of the bonds be on the December 31, 2020 statement of
financial position?
a. $10,000,000
b. $11,171,452
c. $11,208,537
d. $11,246,226
6. A Retailer made cash sales during the month of October of $100,000. The sales are
subject to a 10% value-added tax that was also collected. Which of the following would
be included in the summary journal entry to reflect the sale transactions?
a. Credit Sales Tax Payable for $10,000.
b. Credit Sales for $110,000.
c. Debit Sales Tax Receivable for $10,000.
d. Debit Cash for $100,000.

7. On January 1, 2020, Boy Co. issued $10,000 of three-year of bonds, 12% annually. The
market rate of interest for a bond of similar risk is 10%. The present value of $1 for three
periods: at 10% is 0.75, at 12% is 0.71. The present value of an ordinary annuity for
three periods: at 10% is 2.49, at 12% is 2.40. What is the total cash received on the
issue date?
a. $10,000.
b. $10,488.
c. $9,500.
d.$9,980.

8. On January 1, 2020, Ciecie Company issued $10,000,000 of 10-year, 10% bonds, for
$8,852,960, a yield of 12%. Interest is payable semiannually on January 1 and July 1.
The carrying amount of bonds on July 1, 2020 after amortization process will be...
a. $8,884,138
b.$10,000,000
c. $9,295,608
d. $8,852,960

9. Academic magazines sold 100 of annual subscriptions at $240 each on October 1, 2020.
How much unearned revenue will exist as of December 31,2020?
a. $25,000.
b. $o.
c. $6,000.
d.$18,000.

10. On July 1, 2020, Chacha Company issued $10,000,000 of 10-year, 12% bonds, for
$11,246,226, a yield of 10%. Interest is payable semiannually on July 1 and January 1.
The January 1, 2021 entry to record the first payment of interest will include...
a. a credit to Interest Payable for $600,000.
b. a debit to Cash for $500,000.
c. a credit to Cash for $600,000.
d. a debit to Interest Payable for $500,000.

11. On March 1, Yin Company purchased goods from Yang Company for $10,000, terms
2/10,n/30. The invoice was paid on March, 10. The company uses a perpetual inventory
 system and records purchases gross. The March 1 journal entry to record purchase of
the inventory would include...
a. a debit to Purchase for $10,000.
b. a debit to Inventory for $10,000.
c. a credit to Sales for $10,000.
d. a credit to Cash for $10,000.

12. Purest owes $500,000 that is due on October 30, 2020. The company borrows $400,000
on October 25, (5-year mote) and uses the proceeds to pay down the $500,000 note due
on October 30 cash to pay the balance. How much of the note is classified as current
liabilities in the December 31, 2020?
a. $900,000.
b. $500,000.
c. $O.
d.$400,000.

13. On July 1, 2020, Chacha Company issued $10,000,000 of 10-year, 12% bonds, for
$11,246,226, a yield of 10%. Interest payable semiannually on July 1 and January 1. The
December 31, 2020 entry to record the first interest payable and bonds amortization will
include...
a, a debit to Bonds Payable for $37,689.
b. a debit to Interest Expense for $674,774.
c. a credit to Interest Payable for $500,000.
d. a credit to Bonds Payable for $74,774.

14. On March 1, Yin Company purchased goods from Yang Company for $10,000, terms
2/10,n/30. The invoice was paid on March, 10. The company uses a perpetual inventory
system and records purchases gross. The March 31 journal entry to record purchase of
the inventory would include...
a. a debit to Purchase for $10,000.
b. a debit to Inventory for $10,000.
c. a credit to Sales for $10,000.
d. a credit to Cash for $10,000.

15. On January 1, 2020, Boy Co. issued $10,000 of three-year of bonds, 10% annually. The
market rate of interest for a bond of similar risk is 12%. The present value of $1 for three
periods: at 10% is 0.75, at 12% is 0.71. The present value of an ordinary annuity for
three periods: at 10% is 2.49, at 12% is 2.40. What is the total cash received on the
issue date?
a. $10,000.
b. $10,488.
c. $9,500.
d.$9,980.
 16. On January 1, 2020, Ciecie Company issued $10,000,000 of 10-year, 10% bonds, for
$8,852,960, a yield of 12%. Interest is payable semiannually on January 1 and July 1.
The July 1, 2020 entry to record to record the first interest payment and bonds
amortization will include...
a. Debit Interest Expense for $442,648.
b. Debit Bonds Payable for $57,352.
c. Credit Bonds Payable for $31,178.
d. Credit Cash for $600,000.

