Centex, Inc and Freeborn Company - 71003

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1.  Centex, Inc. sold and issued 50,000 shares ofits $1 par value common stock for $20 per share. The journalentry to record the stock issue would include

 

A)   adebit to cash for $1,000,000.  

B)   a credit to common stock for $1,000,000.

 

C)   a credit to common stock for $50,000.

 

D)   both A and C would be included.

 

2. Use the following items from Diamond Company's income statement to compute its net income:

 

Cost of goods sold  $            320,000
Selling, general and administrative expenses  $              75,000
Miscellaneous income  $              40,000
Net sales  $            540,000
Income tax exspense  $              55,000
Net loss from discontinued operations (net of tax)  $            (20,000)
Cumulative effect of a change in accounting for income taxes(net of tax)  $              50,000
   

What is Diamond Company's net income to be reported on the incomes tatement?

 

 

 

3. In 2008, Freeborn Company disposed of a segment of its business and incurred a pre-tax loss on the disposal of$100,000. In the same year, a flood caused $30,000 of damages to abuilding. The flood damage qualified as an extraordinary item. Income from continuing operations before taxes was $260,000 for 2008 and the 30 percent tax rate applied to all of the items above.

       1). What net income or net loss would the company report for 2008?

       2).   How would the company report the discontinued operation for 2008?

           A)      Loss from discontinued operationsof $100,000.

           B)      Loss from discontinued operationsof $30,000.

           C)      Loss from discontinued operationsof $70,000.

           D)      Loss from discontinued operations of $25,000.

        3).   What net income or net loss per share would the company reportfor 2008 if it had 180,000 shares of common stock outstanding?

 

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