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straight-line method instead of the effective interest method to amortize
the discount. How is the carrying amount of the bonds affected by the
error?
Question 18
Deb Co. records all sales using the installment method of accounting.
Installment sales contracts call for 36 equal monthly cash payments.
According to the FASB's conceptual framework, the amount of deferred
gross profit relating to collections 12 months beyond the balance sheet
date should be reported in the
Question 19
Mirr, Inc. was incorporated on January 1, 2005, with proceeds from the
issuance of $750,000 in stock and borrowed funds of $110,000. During
the first year of operations, revenues from sales and consulting
amounted to $82,000, and operating costs and expenses totaled $64,000.
On December 15, Mirr declared a $3,000 cash dividend, payable to
stockholders on January 15, 2006. No additional activities affected
owners' equity in 2005. Mirr's liabilities increased to $120,000 by
December 31, 2005. On Mirr's December 31, 2005 balance sheet, total
assets should be reported at
Question 20
The following information pertains to Meg Corp.: Dividends on its
1,000 shares of 6%, $10 par value cumulative preferred stock have not
been declared or paid for 3 years. Treasury stock that cost $15,000 was
reissued for $8,000. What amount of retained earnings should be
appropriated as a result of these items?
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