FAR - SE1 QUESTIONS WITH 100%
CORRECT ANSWERS [GRADED A+]
Marr Co. had the following sales and accounts receivable balances, prior to
any adjustments at year end:
Credit sales 10,000,000
Accounts receivable 3,000,000
Allowance for uncollectible accounts (debit balance) 50,000
Marr uses 3% of accounts receivable to determine its allowance for
uncollectible accounts at year end. By what amount should Marr adjust its
allowance for uncollectible accounts at year end?
A $140,000
B.$40,000
C.$0
D.$90,000 - ✔✔A - 140,000
-50,000 + X = 90,000
X = 140,000
©morren2026/2027.Year published 2026.
,90,000 = 3,000,000*3%
Burgess Co. purchase 35% of Egg Co's outstanding common stock on
December 31 for $300,000. On that date, Egg's stockholders' equity was
$600,000, and the fair value of its identifiable assets was $700,000. On
December 31, what amount of goodwill should Burgess attribute to this
acquisition?
A.$55,000
B.$35,000
C.$0
D.$90,000 - ✔✔A - 55,000
Step one:
300,000 (Investment) - 210,000 (NBV) = 90,000 Total Excess
*210,000 = 600,000 * 35%
Step two:
700,000 (FV) - 600,000 = 100,000
©morren2026/2027.Year published 2026.
, Then
100,000 * 35% = 35,000
Goodwill = 90,000 - 35,000 = 55,000
Cross Corp. had outstanding 2,000 shares of 11% preferred stock, $50 par.
On August 8, Cross redeemed and retired 25% of these shares for
$22,500. On that date, Cross' additional paid-in capital from preferred stock
totaled $30,000. To record this transaction, Cross should debit (credit) its
capital accounts as follows: - ✔✔Preferred = 25,000 and APIC = -2,500
Preferred stock 100,000 (2,000* $50 Par) * 25% = 25,000
APIC = 30,000 * 25% = 7,500
**Less than original issue price, the gain is credited to APIC. More than the
original issue price, the loss is debited to RE.
Marvin Corporation signed a five-year lease agreement on January 1, Year
1, in a transaction properly classified as a finance lease. The present value
©morren2026/2027.Year published 2026.
CORRECT ANSWERS [GRADED A+]
Marr Co. had the following sales and accounts receivable balances, prior to
any adjustments at year end:
Credit sales 10,000,000
Accounts receivable 3,000,000
Allowance for uncollectible accounts (debit balance) 50,000
Marr uses 3% of accounts receivable to determine its allowance for
uncollectible accounts at year end. By what amount should Marr adjust its
allowance for uncollectible accounts at year end?
A $140,000
B.$40,000
C.$0
D.$90,000 - ✔✔A - 140,000
-50,000 + X = 90,000
X = 140,000
©morren2026/2027.Year published 2026.
,90,000 = 3,000,000*3%
Burgess Co. purchase 35% of Egg Co's outstanding common stock on
December 31 for $300,000. On that date, Egg's stockholders' equity was
$600,000, and the fair value of its identifiable assets was $700,000. On
December 31, what amount of goodwill should Burgess attribute to this
acquisition?
A.$55,000
B.$35,000
C.$0
D.$90,000 - ✔✔A - 55,000
Step one:
300,000 (Investment) - 210,000 (NBV) = 90,000 Total Excess
*210,000 = 600,000 * 35%
Step two:
700,000 (FV) - 600,000 = 100,000
©morren2026/2027.Year published 2026.
, Then
100,000 * 35% = 35,000
Goodwill = 90,000 - 35,000 = 55,000
Cross Corp. had outstanding 2,000 shares of 11% preferred stock, $50 par.
On August 8, Cross redeemed and retired 25% of these shares for
$22,500. On that date, Cross' additional paid-in capital from preferred stock
totaled $30,000. To record this transaction, Cross should debit (credit) its
capital accounts as follows: - ✔✔Preferred = 25,000 and APIC = -2,500
Preferred stock 100,000 (2,000* $50 Par) * 25% = 25,000
APIC = 30,000 * 25% = 7,500
**Less than original issue price, the gain is credited to APIC. More than the
original issue price, the loss is debited to RE.
Marvin Corporation signed a five-year lease agreement on January 1, Year
1, in a transaction properly classified as a finance lease. The present value
©morren2026/2027.Year published 2026.