17. On January 1, 2020, Ciecie Company issued 510,000,000 of 10-year, 10% bonds,
$8,852,960, a yield of 12%. Interest is payable semiannually on January 1 and July 1.
The January 1, 2020 entry to record the issuance of bonds will include...
a. a credit to Bonds Payable for $10,000,000.
b. a debit to Cash for $8,852,960.
c. a credit to Cash for $10,000,000.
d. a debit to Bonds Payable for $8,852,960.

Quiz 4
1. On January 1, 2020, Queen Company purchased equipment from King Distributors.
There was no established market price for the equipment which has a 10 year life and no
salvage value. Queen gave King a $200,000 zero-interest-bearing note payable in 5
equal annual installments of $40,000, with the first payment due December 31, 2020.
The prevailing rate of interest for a note of this type is 9%. The present value of the note
at 9% was $155,586. The entry to record the issuing note on January 1, 2020 on
Queen's book include a...
a. a debit to Cash for $155,586.
b. a debit to Equipment for $155,586.
c. a credit to Notes Payable for $150,000.
d. a credit to Notes Payable for $200,000.

2. On June 30, 2020, Olala Co. had outstanding 8%, $3,000,000 face amount, 15-year
bonds maturing on June 30, 2030. Interest is payable on June 30 and December 31.
The unamortized amount of the bond discount on June 30, 2020 was $135,000. On June
30, 2020, Olala acquired all of these bonds at 95 and retired them. What net carrying
amount should be used in computing gain or loss on this early extinguishment of debt?
a. $2,865,000.
b. $3,135,000.
c. $3,000,000.
d. $2,850,000.
3.000.000 - 135.000
3. On January 1, 2021, following the payment of interest, Car Corporation retires its
$100,000 face value bonds at redemption price, $102,000. The carrying value of the
bonds at the redemption date is $103,745. The entry to record the redemption will
include a...
a. debit of $103,745 to Bonds Payable.
b. credit of $100,000 to Cash.
c. debit of $1,745 to Loss on Extinguishment of Debt.
d. credit of $2,000 to Gain on Extinguishment of Debt.

4. On July 1, 2020, Princess issued a zero-interest-bearing note (face amount, $60,000)

was exchanged solely for cash; no other rights or privileges were exchanged. The note
is to be repaid on December 31, 2022. The prevailing rate of interest for a loan of this
type is 10%. The present value of $60,000 at 10% for three years is $45,078. What
amount of interest expense should Princess recognize in 2020?
a. $0.
b.$3,000.
c. $2,254.
d. $4,508.

5. On its December 31, 2020 statement of financial position, Time Corp. reported bonds
payable of $5,680,000. The bonds had a $6,000,000 face value. On January 2, 2021,
Time retired 50% of the outstanding bonds at par. What amount should Time report as
gain or loss on extinguishment of debt in its 2021?
a. $160,000 loss.
b. $320,000 loss.
c. $320,000 gain.
d. $0.
6.000.000 x 50% - (5.860.000 50% ) = 160.000 loss

6. On January 1, 2021, following the payment of interest, Car Corporation retires its
$100,000 face value bonds at redemption price, $102,000. The carrying value of the
bonds at the redemption date is $103,745. The entry to record the redemption will
include a...
a. credit of $103,745 to Bonds Payable.
b. credit of $1,745 to Gain on Extinguishment of Debt.
c. debit of $102,000 to Cash.
d. debit of $2,000 to Loss on Extinguishment of Debt.

7. On January 1, 2020, Queen Company purchased equipment from King Distributors.

There was no established market price for the equipment which has a 10 year life and no
salvage value. Queen gave King a $200,000 zero-interest-bearing note payable in 5
equal annual installments of $40,000, with the first payment due December 31, 2020.
 The prevailing rate of interest for a note of this type is 9%. The present value of the note
at 9% was $155,586. The balance reported in the notes payable account on December
31, 2020 was...
a. $200,000.
b. $129,589.
c. $169,589.
d. $160,000.

