Solved by verified expert :Question 1 (3 points25 minutes)On January 1, 2014, PVP Co. issued 6 % bonds with a face value of $400,000 for $345,644 when the market interest rate was 8 %. The bonds are due in 10 years, and interest is payable every June 30 and December 31.1. Prepare an amortization schedule through 6/30/2015. Round all numbers to the nearest dollar.2. Prepare the journal entry for the bond issue on 1/1/2014.3. Prepare the journal entry for the interest payment on 6/30/2014.Question 2 (3 points20 minutes)PVP Inc. has $800,000 of 8% preferred stock and $1,200,000 of common stock outstanding, each having a par value of $10 per share. No dividends have been paid or declared during 2012 and 2013. As of December 31, 2014, PVP wishes to distribute $488,000 in dividends.Show computations for how much will the preferred and common stockholders receive under each of the followingassumptions:(a) The preferred is noncumulative and nonparticipating.(b) The preferred is cumulative and nonparticipating.(c) The preferred is cumulative and fully participating.Question 3 (4 points15 minutes)Select the best answer for each of the following and write the letter corresponding to your answer in the answer sheet provided.1. With respect to a short term obligations expected to be refinanced, which of the following statements iscorrect?a. A company demonstrates the ability to consummate the refinancing only if it has actually refinanced theshort term obligation by issuing a long term obligationb. A company demonstrates the ability to consummate the refinancing only if it has actually refinanced theshort term obligation by issuing equity securitiesc. A company demonstrates the ability to consummate the refinancing only if it has entered into a financingagreement that clearly permits the company to refinance the debt on a long term basisd. A company demonstrates the ability to consummate the refinancing by any one of the actions described ina, b, or c above.2.a.b.c.d.3.a.b.c.d.With respect to accounting for sick pay which of the following statements is correct?Employers must accrue sick pay benefits if the sick pay benefits vest or accumulateEmployers must accrue sick pay benefits if the sick pay benefits vestEmployers must accrue sick pay benefits if the sick pay benefits accumulate but do not vestNone of the above are correctUnder what conditions an employer must accrue a liability for vacation pay?Vacation pay benefits can be reasonably estimated.Only if vacation pay benefits are vested.Only if vacation pay benefits are accumulated but not vested.Vacation pay benefit-rights are accumulated or vested.4.Which of the following statements is correct?a. Pending court cases with a probable favorable outcome is an example of a contingent liability.b. Losses related to pending litigation are always accrued.c. Obligations related to premiums and coupons offered to customers, is an example of a gain contingency.d. Obligations related to guarantee and warranty costs, is an example of a loss contingency.5. In a troubled debt restructuring the debt is settled by a transfer of an asset. If the asset’s fair market value ishigher than its book value and less than the carrying amount of the debt, the debtor would recognizea. No gain or loss on the settlement.b. A loss on the disposition of the asset.c. A loss on the settlement.d. A gain on the disposition of the asset6. Which of the following statements is correct with respect to Treasury Stock?a.b.c.d.When a company purchases treasury stock it is recorded as an assetWhen a company records the purchase of treasury stock, the entry reduces assets but increasesstockholders’ equityWhen a company records the purchase of treasury stock, the entry reduces both assets andstockholders’ equityWhen a company records the purchase of treasury stock, the entry reduces stockholders’ equity butincreases assets7. A small stock dividenda.b.c.d.Has no effect on retained earnings.Reduces retained earnings.Reduces total stockholders equity.Increases total stockholders equity8. In determining diluted earnings per share under the if converted method, interest expense on dilutiveconvertible debt should bea. Disregarded.b.Added back to net income net of taxes.c.Deducted from net income net of taxes.d.None of the above are correct.Question 4 (5 points20 minutes)Show computations for each of the following, and clearly show your final answer using the answer sheet provided.1. During 2014, PVP Co. introduced a new product carrying a two-year warranty against defects. Theestimated warranty costs related to dollar sales are 3% within 12 months following sale and 4% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2014 and 2015 are as follows:20142015Actual WarrantyExpenditures$10,00030,000$40,000Sales$ 900,0001,000,000$1,900,000Show computation for an estimated warranty liability on 12/31/2015..2. To increase its sales, PVP Co. included a coupon redeemable for a prize in each package of cereal soldbeginning on July 1, 2014. Each prize costs PVP $1.00, and five coupons must be presented to receive a prize.2 of 3PVP estimated that only 50% of the coupons issued would be redeemed. For the six months ended December 31, 2014 the following information is available:Packages of cereal soldPrizes purchasedCoupons redeemed2,000,000150,000500,000Show computations for the estimated liability for prize claims outstanding on December 31, 2014.3. On January 2, 2014, PVP Co. issued 6 % bonds with a face value of $400,000 when the market interest rate was 8 %. The bonds are due in 10 years, and interest is payable every June 30 and December 31. Use the following present value and present value annuity tables to select applicable factors.Present value of an ordinaryAt 3% 10 periods=8.5302At 6% 10 periods=7.3601annuity of $1At 4% 20 periods=13.5903At 8% 10 periods=6.7101Present value of $1At 3% 10 periods=0.7441At 6% 10 periods=0.5584At 4% 20 periods=0.4564At 8% 10 periods=0.4632Show computations to calculate the selling price of the bond (round your final answer to the nearest dollar).4. On January 1, 2014, PVP Corporation had 1,000,000 shares of common stock outstanding. On March 1, the corporation issued 150,000 new shares to raise additional capital. On July 1, the corporation declared and issued a 2-for-1 stock split. On October 1, the corporation purchased on the market 600,000 of its own outstanding shares and retired them. Compute the weighted average number of shares to be used in computing earnings per share for 2014.5. On January 1, 2014, VAP Co issued at par $15,000 of its 5% bonds, convertible into 1,000 shares of VAPCo common stock. No bonds were converted during 2014.Throughout 2014, VAP Co had 1,500 shares of common stock outstanding. The net income for 2014 was $18,000. VAP Co tax rate is 35%.No potentially dilutive securities other than the convertible bonds were outstanding during 2014. Showcalculations to determine VAP Co diluted earnings per share for 2014
Expert answer:accounting problems with A+ answers fall 2014
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