Question

1. (TCO A) On July 1, 2010, an interest paymentdate, $60,000 of Parks Co. bonds were converted into 1,200 sharesof Parks Co. common stock, each having a par value of $45 and amarket value of $54. There is $2,400 unamortized discount on thebonds. Using the book value method, Parks would record (Points :5)

no change in paid-incapital in excess of par.
a $3,600 increase in paid-incapital in excess of par.
a $7,200 increase in paid-incapital in excess of par.
a $4,800 increase in paid-incapital in excess of par.

Question 2. 2. (TCO A) On March 1, 2010, RuizCorporation issued $800,000 of 8% nonconvertible bonds at 104,which are due on February 28, 2030. In addition, each $1,000 bondwas issued with 25 detachable stock warrants, each of whichentitled the bondholder to purchase for $50 one share of Ruizcommon stock, par value $25. The bonds without the warrants wouldnormally sell at 95. On March 1, 2010, the fair market value ofRuiz's common stock was $40 per share and the fair market value ofthe warrants was $2.00. What amount should Ruiz record on March 1,2010 as paid-in capital from stock warrants?
(Points : 5)

$28,800

$33,600

$41,600

$40,000

Question 3. 3. (TCO A) On January 1, 2010,Trent Company granted Dick Williams, an employee, an option to buy100 shares of Trent Co. stock for $30 per share, the optionexercisable for 5 years from date of grant. Using a fair valueoption pricing model, total compensation expense is determined tobe $900. Williams exercised his option on September 1, 2010, andsold his 100 shares on December 1, 2010. Quoted market prices ofTrent Co. stock during 2010 were as follows:

January1 $30 per share
September1 $36 per share
December1 $40 per share

The service period is for 2 years, beginning January 1, 2010. As aresult of the option granted to Williams, using the fair valuemethod, Trent should recognize compensation expense for 2010 on itsbooks in the amount of (Points : 5)

$1,000.

$900.

$450.

$0.

Question 4. 4. (TCO A) Wonderful Inc. issued toits existing common stockholders 2000 warrants. Each warrantentitles the stockholder to purchase 3 shares of common stock at aprice of $4 each. The common stock of the company is selling in thestock exchange at $6 each. If Wonderful has 20,000 shares of commonstock outstanding throughout the year and its Net Income is $8,000after paying the preferred dividends, what will be the dilutive EPSof Wonderful incorporation under treasury stock method? Round youranswer to two decimal points. (Points : 5)

$4
$0.40

$0.30

$0.36

Question 5. 5. (TCO A) At December 31, 2011 and2010, Miley Corp. had 180,000 shares of common stock and 10,000shares of 5%, $100 par value cumulative preferred stockoutstanding. No dividends were declared on either the preferred orcommon stock in 2011 or 2010. Net income for 2011 was $400,000. For2011, earnings per common share amounted to (Points : 5)

$2.22.
$1.94.
$1.67.
$1.11.