8. On July 1, 2020, Princess issued a zero-interest-bearing note (face amount, $60,000)

was exchanged solely for cash; no other rights or privileges were exchanged. The note
is to be repaid on December 31, 2022. The prevailing rate of interest for a loan of this
type is 10%. The present value of $60,000 at 10% for three years is $45,078. The entry
to record the issuing note on July 1, 2020 include a...
a. debit of $45,078 to Cash.
b. debit of $14,922 to Interest Expense.
c. credit of $60,000 to Cash.
d. credit of $60,000 to Notes Payable.

9. On June 30, 2020, Olala Co. had outstanding 8%, $3,000,000 face amount, 15-year
bonds maturing on June 30, 2030. Interest is payable on June 30 and December 31.
The unamortized amount of the bond premium on June 30, 2020 was $135,000. On
June 30, 2020, Olala acquired all of these bonds at 105 and retired them. What amount
of gain or loss on this early extinguishment of debt?
a. $15,000 gain.
b. $15,000 loss.
c. $150,000 loss.
d. $150,000 gain.
CA = 3.135.000
Retired = 105% 3.000.000 = 3.150.000
Loss 15.000

10. On June 30, 2020, Olala Co. had outstanding 8%, $3,000,000 face amount, 15-year
bonds maturing on June 30, 2030. Interest is payable on June 30 and December 31.
The unamortized amount of the bond discount on June 30, 2020 was $135,000. On June
30, 2020, Olala acquired all of these bonds at 95 and retired them. What amount of gain
on this early extinguishment of debt?
a.$285,000.
b. s0.
c. $150,000.
d. $15,000.
11. Ken Corporation retires its $100,000 face value bonds at redemption price $97,000, on
January 1, following the payment of interest. The carrying value of the bonds at the
redemption date is $96,250. The entry to record the redemption will include a...
a. credit of $750 to Gain on Extinguishment of Debt.
b. credit of $100,000 to Cash.
c. debit of $96,250 to Bonds Payable.
d. debit of $3,000 to Loss on Extinguishment of Debt.

12. Elle Co. is indebted to Calvin under a $200,000, 12%, three-year note dated December
31, 2018. Because of Elle's financial difficulties developing in 2020, Elle owed accrued
interest of $24,000 on the note at December 31, 2020. Under a debt settlement, on
December 31, 2020, Calvin agreed to settle the note and accrued interest for a tract of
land having a fair value of $180,000. Elle's acquisition cost of the land is $145,000. On
its 2020 income statement Elle should report gain as a result of the debt settlement....
a. $35,000
b. $20,000
c. $55,000
d.$44,000

13. On July 1, 2020, Princess issued a zero-interest-bearing note (face amount, $60,000)
was exchanged solely for cash; no other rights or privileges were exchanged. The note
is to be repaid on December 31, 2022. The prevailing rate of interest for a loan of this
type is 10%. The present value of $60,000 at 10% for three years is $45,078. The entry
to record the adjusting entry on December 31, 2020 include a...
a. debit of $3,000 to Interest Expense.
b. credit of $6,000 to Cash.
c. debit of $4,508 to Notes Payable.
d. credit of $2,254 to Notes Payable.
( 10% x 45.078m) / 2 = 2254

14. On January 1, 2020, Queen Company purchased equipment from King Distributors.
There was no established market price for the equipment which has a 10 year life and no
salvage value. Queen gave King a $200,000 zero-interest-bearing note payable in 5
equal annual installments of $40,000, with the first payment due December 31, 2020.
The prevailing rate of interest for a note of this type is 9%. The present value of the note
at 9% was $155,586. The entry the first payment of installment on December 31, 2020
include a...
a. a credit to Interest Expense for $14,003.
b. a debit to Notes Payable for $25,997.
c. a credit to Notes Payable for $18,000.
d. a debit to Cash for $40,000.
Cash paid = 40.000
Interest exp = 9% x 155.586 = 14.003
 Journal → Interest exp. 14.003
N/P 25.997
Cash 40.000

15. On July 1, 2020, Princess issued a zero-interest-bearing note (face amount, $60,000)
was exchanged solely for cash; no other rights or privileges were exchanged. The note
is to be repaid on December 31, 2022. The prevailing rate of interest for a loan of this
type is 10%. The present value of $60,000 at 10% for three years is $45,078. The entry
to record the issuing note on July 1, 2020 include a...
a. credit of $60,000 to Notes Payable.
b. debit of $45,078 to Cash.
c. debit of $14,922 to Interest Expense.
d. credit of $60,000 to Cash.

