ACCT 3432 and ACCT 5134 Exam 3, Fall 2013
A solved Exam 3 from Fall 2013 covering key accounting concepts in financial reporting.
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ACCT 3432 and ACCT 5134
Exam 3, Fall 2013
First Name Suggested Solution Last Name The Thomas
Instructions:
1. You have 120 minutes to complete this exam.
2. The exam has 11 pages, including this cover page. Check to make sure you have all 11
pages.
3. There are 20 multiple choices and 3 problem solving questions. Each multiple choice
problem is worth 3 points and maximum points for each problem solving question are shown
at each question.
4. Closed notes, closed books. Only the exam, writing utensils, and a calculator are permitted
on your desk.
5. Please write your answers for multiple choices CAREFULLY on the ANSWER SHEET.
6. Please write answers CLEARLY on the exam for problem solving questions. If I cannot read
them, I will NOT GIVE YOU ANY PARTIAL CREDIT.
7. DO NOT START EXAM UNTIL I TELL YOU TO BEGIN.
ANSWER SHEET
Question
No. 1 2 3 4 5 6 7 8 9 10 11 12
Answer C C D C C B A B B D A A
Question
No. 13 14 15 16 17 18 19 20 Multi Prob. Total
Answer B A B D D B A D
ACCT 3432 and ACCT 5134
Exam 3, Fall 2013
First Name Suggested Solution Last Name The Thomas
Instructions:
1. You have 120 minutes to complete this exam.
2. The exam has 11 pages, including this cover page. Check to make sure you have all 11
pages.
3. There are 20 multiple choices and 3 problem solving questions. Each multiple choice
problem is worth 3 points and maximum points for each problem solving question are shown
at each question.
4. Closed notes, closed books. Only the exam, writing utensils, and a calculator are permitted
on your desk.
5. Please write your answers for multiple choices CAREFULLY on the ANSWER SHEET.
6. Please write answers CLEARLY on the exam for problem solving questions. If I cannot read
them, I will NOT GIVE YOU ANY PARTIAL CREDIT.
7. DO NOT START EXAM UNTIL I TELL YOU TO BEGIN.
ANSWER SHEET
Question
No. 1 2 3 4 5 6 7 8 9 10 11 12
Answer C C D C C B A B B D A A
Question
No. 13 14 15 16 17 18 19 20 Multi Prob. Total
Answer B A B D D B A D
2
Part I. Multiple Choices:
1. The Thomas Company's net income for the year ended December 31 was $30,000. During
the year, Thomas declared and paid $3,000 in cash dividends on preferred stock and $5,250
in cash dividends on common stock. At December 31, 36,000 shares of common stock were
outstanding, 30,000 of which had been issued and outstanding throughout the year and 6,000
of which were issued on July 1. There were no other common stock transactions during the
year, and there is no potential dilution of earnings per share. What should be the year's basic
earnings per common share of Thomas, rounded to the nearest penny?
a. $0.66
b. $0.75
c. $0.82
d. $0.91
ANS. C
Basic earnings per common share = (Net income- cash dividends on preferred stock) /
weighted-average number of common shares = ($30,000-$3,000) /
(30,000*6/12+36,000*6/12)=$0.82
2. On December 31, 2013, Overachiever, Inc. had 300,000 shares of common stock issued and
outstanding. Overachiever issued a 10 percent stock dividend on June 1, 2014. On November
1, 2014, Overachiever reacquired 30,000 shares of its common stock and recorded the
purchase using the cost method of accounting for treasury stock. What number of shares
should be used in computing basic earnings per share for the year ended December 31, 2014?
a. 310,000
b. 314,167
c. 325,000
d. 330,000
ANS. C
Event Period Shares Fraction
of Year
Adjustment Weighted
Average
Shares
Beginning Jan 1- June 1 300,000 5/12 1.1 137,500
Stock Dividend
(10%)
June 1–Nov 1 330,000 5/12 1 137,500
Repurchase Nov 1 – Dec
31
300,000 2/12 1 50,000
Total 325,000
Part I. Multiple Choices:
1. The Thomas Company's net income for the year ended December 31 was $30,000. During
the year, Thomas declared and paid $3,000 in cash dividends on preferred stock and $5,250
in cash dividends on common stock. At December 31, 36,000 shares of common stock were
outstanding, 30,000 of which had been issued and outstanding throughout the year and 6,000
of which were issued on July 1. There were no other common stock transactions during the
year, and there is no potential dilution of earnings per share. What should be the year's basic
earnings per common share of Thomas, rounded to the nearest penny?
a. $0.66
b. $0.75
c. $0.82
d. $0.91
ANS. C
Basic earnings per common share = (Net income- cash dividends on preferred stock) /
weighted-average number of common shares = ($30,000-$3,000) /
(30,000*6/12+36,000*6/12)=$0.82
2. On December 31, 2013, Overachiever, Inc. had 300,000 shares of common stock issued and
outstanding. Overachiever issued a 10 percent stock dividend on June 1, 2014. On November
1, 2014, Overachiever reacquired 30,000 shares of its common stock and recorded the
purchase using the cost method of accounting for treasury stock. What number of shares
should be used in computing basic earnings per share for the year ended December 31, 2014?
a. 310,000
b. 314,167
c. 325,000
d. 330,000
ANS. C
Event Period Shares Fraction
of Year
Adjustment Weighted
Average
Shares
Beginning Jan 1- June 1 300,000 5/12 1.1 137,500
Stock Dividend
(10%)
June 1–Nov 1 330,000 5/12 1 137,500
Repurchase Nov 1 – Dec
31
300,000 2/12 1 50,000
Total 325,000
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Document Details
University
University of Houston
Subject
Accounting