# 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...

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