On January 1, 2012, King John Corp. issued a 3-year, 5% coupon,

| October 3, 2018

1)
On January 1, 2012, King John Corp. issued a 3-year, 5% coupon,
$100,000 face value bond. The bond was priced at an effective interest rate of
8%, yielding proceeds of $92,137. This is the first and only bond that King
John has ever issued.
King John’s Statement
of Cash Flows for fiscal year 2012 had the following line items:

2012

2011

Net Income

$11,500

$10,350

Depreciation

$25,478

$23,675

Amortization of Bond Discount

$2,418

$0

What was King John’s
Interest Expense on the bond during fiscal year 2012?
ÿ
$5,000
ÿ
$8,000
ÿ
$7,418
ÿ
$7,371
ÿ
$2,418
2)
On January 1, 2012, Tanenwee Ltd. signed a three-year lease on a
delivery truck. The lease requires annual payments of $29,103, which are due at
the end of each year. Tanenwee’s managers computed the present value of the
lease payments as $75,000 using an effective interest rate of 8%. Tanenwee had
to use capital lease accounting treatment for the truck.
What was the total
expense related to this lease during the fiscal year ended December 31, 2012?
ÿ
$31,000
ÿ
$0
ÿ
$29,103
ÿ
$25,000
ÿ
$6,000

3)
Byant Telecom had the following lines in its Income Taxes
footnote:

Deferred Tax Liabilities

12/31/2012

12/31/2011

Insurance Receivables

$(60)

$(63)

Depreciation

$(858)

$(745)

Other

$(808)

$(883)

Total Deferred
Tax Liabilities

$(1,726)

$(1,691)

Bryant Telecom had the
following lines in its Statement of Cash Flows:

2012

2011

Net Income

$4,511

$4,357

Depreciation

$1,288

$1,236

Bryant Telecom is a US
company with a 35% Federal Statutory Tax Rate. What was Bryant Telecom’s
depreciation expense for tax purposes in fiscal year 2012?
ÿ
$1,288
ÿ
$1,175
ÿ
$1,401
ÿ
$1,611
ÿ
$965

4)
After completing its preliminary financial statements for 2012,
Alibasic Shipping Inc. found a mistake in computing its straight-line
Depreciation Expense. After fixing the mistake, Alibasic Shipping’s
Depreciation Expense was now $10,000 higher. Alibasic Shipping is a US company
with a 35% Federal Statutory Tax Rate.
How did the $10,000
increase in Depreciation Expense affect Net Income for 2012?
Net Income dropped by
$6,500
Net Income dropped by
$3,500
Net Income increased
by $10,000
Net Income increased
by $3,500
Net Income dropped by
$10,000

5)
Yañez Inc.’s Balance Sheet had the following line items:

Shareholders’ Equity

12/31/2012

12/31/2011

Common Stock, par value $1 per
share

$300,000

$300,000

(Shares Issued:
300,000 in 2012 and 300,000 in 2011;

Shares Outstanding:
250,000 in 2012 and 220,000 in 2011)

Additional Paid in Capital

$1,750,500

$1,750,500

Retained Earnings

$10,321,123

$8,675,309

Treasury Stock

$(550,000)

$(800,000)

Total

$11,821,623

$9,925,809

What was the average
price per share paid by Yañez to acquire all of the treasury shares held as of
December 31, 2012?
ÿ
$11.00
ÿ
Not enough information
ÿ
$10.50
ÿ
$10.38
ÿ
$10.00

6)
For the year ended 12/31/2013, Anonymous Corp. reported Net
Income of $100,000, including $10,000 of Interest Expense on convertible debt.
Anonymous had 10,000 common shares outstanding throughout 2013. Anonymous paid
$4,000 of preferred dividends during 2013. Anonymous’ convertible debt is
convertible into 2,000 shares of common stock. Anonymous is a US company with a
35% Federal Statutory Tax Rate.
What is Anonymous
Corp.’s Diluted EPS for fiscal year 2013?
ÿ
$7.46
ÿ
$8.29
ÿ
$8.54
ÿ
$8.83
ÿ
$7.17

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