ACC 371 Week 2 Quiz 3

ACC 371 Week 2 Quiz 3 | Mercer University

Question 1

Lansing Corporation declared and paid preferred dividends of $50,000 in 2019.  There were 100,000 weighted average common shares outstanding.  2019 Net income for the company totaled $1,500,000.  The company reported a loss from discontinued component (net of tax) of $50,000 and a loss on sale of discontinued component (net of tax) of $10,000 during the year. 

What was reported as earnings per share for continuing operations for 2019?  

$15.10  

$14.50  

$15.60  

$15.00  

$14.40  

$13.90

Question 2

Which categories of income from discontinued operations might be presented on the Income statement of a company, assuming the discontinued component was sold after year end?  

Gain from discontinued component, net of tax  

Loss on disposal of discontinued component, net of tax  

Impairment loss on discontinued component, net of tax  

A and B 

A and C 

A, B, and C 

Question 3

Wanton Industries, a company located in San Diego, suffered considerable damage to its warehouse due to a January blizzard.  The total cost to repair the damage was $200,000. Income from operations (not including the $200,000 in repair costs) was $335,450. 

In the income statement for the year ended 12/31, Wanton Industries _______________.  

Could report the $200,000, net of taxes, as a separate line item in the Other expenses and losses section  

Could disclose the cost to repair the damage but not include the amount in the income statement.  

Could either report the $200,000 as a separate line item in the Other expenses and losses section or include the amount with similar costs in that section and disclose the details in a note.   

Could report the $200,000 as part of discontinued operations, net of tax. 

Rationale: 220-20-45-1 allows for two reporting alternatives

Question 4

Lannon Industries is a manufacturer of outdoor furniture.  Which of the following expenses incurred during the year would be reported as an operating expense in a multiple-step income statement?  

Cost of factory employee health insurance  

Depreciation of sales office equipment  

Interest on note payable  

A and B  

B and C  

All of the above

Question 5 

Operating expenses for Slater Corporation totaled ___________ in 2019.  

$1,367,700  

$1,399,700 

$1,464,100 

$1,496,100  

$1,608,100

Question 6

Stetson Industries purchased and placed in service equipment costing $50,000 on January 1, 2016.  The equipment was expected to last 8 years and to have no salvage value.  The factory manager revised the estimate of the equipment’s useful life on January 1, 2020.  The equipment was now expected to last another 8 years (a useful life of 12 years in total).  The company used the straight-line method to depreciate factory equipment. 

What is the new annual depreciation expense amount?  

$2,083 

$3,125  

$4,167  

$6,250

Question 7

Which of the following subtotals would not be included on a single-step income statement?  

Gross profit  

Total expenses and losses  

Operating income  

A and B  

B and C  

A and C

Question 8 

Other expenses and losses on Slater Corporation’s Income statement totaled __________ in 2019.  

$112,000  

$1,608,100  

$1,399,700  

$105,300  

$144,000

Question 9

Which of the following financial statement presentation formats would be acceptable in a company with unrealized holding gains on debt investments (other comprehensive income).  

A single statement of Comprehensive Income  

Two consecutive statements (An Income Statement followed by a Statement of Comprehensive Income)  

A single statement of Net Income with components of comprehensive income disclosed in the footnotes.  

A and B  

A and C  

B and C  

A, B, and C

Question 10 

Pendergrass Industries reported $_____________ in Other comprehensive income in its Statement of Comprehensive Income in 2020.

$12,500  

$34,000  

$16,125  

$9,375  

$25,500