Question

6. During 2017, Miami Inc. had sales revenue $1,328,000, gross profit $728,000, operating expenses $398,000, cash dividends $90,000, other expenses and losses $40,000. Its corporate tax rate is 30%. What was Miami's income tax expense for the year?

Select one:

a. $ 60,000

b. $ 87,000

c. $ 99,000

d. $267,000

e. $218,400

8.On January 1, 2018, equity account balances are as follows:

                  Preferred Stock                                                                 $       500,000

                  Common Stock                                                                        1,000,000

                  Paid-In Capital in Excess of Par - Preferred                           200,000

                  Paid-In Capital in Excess of Par - Common                         500,000

                  Paid-In Capital From Treasury Stock                                      20,000

                  Retained Earnings                                                                  1,500,000

                  Treasury Stock (25,000 shares purchased 3/15/17)            762,500

            On January 15, 2018, 10,000 shares of treasury stock are sold at $15 per share. The entry to record this transaction includes a

Select one:

a. debit to Paid-In Capital From Treasury Stock of $135,000

b. debit to Paid-In Capital From Treasury Stock of $155,000

c. debit to Retained Earnings of $155,000

d. debit to Paid-In Capital From Treasury Stock of $150,000

e. debit to Retained Earnings of $135,000

9.Relative to a given bond issue, using either the straight-line method or the effective-interest method of amortization will result in

Select one:

a. the same amount of interest expense being recognized each year.

b. the same amount of interest expense being recognized over the life of the bonds.

c. the same carrying value each year during the life of the bonds.

d. more interest expense being recognized than if premium or discounts were not amortized.

10.Blanco, Inc. has a net income of $300,000 for 2017, and there are 200,000 weighted-average shares of common stock outstanding. Dividends declared and paid during the year amounted to $40,000 on preferred stock and $60,000 on common stock. Earnings per share for 2017 is

Select one:

a. $1.20.

b. $1.50.

c. $1.30.

d. $1.00.

e. $2.00.

Answer 1

6) calculate income tax expense

Gross profit	728000
Operating expense	-398000
Operating income	330000
Other expense and losses	-40000
Income before tax	290000
Income tax expense (290000*30%)	-87000
Net income	203000

So answer is b) $87000

8) Journal entry

Date	account and explanation	debit	credit
	Cash (10000*15)	150000
	Paid-In Capital From Treasury Stock	20000
	Retained earnings	135000
	Treasury stock (10000*30.5)		305000

So answer is e) debit to Retained Earnings of $135,000

9) Relative to a given bond issue, using either the straight-line method or the effective-interest method of amortization will result in

Total interest expense is same either use straight line method or effective interest method

So answer is b) the same amount of interest expense being recognized over the life of the bonds.

10) EPS = (300000-40000)/200000 = 1.3

So answer is c) $1.30