СMA/CFM - Financial Accounting, Reporting and Analysis

1) In December, Mill Co. began including one coupon in each package of candy that it sells and offering a toy in exchange for $.50 and five coupons. The toys cost Mill $.80 each. Sixty percent of the coupons will eventually be redeemed. During December, Mill sold 110,000 packages of candy, and no coupons were redeemed. In its December 31 balance sheet, what amount should Mill report as estimated liability for coupons?

2) James Corporation reported earnings for calendar year Year 1 of $3 per common share based on net income of $3,000,000 and 1,000,000 average shares of common stock outstanding. There were 1,000,000 common shares outstanding on December 31, Year 1. In Year 2 the common stock was split on a two-for-one basis, and a 20% stock dividend was distributed in Year 3. The EPS reported in the Year 4 annual report for Year 1 should be reported as

3) : In January 2002, Vorst Co. purchased a mineral mine for $2,640,000 with removable ore estimated at 1.2 million tons. After it has extracted all the ore, Vorst will be required by law to restore the land to its original condition at an estimated cost of $180,000. Vorst believes it will be able to sell the property afterwards for $300,000. During 2002, Vorst incurred $360,000 of development costs preparing the mine for production and removed and sold 60,000 tons of ore. In its 2002 income statement, what amount should Vorst report as depletion?

4) The purchase of treasury stock with a firm's surplus cash

5) On December 1, Hawk Corp. declared a property dividend to be distributed on December 31 to shareholders of record on December 15. On December 1, the property to be transferred had a carrying amount of $60,000 and a fair value of $78,000. What is the effect of this property dividend on Hawk's retained earnings, after all nominal accounts are closed?

6) An employee's right to obtain pension benefits regardless of whether (s)he remains employed is known as his/her

7) When reporting a change in accounting principle,

8) On July 1, Year 3, R&R Company's accountants discovered several accounting errors made in prior years. The firm's fiscal year ends on December 31. A description of the errors follows:
· The ending inventory taken in Year 1 failed to include some units that were on hand. As a result, the inventory was undervalued by $43,000.
· The ending inventory taken in Year 2 included 5,000 items that were priced in error at $10.00 each rather than the correct amount of $1.00 each.
· There were accrued salaries totaling $5,000 that should have been recorded as salary expense and recognized as a liability at the end of Year 2. This accrual was not made due to an oversight.
Ignoring any income tax effect, the result of the above errors is that Year 2 reported income before taxes was

9) Milton Co. began operations on January 1, 2000. On January 1, 2002, Milton changed its inventory method from LIFO to FIFO for both financial and income tax reporting. If FIFO had been used in prior years, Milton's inventories would have been higher by $60,000 and $40,000 at December 31, 2002 and 2001, respectively. Milton has a 30% income tax rate. What amount should Milton report as the cumulative effect of this accounting change in its income statement for the year ended December 31, 2002?

10) Depreciation of plant assets refers to