16. On January 1, 2020, Queen Company purchased equipment from King Distributors.
There was no established market price for the equipment which has a 10 year life and no
salvage value. Queen gave King a $200,000 zero-interest-bearing note payable in 5
equal annual installments of $40,000, with the first payment due December 31, 2020.
The prevailing rate of interest for a note of this type is 9%. The present value of the note
at 9% was $155,586. The balance reported in the notes payable account on December
31, 2020 was...
a. $169,589.
b. $129,589.
c. $160,000.
d. $200,000.

17. On June 30, 2020, Olala Co. had outstanding 8%, $3,000,000 face amount, 15-year
bonds maturing on June 30, 2030. Interest is payable on June 30 and December 31.
The unamortized amount of the bond discount on June 30, 2020 was $135,000. On June
30, 2020, was 135.000 . On june 30, 2020 ,Olala acquired all of these bonds at 95 and
retired them. What amount of gain on this early extinguishment of debt?
a. 285.000
b. 150.000
c. 0
d. 15.000
Ca = 3.000.000 - 135.000 = 2.865.000
Redeem = 95% x 3.000.000 = 2.850.000
Gain 15.000

QUIZ 5
1. On December 1, 2019, Vivo Company reacquired 1,000 shares of its $10 par value
ordinary shares for $15 per share. On March 1, 2020, Vivo sold 200 of these treasury
 shares at $18 per share. Vivo uses the cost method to account for treasury shares. The
entry to record the sale of treasury shares on March 1, 2020 will include a...
a. credit of $2,000 to Treasury Shares.
b. credit of $600 to Share Premium-Treasury.
c. debit of $3,000 to Cash.
d. debit of $1,600 to Share Premium-Treasury.

2. On March 1, 2020, Lily Inc. has 10,000 issuing ordinary shares, $5 par value, and 1,000
treasury shares. On March 1, 2020, the board of directors declare a cash dividend of
$0,5 per share, payable March 15, to all shareholders of record March 5. The entry to
record on March 15, 2020 will include a...
a. debit of $5,000 to Dividend.
b. debit of $4,500 to Retained Earning.
c. credit of $5,000 to Dividend Payable.
d. credit of $4,500 to Cash.

3. Turtle, Ltd. transferred to shareholders some of its property costing $1,000,000 by

declaring a property dividend on March 1, 2020, to be distributed on March 30, 2020, to
shareholders of record on March 5, 2020. At the date of declaration the properties have
a fair value of $1,050,000. The entry to record on March 30, 2020 will include a...
a. debit of $1,050,000 to Property Dividend Payable.
b. debit of $1,050,000 to Retained Earnings.
c. credit of $1,000,000 to Property.
d. credit of $50,000 to Unrealized Holding Gain or Loss-Income.

4. Turtle, Ltd. transferred to shareholders some of its property costing $1,000,000 by

declaring a property dividend on March 1, 2020, to be distributed on March 30, 2020, to
shareholders of record on March 5, 2020. At the date of declaration the properties have
a fair value of $1,050,000. The entry to record on March 1, 2020 will include a...
a. debit of $500,000 to Property.
b. credit of $1,050,000 to Property.
c. debit of $1,050,000 to Retained Earnings.
d. credit of $1,000,000 to Property Dividend Payable.

