A200 Student name ____________________________Exam 2 (Ch. 6, 7, 8) Last 4 digits of ID number _________________Version A Section number __________________________100 Points possible Instructor’s name ________________________FILL OUT THE ENTIRE HEADING ON THIS EXAM.FILL OUT YOUR SCAN FORM AS YOUR INSTRUCTOR INDICATES.MARK ON YOUR SCAN FORM THE BEST ANSWER TO EACH QUESTION.ONLY THE ANSWERS YOU MARK ON YOUR SCAN FORM WILL BE GRADED.1. Kauffman Corporation’s 12-31-09 balance sheet reports 100,000 shares of $30 par value common stock outstanding. What is the meaning of par value?a. the current market price per share of Kauffman’s common stockb. the legal value per share of Kauff-man’s common stockc. the market price per share of Kauff-man’s common stock when the company was foundedd. the minimum price per share that Kauffman’s common stock will sell for2. On the balance sheet, total stockholders’ equity:a. includes long-term liabilities and capital stockb. includes retained earnings plus paid-in capitalc. is equal to total assetsd. is usually equal to cashe. both a. and b.3. A gain on the sale of a fixed asset will:a. increase assets and liabilitiesb. increase equity, but decrease assetsc. decrease liabilities and increase assetsd. increase assets and equityExam2A Fall09 Pg. 2 of 124. At the end of the first year of business, Stanga Company aged its accounts receiv-able as follows:Age Interval Balance Percent UncollectibleNot past due $310,000 3%93001-30 days past due 255,000 8%2040031-60 days past due 84,000 12%1008060-90 days past due 47,000 23%1081091-180 days past due 21,000 56%11760over 180 days past due 8,000 82%6560Total accounts receiv-able: $725,000How will Stanga record the year’s provision for doubtful accounts?a. increase uncollectible accounts ex-pense by $68,910, and decrease ac-counts receivable by $68,910b. increase uncollectible accounts ex-pense by $68,910, and increase al-lowance for doubtful accounts by $68,910c. increase uncollectible accounts ex-pense by $656,090, and increase al-lowance for doubtful accounts by $656,090d. increase uncollectible accounts ex-pense by $656,090, and decrease ac-counts receivable by $656,0905. In a period of rising prices, which of the following inventory cost flow assumptions assigns the most recent costs to cost of ending inventory (COEI) on the balance sheet? a. lifo (last-in, first-out)c. fifo (first-in, first-out)b. average cost d. filo (first-in, last-out)6. Mark Company’s equipment account shows a cost of $1,125,000. The book value of the equipmentto date is $673,500, and annual depreciation expense using the straight-line method is $71,200. What is Mark’s accumulated depreciation on the equipment?a. $ 451,500 c. $ 380,300b. $1,053,800 d. $ 522,700Exam2A Fall09 Pg. 3 of 12The following information applies to questions 7-9: Selected account balances from Hughes Corporation’s 12-31-09 balance sheet are:Common stock, $30 par, 75,000 shares authorized, 20,000 shares issued, and ______shares outstanding $600,000Paid-in capital in excess of par, com-mon 85,000Preferred $8 stock, $25 par, 60,000 shares authorized, issued, and outstanding 1,500,000Paid-in capital in excess of par, pre-ferred 200,000Retained earnings 390,000Treasury stock (common) 9,500 shares 142,5007. What is Hughes Corporation’s 12-31-09 total stockholders' equity?a. $2,775,000 c. $2,917,500b. $2,632,500 d. $2,527,5008. During the year, Hughes Corporation repurchased stock at what cost per share?a. $15 per share c. $25 per shareb. $30 per share d. $ 8 per share9. How many shares of Hughes Corporation’s common stock are outstanding?a. 55,000 shares c. 65,500 sharesb. 35,000 shares d. 10,500 shares10. Generally accepted accounting principles (GAAP) says that businesses should recordcontingent liabilities on the balance sheet when the event causing the liability is ________________ and the amount owed is ______________:a. probable, es-timablec. current, es-timableb. probable, un- d. long-term,known known11. On March 1, Aster Corporation issued $22,000,000 of 30-year, 8% bonds at par in exchange for cash, with interest payable semi-annually. How will the March 1 transaction affect Aster’s accounts?a. increase cash, $23,760,000; in-crease bonds payable, $22,000,000;and increase bond interest expense,$1,760,000b. increase cash, $23,760,000 and in-crease bonds payable, $23,760,000c. increase cash, $22,000,000 and in-crease bond interest expense, $22,000,000d. increase cash, $22,000,000 and in-crease bonds payable, $22,000,000Exam2A Fall09 Pg. 4 of 1212. On 2-01-09, Sloe Company purchased a building. During 2009, Sloe made the fol-lowing related expenditures:Window washing $ 650New security system 8,200Repaired broken floor tiles 3,600Office cleaning 4,500What is Sloe’s total revenue expenditure related to the building?a. $16,950 c. $ 8,200b. $ 8,750 d. $ 5,15013. On January 1, 2009, Lisle Company acquired a piece of equipment at a cost of $325,000. It estimates a 12-year useful life and a $19,000 residual value. What will be Lisle’s depreciationexpense in 2011 (year 3) if Lisle depreciates the asset using the straight-line method?a. $ 25,500 c. $ 81,250b. $ 76,500 d. $ 27,08314. On January 1, 2009, Dent Company purchased equipment for $211,500. It has a useful life of 18 years and a residual value of $9,000. Using the declining balance method (DDB), what depreciation expense will Dent record for 2009 (year one)?a. $ 8,991 c. $11,250b. $23,500 d. $22,500Exam2A Fall09 Pg. 5 of 12The following information applies to questions 15 and 16: Anderson Corporation’s first year of operations was 2009. The corporation’s 12-31-09 balance sheet re-ported assets as follows:Accounts receivable $ 187,600Accumulated depreciation 23,500Allowance for doubtful accounts 13,300Cash and cash equivalents 42,500Interest receivable 18,650Merchandise inventory (FIFO cost) 98,500Notes receivable (due 9-15-10) 50,000Property, Plant, and Equipment 314,000Wages payable 52,00015. What is the total of Anderson Corporation’s net current assets?a. $410,550 c. $383,950b. $333,950 d. $360,00016. What is the total of Anderson Corporation’s net long-term (fixed) assets?a. $337,500 c. $364,000b. $290,500 d. $387,50017. 17. Krill Company shows a $282,000, 60-day note receivable on its balance sheet. On the maturity date, the related interest totals $3,760. What is