Accounting 202

Topics: Stock, Preferred stock, Stock market Pages: 3 (595 words) Published: September 15, 2013
Final Exam Review
Questions from old Midterm

Question 4
On December 31, 2012, Milton Company had $600,000 of short-term debt in the form of notes payable due February 2, 2013. On January 21, 2013, the company issued 12,500 shares of its common stock for $36 per share, receiving $450,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2013, the proceeds from the stock sale, supplemented by additional $150,000 cash, are used to liquidate the $600,000 debt. The December 31, 2012, balance sheet is issued on February 23, 2013.

Ignoring the foot note disclosure how should the $600,000 of debt be presented on the December 31st 2012 balance sheet?

Current liabilities: Notes payable ........................................................ $150,000

Long-term debt: Notes payable refinanced in February 2013 ...... 450,000

Question 12
On June 30, 2004, Marmet Company issued 12% bonds with a par value of $300,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2012. Because of lower interest rates and a significant change in the company’s credit rating, it was decided to call the entire issue on June 30, 2013, and to issue new bonds. New 10% bonds were sold in the amount of $800,000 at 102; they mature in 20 years. Marmet Company uses straight-line amortization. Interest payment dates are December 31 and June 30. What is the loss on the early extinguishment of debt?

300,000 * 2% = $6,000
$6,000 / 20 years = $300 A YEAR OF AMORTIZATION
Original carrying value= $300,000* .98= $294,000
9 yrs * $300= $2,700 + $294,000 = $296,700 = Carrying Value at the call date

Call Price
$300,000 * 104%= $312,000
$312,000- $296,700 = $15,300
We have a loss of $15,300
A)$15,300

Question 17
Splendler, Inc. transferred to stockholders some of its equity investments costing $1,000,000 by declaring a property dividend on December 28, 2011, to be distributed on January 30, 2012, to...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Accounting Ethics Essay
  • Intermediate Accounting 301 Essay
  • Financial Accounting: Tools for Business Decisions Essay
  • accounting Essay
  • Chapter 2 Solution-Classifying Accounting Items Essay
  • Financial and Management Accounting Exam Essay
  • ACC291 Week6 E11-15, E12-1, E12-2, P11-6A Essay
  • Financial Accounting Essay

Become a StudyMode Member

Sign Up - It's Free