5. Angel, Inc., has 1,000 shares of 5%, $10 par value, cumulative preference shares, and
5,000 shares of $1 par value ordinary shares outstanding at December 31, 2020. There
were no dividends declared in 2019. The board of directors declares and pays a $10,000
dividend in 2020. What is the amount of dividends received by the preference
shareholders in 2020?
a. $9,500.
b. $1,000.
c. $500.
d.$9,000.
6. On December 1, 2019, Vivo Company reacquired 1,000 shares of its $10 par value
ordinary shares for $15 per share. On March 1, 2020, Vivo sold 200 of these treasury
shares at $18 per share. Vivo uses the cost method to account for treasury shares. The
entry to record the reacquiring of ordinary shares on December 1, 2019 will include a...
a. debit of $15,000 to Treasury Shares.
b. credit of $10,000 to Cash.
c. credit of $5,000 to Share Premium-Ordinary.
d. debit of $15,000 to Share Capital-Ordinary.

7. On March 1, 2020, Lily Inc. has 10,000 issuing ordinary shares, $5 par value, and 1,000
treasury shares. On March 1, 2020, the board of directors declare a cash dividend of
$0,5 per share, payable March 15, to all shareholders of record March 5. The entry to
record on March 1, 2020 will include a...
a. debit of $4,500 to Retained Earning.
b. credit of $5,000 to Dividend Payable.
c. debit of $5,000 to Dividend.
d. credit of $4,500 to Cash.

8. Hello Corp. issues 1,000 $2 par value ordinary shares and 1,000 $10 par value
preference shares for a lump sum of $18,000. At the issue date, the ordinary shares
were selling for $5 and the preference shares were selling for $15. The Share
Premium--Ordinary account will be credited for...
a. $2,500.
b.$3,000.
c. $3,500.
d.$5,000.
1.000 x 5 = 5.000
1,000 x 15 = 15.000
Total 20.000

5.000/20.000 x 18.000 = 4.500

Par = 2.000
Sisa 2,500

9. Turtle, Ltd. transferred to shareholders some of its property costing $1,000,000 by

declaring a property dividend on March 1, 2020, to be distributed on March 30, 2020, to
shareholders of record on March 5, 2020. At the date of declaration the properties have
a fair value of $1,050,000. As a result of this property dividend, Turtle's retained
earnings...
a. decreased by $1,000,000.
b. decreased by $1,050,000.
c. did not change.
 d. increased by $50,000.

10. Donut Co. issued 1,000 ordinary shares for cash. The shares have a $2 par value and
sold for $5 per share. Donut incurred $100 to sell the shares related to underwriting
costs and legal fees. The entry to record the issuing of ordinary shares will include a...
a. credit of $5,000 to Share Capital-Ordinary.
b. debit of $2,000 to Cash.
c. credit of $2,900 to Share Premium-Ordinary.
d. debit of $100 to Legal Expense.

11. On October 1, 2020, Zigzag Corp. declared a 10% ordinary shares dividend. Prior to this
dividend, Ziek had 10,000 ordinary shares of $5 par value issued and outstanding. The
fair value of Zigzag's ordinary shares was $15 per share on October 1, 2020. As a result
of this share dividend, Zigzag's retained earnings...
a. decreased by $5,000.
b. did not change.
c. decreased by $10,000.
d. decreased by $15,000. bener

12. Pinky Inc issued 5,000 shares of $1 par value ordinary shares for a patent. Pinky could
not readily determine the fair value of the patent, but it knows the fair value of the shares
is $12,000. The entry to record on issuing ordinary shares will include a...
a. debit of $5,000 to Patent.
b. credit of $12,000 to Patent.
c. credit of $5,000 to Share Capital-Ordinary.
d. debit of $7,000 to Share Premium-Ordinary.

13. Join Corporation has outstanding 10,000 shares of $4 par value ordinary shares and
retained earnings of $200,000. If Join declares a 2-for-1 share split when the fair value of
the shares is $10 per share, Join's total paid-in capital...
a. increased by $200,000.
b. increased by $80,000.
c. increased by $40,000.
d. did not change.

