ACC 423 Week 5 Final Exam 2 CPA Questions

CPA Question 01

On September 1, 2017, Hyde Corp., a newly formed company, had the following stock issued and outstanding:

Common stock, no par,

$1

stated value,

$5,000

shares originally issued at

$15

per share.

Preferred stock,

$10

par value,

1,500

shares originally issued for

$25

per share.

Hyde's September 1, 2017 statement of stockholders' equity should report

CPA Question 02

 Beck Corp. issued

200,000

shares of common stock when it began operations in year 1 and issued an additional

100,000

shares in year 2. Beck also issued preferred stock convertible to

100,000

shares of common stock. In year 3, Beck purchased

75,000

shares of its common stock and held it in Treasury. At December 31, year 3, how many shares of Beck's common stock were outstanding?

CPA Question 05

Jones Co. had

50,000

shares of

$5

par value common stock outstanding at January 1. On August 1, Jones declared a

5.00%

5

stock dividend followed by a two-for-one stock split on September 1. What amount should Jones report as common shares outstanding at December 31?

CPA Question 04

A restricted stock award was granted at the beginning of 2015 calling for

3,000

shares of stock to be awarded to executives at the beginning of 2019.

The fair value of one option was

$20

at grant date. During 2017,

100

 shares were forfeited because an executive left the firm.

What amount of compensation expense is recognized for 2017?

CPA Question 06

A company had the following outstanding shares as of January 1, year 2:

Preferred stock,

$60

par,

4.00%

 cumulative

10,000

shares

Common stock,

$3

par

50,000

shares

 On April 1, year 2, the company sold

8,000

shares of previously unissued common stock. No

dividends were in arrears on January 1, year 2,

 and no dividends were declared or paid during year 2.

Net income for year 2 totaled

$236,000

What amount is basic earnings per share for the year ended December 31, year 2?

CPA Question 08

Brass Co. reported income before income tax expense of

$60,000

for 2017. Brass had no permanent or temporary timing differences for tax purposes.

Brass has an effective tax rate of

30%

and a

$40,000

net operating loss carry-forward from 2016.

What is the maximum income tax benefit that Brass can realize from the loss carry-forward for 2017?

CPA Question 03

During 2017, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method. Inventory balances under each method were as follows:

FIFO

Weighted-average

January 1, 2017

$71,000

$77,000

December 31, 2017

$79,000

$83,000

Orca's income tax rate is

30.00%

 In its 2017 financial statements, what amount should Orca report as the cumulative effect of this accounting change?