Exam 2 Wrong Answers Flashcards
What is the journal entry to record a fair value adjustment for an a unrealized gain of an available for sale investment in a stock?
Fair Value Adjustment-Available for sale. Xxx
Unrealized holding gain - equity. Xxx
What is the journal entry to record the purchase of common stock as an available for sale investment?
Equity investments. Xxx
Cash. Xxx
Your company purchases a 30% stake in Murphy inc. How do you record the journal entry for this purchase?
Investments in Murphy Inc. 300,000
Cash. 300,000
During the year Murphy Inc. earned net income of $180,000. If you own a 30% stake in this company, how do you record a journal entry for this transaction?
Investment in Murphy Inc. Xxx
Income from Investments. Xxx
During the year the company Murphy Inc. which you own 30% of, pays a dividend. How do you record a journal entry for this transaction?
Cash. Xxx
Investment in Murphy inc. Xxx
How do you record the journal entry for purchase of 12% bonds that will be held to maturity?
Debt investments. Xxx
Cash. Xxx
What is the heading and bond amortization schedule setup for held to maturity securities of 12% bonds purchased at a premium where they have a 10% yield, when the company uses the effective interest method?
Schedule of interest revenue and bond premium amortization
Effective Interest Method
12% bonds sold to yield 10%
Date Cash received. Interest revenue. Premium amortized
(furthest right): Carrying Amount of Bonds
How do you record a journal entry for interest received and amortization of a premium?
Cash. Xxx
Debt investments. Xxx
Interest Revenue. Xxx
A company owns a bond that is available for sale. Record the journal entry for interest received?
Cash. Xxx
Debt investments (available for sale). Xxx
Interest Revenue. Xxx
A company owns a bond that is available for sale. Record the journal entry for recognition of fair value, If fair value were to increase.
Fair value adjustment
(available for sale). Xxx
Unrealized Holding Gain Or Loss - Equity. Xxx
A company owns a bond that is available for sale. Record the journal entry for recognition of fair value, where it decreases.
Unrealized Holding Gain or Loss-Equity. Xxx
Fair Value Adjustment
(available for sale). Xxx
When recording the recognition of fair value for available for sale bond investments, what must you do with a previous fair value adjustment you debited the period before?
Credit it towards the fair value adjustment account
Makes fair value decrease further
Ex. Available for sale bonds. $(5,920)
Previous FV adj. dr. 1,401
Fair Value adj. cr. $(7,401)
What is the journal entry for the sale of an equity stock (trading), you sold for $9,400 and cost $10,000?
Cash. 9,400
Loss on Sale of Investments. 600
Equity Investments (trading). 10,000
How do you record a gain on a sale from a trading equity investment?
Cash. Xxx
Gain on sale of investments. Xxx
Equity investments (trading). Xxx
What are the 4 journal entries used under the percentage completion method for a construction contract?
Construction in Process. Xxx
Cash. Xxx
A/R. Xxx
Billings on Construction in Process. Xxx
Cash. Xxx
A/R. Xxx
Construction Expenses. Xxx
Construction in Process. Xxx
Construction Revenue. Xxx
How are details from a percentage completion contract disclosed on an income statement?
Income statement (20xx)
Gross profit on Long term Construction Contract. XxxHow are details from a percentage completion contract disclosed on the Balance Sheet?
Balance Sheet (12/31/XX)
Current Assets:
Receivables-Construction in Process. Xxx
Inventories-Construction in Process totaling
$900,000 less billings of $500,000. Xxx
Grupo sells goods to Magnus for $500,000, payment due in 2 installments: the 1st payable in 6 months and the 2nd payment due 3 months later.
How is this transaction reported?
recognize revenue by discounting payments using an
Imputed interest rate
When there is a high rate of return of 12%, how should revenue be recognized if terms are FOB shipping point
Report revenue at gross amount less 12% normal
return factor
Uddin shipped books invoiced at $15,000,000. Prepare the journal entry for revenue recognition assuming the normal return rate is 12%.
Accounts receivable. 15,000,000 Sales Revenue (texts). 15,000,000
Sales Returns and Allowances. 1,800,000
Allowance for Sales returns and
allowances. 1,800,000
What is the journal entry if returns are $2,000,000 or $200,000 higher than anticipated? Note sales in July were $15,000,000.
Sales returns and allowances. 200,000
Allowance for sales returns and allowances. 1,800,000
Accounts Receivable. 2,000,000
Cash. 13,000,000
Accounts Receivable. 13,000,000
How does a company record the journal entry for a loss carry back?
Income tax refund receivable. Xxx
Benefit due to loss carry back Xxx
Prepare the income tax expense section of the income statement beginning with line “income before income taxes”
Income before income taxes. Xxx
Income tax expense
Current. Xxx
Deferred. Xxx. Xxx
Net income. Xxx
What does the income tax expense portion of the income statement look like if there was a loss carry back and carry forward benefit?
Operating loss before income taxes. $(xxx)
Income tax benefit.
Benefit due to loss carry back Xxx
Benefit due to loss carry forward. Xxx. Xxx
Net loss. (xxx)
How do you record a journal entry for a deferred tax asset in the year of loss?
Deferred tax asset. Xxx
Benefit due to loss carry forward Xxx
What is the journal entry for applying a capital loss carry forward to a profitable year?
Income tax expense. Xxx
Deferred tax asset. Xxx
Held to maturity securities ate reported at…
Acquisition cost + amortization of discount
Assuming a $10,000 debit balance for fair value adjustment available for sale account and fair value $20,000 lower for the portfolio cost:
what would be reported for unrealized loss of comprehensive income? 2) for stockholder’s equity section of balance sheet?
$30,000
2) $20,000
Which of the following differences would result in future taxable amounts?
Expenses or losses that are tax deductible before
recognized in financial income
If a company buys 400 shares of stock and gets paid a dividend during the year, what is the journal entry?
Cash. Xxx
Dividend revenue. Xxx