14. Pinky Inc issued 5,000 shares of s1 par value ordinary shares for a patent. Pinky cannot
readily determine the fair value of the shares, but it determines the fair value of the
patent is $15,000. The entry to record on issuing ordinary shares will include a...
a. debit of $5,000 to Cash.
b. credit of $10,000 to Share Premium-Ordinary.
c. credit of $15,000 to Share Capital-Ordinary.
d. debit of $5,000 to Patent.
Ini sama kaya no 12 gasih? Beda, ini yg diketahui fv patent
QUIZ 6
1. On January 1, 2018, Red Company granted share options to officers and key employees
for the purchase of 20,000 ordinary shares of the company's $5 par at $10 per share as
additional compensation for services to be rendered over the next three years. The
options are exercisable during a five-year period beginning January 1, 2021 by grantees
still employed by Red. The Black-Scholes option pricing model determines total
compensation expense to be $75,000. The market price of ordinary shares was $15 per
share at the date of grant. The amount of compensation expense related to these
options for 2020 was...
a. $75,000.
b. $25,000.
c. $200,000.
d.$o
.
2. On January 1, 2018, Red Company granted share options to officers and key employees
for the purchase of 20,000 ordinary shares of the company's $5 par at $10 per share as
additional compensation for services to be rendered over the next three years. The
options are exercisable during a five-year period beginning January 1, 2021 by grantees
still employed by Red. The Black-Scholes option pricing model determines total
compensation expense to beA $75,000. The market price of ordinary shares was $15
per share at the date of grant. If Red's executives exercise 5,000 of the 20,000 options
(25% of the options) on February 1, 2021. The entry to record transactions related to the
option on February 1, 2021 included a...
a. debit of $75,000 to Cash.
b. credit of $25,000 to Share Premium-Ordinary
c. credit of $25,000 to Share Capital-Ordinary.
d. debit of $75,000 to Compensation Expense

3. In January 2020, Eye, Inc., issued for $105 per share, 50,000 shares of $100 par value
convertible preference shares. One share of preference shares can be converted into
three shares of Eye's $20 par value ordinary shares at the option of the preference
shareholder. In August 2020, all of the preference shares were converted. The fair value
of the ordinary shares at the date of the conversion was $30 per share. The entry to
record the issuing of convertible preference shares on January 2020, included a...
a. debit of $250,000 to Share Premium-Conversion.
b. credit of $5,250,000 to Share Capital-Preference
c. debit of $5,250,000 to Cash.
d. credit of $3,000,000 to Share Capital-Ordinary.

4. Moon Corp. issued 100 convertible bonds at par (face value of $1,000 per bond) on
January 1, 2019. The bonds have a four-year term with a stated rate of interest of 6%.
Interest is payable annually at December 31. The market rate of interest on similar
 non-convertible debt is 8%. Each bond is convertible into 100 ordinary shares with a par
value of $5. The net present value of the debt without the conversion feature is $93,376.
The entry to record the issuing of convertible bonds will include a...
a. debit of $6,624 to Share Premium-Conversion Equity.
b. debit of $100,000 to Cash.
c. credit of $50,000 to Share Capital-Ordinary.
d. credit of $100,000 to Bonds Payable.

5. On January 1, 2018, Red Company granted share options to officers and key employees
for the purchase of 20,000 ordinary shares of the company's $5 par at $10 per share as
additional compensation for services to be rendered over the next three years. The
options are exercisable during a five-year period beginning January 1, 2021 by grantees
still employed by Red. The Black-Scholes option pricing model determines total
compensation expense to be $75,000. The market price of ordinary shares was $15 per
share at the date of grant. If Red's executives exercise 5,000 of the 20,000 options (25%
of the options) on February 1, 2021. The entry to record transactions related to the
option on February 1, 2021 included a...
a. credit of $25,000 to Share Premium-Ordinary
b. credit of $100,000 to Share Capital-Ordinary.
c. debit of $50,000 to Cash.
d. debit of $25,000 to Share Premium-Share Options

6. In January 2020, Eye, Inc., issued for $105 per share, 50,000 shares of $100 par value
convertible preference shares. One share of preference shares can be converted into
three shares of Eye's $20 par value ordinary shares at the option of the preference
shareholder. In August 2020, all of the preference shares were converted. The fair value
of the ordinary shares at the date of the conversion was $30 per share. What total
amount should be credited to share premium-ordinary as a result of the conversion of
the preference shares into ordinary shares?
a. $3,000,000.
b.$250,000.
c.$2,250,000
d.$1,500,000.

