[jeff]

SO I know every test is different but does anyone have any insight on what has been heavily tested recently? I take the exam Monday and I need to narrow my focus….Thanks!

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Mehwish]

Yep I did too. I had the JE in my head… Debit cash credit investment :-/

[JoMS]

@Gabe as I know just in Cost method you have dividend income, in Equity method you treat dividends as a return of investment, not as dividend income. (If you use Becker is on F3-13)

Hope this helps!

[jakeeee]

@ebimbo Right there with ya! You got this!

My test is in 2 weeks. Using Becker–currently going through the last chapter. These MC questions are killing me. Gotta review all multiple choice questions AND sims (didn't review SIMS first time around). Feeling a bit overwhelmed, but just have to stay optimistic and think about Thanksgiving.

I also have pages and pages and pages of notes. I think I have more notes than the other three sections combined LOL.

Good luck everyone! Keep pushing. =]

BEC - July 2014
REG - Aug 2014
FAR - January 2015
AUD - May 2014
Ethics - 3x...

[Gabe]

@joms thanks! I still think the question is worded funky.. But I guess as long as I know under the cost method dividends =income and under the equity method dividends reduce investment, I should be good.

CPA, CFE
CISA- Experience will be completed by August 2016

[ron10590]

On July 1, year 1, Eagle Corp. issued 600 of its 10%, $1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, year 1, and mature on April 1, year 11. Interest is payable semiannually on April 1 and October 1. What amount did Eagle receive from the bond issuance? Answer: $609,000

The explanation shows the journal entry:

Cash ?

Discount on Bond Payable 6,000

Bond Payable 600,000

Interest Expense 15,000

Why is interest expense a credit? I would have though that accrued interest expense should be a debit which would increase the amount owed to lenders, and decrease the amount of cash received by the company.

REG (7/14): 82
FAR (11/14): 81
BEC (1/15): 83
AUD (5/15):

[Gabe]

@ron from Ninja:

To account for the buyer getting money that wasn’t earned in July, then the buyer essentially pays them back for those two months up front.

$100,000 Bonds

10% Stated Rate

Sold at Par on March 1

January 1 & July 1 interest dates

100,000 x 2/12 x 10% = $1,667

Cash $101,667

Bonds Payable $100,000

Interest Expense $1,667< CREDIT

Note* this problem ignores any discount or premium

Does this help a little? If not, anyone else explain it better?

CPA, CFE
CISA- Experience will be completed by August 2016

[Rocky123]

@ebimbo

I'm in the same situation. Pass FAR or lose AUD. Everyone in my life is sick of me stressing about it too. I get it.

My exam is on the 23rd. Looks like the day after yours.

I failed the first time around because I didn't study enough. I studied more this time around and hopefully it pays off.

Good luck to us both!!

The tallest oak in the forest was once just a little nut that held its ground.

AUD-PASS
BEC-PASS
REG-PASS
FAR-PASS

Rocky123, CPA

[ron10590]

Thanks Gabe. I found a good explanation in the Kieso textbook:

“The purchasers of the bonds, in effect, pay the bond issuer in advance for that portion of the full six-months' interest payment to which they are not entitled because they have not held the bonds for that period. Then, on the next semiannual interest payment date, purchasers will receive the full six-months' interest payment.”

So I think in the first problem, the 7/1 entry would be:

DR: Interest Expense 30,000

CR: Cash 30,000

which would give the correct debit balance of 15,000 for interest expense up until that point, and cash paid of 15,000

REG (7/14): 82
FAR (11/14): 81
BEC (1/15): 83
AUD (5/15):

[Gabe]

So you credit interest expense when the bonds are issued in between interest dates because the purchaser is paying more interest up front. Yes?

CPA, CFE
CISA- Experience will be completed by August 2016

[salring]

Ron here is the calculation

600,000 X 99% = 594,000 CV of the bond

600,000 X 3/12 X 10% = 15,000 interest expense

You add the 594,000 + 15,000 = 609,000

Since we are paying the interest in between payment dates we will credit, the last payment was July 1 so we are computing interest for July through the end of September.

[Gabe]

Ivy Co. operates a retail store. All items are sold subject to a 6% state sales tax, which Ivy collects and records as sales revenue. Ivy files quarterly sales tax returns when due, by the 20th day following the end of the sales quarter. However, in accordance with state requirements, Ivy remits sales tax collected by the 20th day of the month following any month such collections exceed $500. Ivy takes these payments as credits on the quarterly sales tax return. The sales taxes paid by Ivy are charged against sales revenue.

The following is a monthly summary appearing in Ivy's first quarter 20X1 sales revenue account:

Debit Credit

January $10,600

February $ 600 7,420

March 8,480

---

---

$ 600 $26,500

====== =======

In its March 31, 20X1, balance sheet, what amount should Ivy report as sales taxes payable?

A.

$600

B.

$900

C.

$1,500

D.

$1,590

Anyone explain why B is the answer?

CPA, CFE
CISA- Experience will be completed by August 2016

[ron10590]

Yes I think that sounds right. At the payment date, the purchaser collects the full cash interest payment for the six months, subtract their initial interest payment (for the 3 months that they did not actually earn), to equal only the interest earned after they purchased the bond.

When you record interest on the interest payment date (7/1), you debit the whole interest expense for the period, which nets against the credited interest expense at purchase date to equal the actual balance of interest expense incurred.

REG (7/14): 82
FAR (11/14): 81
BEC (1/15): 83
AUD (5/15):

[hudnetj]

Kuchman Kookware issued 40,000 shares of its $8.00 par value common stock for $9 on January 1, Year 1. Kuchman repurchased 1,000 shares at $8 per share on April 1, Year 2, resold 500 shares at $9 per share on July 1, Year 2, and, on October 1, Year 2, resold the final 500 shares at $5 per share. Assuming Kuchman uses the par value method of accounting for its treasury stock, retained earnings at December 31. Year 2 would be reduced by:

What are all the JEs???

BEC - 76
REG - 76
FAR - 77
AUD - 63, 89

DONE!!

CPA 3/15

[ron10590]

hudnetj, what's the answer?

REG (7/14): 82
FAR (11/14): 81
BEC (1/15): 83
AUD (5/15):

[mccaberp]

@hudnetj is this the answer?

DR:Cash 360,000

CR: CS 320,000

CR: APIC – C/S 40,000

Issuance of 40,000 shares of $8 par value stock for $9 per share.

DR:T/S 8,000

CR:Cash 8,000

DR:Cash 4,500

CR: T/S 4,000

CR:APIC 500

DR: Cash 2,500

DR:APIC 1,000

DR:R/E 500

CR:T/S 4,000

AUD: Pass
REG: Pass
BEC: Pass
FAR: Pass

First try CPA. Thank god. God bless America.

[Author]

Replies