INTERMEDIATE ACCOUNTING II

FINAL EXAM

FALL $2024$

$24.$ Hutchins Company had $200,000$ shares of common stock, $50,000$ shares of convertible preferred stock, and $$2,000,000$ of $10\%$ convertible bonds outstanding during the entire year. The preferred stock was convertible into $40,000$ shares of common stock.

During the current year, Hutchins paid dividends of $$1\mathrm{.}00$ per share on the common stock and $$2\mathrm{.}00$ per share on the preferred stock. Each $$1,000$ bond was convertible into $50$ shares of common stock. The net income for the year was $$1,000,000,$ and the income tax rate was $30\%.$

Basic earnings per share for the current year was $($rounded to the nearest penny$)$:

A$.$ $$4\mathrm{.}50$

B$.$ $$4\mathrm{.}30$

C$.$ $$4\mathrm{.}55$

D$.$ $$5\mathrm{.}00$

$25.$ Insight Corporation leases equipment for $5$ years with annual rentals of $$2,000$ per year. The agreement also requires that Insight purchase supplies such as oil, fasteners, and filters directly from the lessor and must spend a minimum of $$350$ per year over the lease term. The total lease payments used to classify the lease are:

A$.$ $$10,350$

B$.$ $$1,750$

C$.$ $$11,750$

D$.$ $$10,000$