BUSA
101
Answers
to Quiz on Chapters 11-13
Debra
Schmidt
1. Stockholders Equity: Answer: C -
calculated as follows:
C/S 500,000
PIC
40,000
R/E 190,000
T/S <20,000>
710,000
2. Answer:
C
Equity section
3.
Answer: D
GAAP net income is 750,000, tax rate is 50%, so income tax expense is
375,000.
4.
Answer: A
The ownership percentage is 32%. Any
ownership percentage above 20% must be accounted for under the equity method.
5.
Answer: C
$10,000 =
9091
1.10
6.
Answer: C
1,000,000 x 1.025 = 1,025.000
7.
Answer: A
8.
Answer: D
9. a.
Dr. Investment
in Downs
10,200
Cr. Cash
10,200
b.
Dr. Investment
in Ross
46,700
Cr. Cash
46,700
c.
Dr. Cash
1,000
Cr. Dividend income
1,000
d.
Dr. Cash
4,000
Cr. Investment in
Ross
4,000
e.
Dr. Cash
2,250
Cr. Investment in
Downs
1,020
(100 x 10.20)
Cr. Gain on sale
1,230
f.
Dr. Investment
in Ross
12,000
Cr. Income from Ross
12,000
(60,000 x .20)
10.
Adams (Issues)
(1)
Dr. Cash
1,025,000
Cr. Bonds
Payable 1,000,000
Cr. Premium
on Bonds Payable
25,000
(2) Dr.
Interest expense
50,000
Cr. Cash
50,000
1,000,000 x .10 x 6/12
(3) Dr.
Premium on Bonds Payable 1,250
Cr. Interest
expense
1,250
25,000 ÷ 10 =
2,500 x 6/12 =
1,250
Palmer
(Investor)
(1) Dr.
Investment in Bonds
1,025,000
Cr. Cash
1,025,000
(2) Dr.
Cash
50,000
Cr. Interest
Income 50,000
(3) Dr.
Interest Revenue 1,250
Cr. Investment
in Bonds
1,250