7. On January 1, 2018, Red Company granted share options to officers and key employees
for the purchase of 20,000 ordinary shares of the company's $5 par at $10 per share as
additional compensation for services to be rendered over the next three years. The
options are exercisable during a five-year period beginning January 1, 2021 by grantees
still employed by Red. The Black-Scholes option pricing model determines total
compensation expense to be $75,000. The market price of ordinary shares was $15 per
share at the date of grant. The entry to record transactions related to the option on
December 31, 2018 included a......
a. debit of $25,000 to Retained Earnings.
 b. debit of $75,000 to Compensation Expense.
c. credit of $100,000 to Share Capital-Ordinary.
d. credit of $25,000 to Share Premium-Share Options

8. have a par value of $10 per share. The shares were issued at a price of $50 per share.
Each preference share is subsequently converted into 25 each ordinary shares, $1 par
value. The entry to record the issuing of preference shares will include a...
a. debit of $10,000 to Cash.
b. debit of $1,000 to Cash.
c. credit of $10,000 to Share Capital-Preference.
d. credit of $49,000 to Share Premium-Preference.’

9. Blue issues 1,000 convertible preference shares that have a par value of $10 per share.
The shares were issued at a price of $50 per share. Each preference share is
subsequently converted into 25 each ordinary shares, $1 par value. The entry to record
the convertion of preference shares when the ordinary market price of $5 will include a...
a. debit of $125,000 to Cash.
b. debit of $10,000 to Share Capital-Preference.
c. credit of $100,000 to Share Capital-Ordinary.
d. credit of $100,000 to Share Premium-Ordinary

10. On January 1, 2019, Moon Co. issued $500,000 of 6% bonds at 102, which are due on
January 1, 2024. One detachable stock warrants entitling the holder to purchase for $15
one share of Moon's ordinary shares $10 par value, were attached to each $100 bond.
The bonds without the warrants would sell at $460,071. On January 1, 2019, the fair
value of Moon's shares was $25 per share. On January 1, 2019, Moon should record
bonds payable at...
a. $0.
b. $460,071.
c. $500,000.
d.$510,000.

11. Moon Corp. issued 100 convertible bonds at par (at face value of $1,000 per bond) on
January 1, 2019. The bonds have a four-year term with a stated rate of interest of 6%,
Interest is payable annually at December 31. The market rate of interest on similar
non-convertible debt is 8%. Each bond is convertible into 100 ordinary shares with a par
value of $5. The net present value of the debt without the conversion feature is $93,376.
Assuming that Moon converts its bonds into ordinary shares when the carrying amount
of bonds are $96,434 and the market price of ordinary share is $20 per share. The entry
to record the covertion of bonds will include a...
a. credit of $6,624 to Share Premium-Conversion Equity.
b. credit of $150,000 to Share Premium-Ordinary.
c. debit of $96,434 to Bonds Payable.
 d. debit of $200,000 to Cash.

12. On January 1, 2019, Moon Co. issued $500,000 of 6% bonds at 102, which are due on
January 1, 2024. One detachable stock warrants entitling the holder to purchase for $15
one share of Moon's ordinary shares $10 par value, were attached to each $100 bond.
The bonds without the warrants would sell at $460,071. On January 1, 2019, the fair
value of Moon's shares was $25 per share. Assuming investor exercise all warrants on
June 1, 2020. The entry to record the exercise of warrants will include a...
a. debit of $39,929 to Share Premium-Warrant
b. credit of $50,000 to Share Capital-Ordinary.
c. debit of $125,000 to Cash.
d. credit of $75,000 to Share Premium-Ordinary

13. On January 1, 2019, Moon Co. issued $500,000 of 6% bonds at 102, which are due on
January 1, 2024. One detachable stock warrants entitling the holder to purchase for $15
one share of Moon's ordinary shares $10 par value, were attached to each $100 bond.
The bonds without the warrants would sell at $460,071. On January 1, 2019, the fair
value of Moon's shares was $25 per share. Assuming investor exercise all warrants on
June 1, 2020. The entry to record the exercise of warrants will include a...
a. debit of $125,000 to Cash.
b. credit of $75,000 to Share Capital-Ordinary.
c. debit of $49,929 to Share Premium-Warrant
d. credit of $75,000 to Share Premium-Ordinary