70.2K

Verified Solution

Link Copied!

Rose Photoshop sold $1,000 in gift cards on a special promotion on October 15, 2021, and sold $1,500 in gift cards on another special promotion on November 15, 2021. Of the cards sold in October, $100 were redeemed in October, $250 in November, and $300 in December. Of the gift cards sold in November, $150 were redeemed in November and $350 were redeemed in December. Rose views the probability of redemption of a gift card as remote if the card has not been redeemed within two months. At

12/31/2021, Rose would show a deferred revenue account for the gift cards with a balance of:

A. $0.

B. $1,500.

C. $1,350.

D. $1,000.

On January 1, 2021, L Corp. granted stock options to key employees for the purchase of 80,000 shares of the company's common stock at $25 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2023, by the grantees still in the employ of the company. No options were terminated during 2021, but the company does have an experience of 4% forfeitures over the life of the stock options. The market price of the common stock was $31 per share at the date of the grant. L Corp. used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should L charge to compensation expense for the year ended December 31, 2021?

A. $307,200.

B. $384,000.

C. $320,000.

D. $400,000.

Jones Company sold five-year, 8% bonds on October 1, 2021. The face amount of the bonds was $100,000, while the issue price was $102,000. Interest is payable on April 1 of each year. The fiscal year of Jones Company ends on December 31. How much interest expense will Jones Company report in its December 31, 2021, income statement (assume straight-line amortization)?

A. $1,900.

B. $2,000.

C. $1,778.

D. $2,040.

Answer & Explanation Solved by verified expert

See Answer