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QUESTION

accounting questions

A 6. A corporation purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale?

a.

$0

b.

$5,000

c.

$2,500

d.

$10,000

___c _ 7. A corporation has 40,000 shares of $25 par value stock outstanding. If the corporation issues a 4-for-1 stock split, the number of shares outstanding after the split will be:

a.

160,000 shares

b.

40,000 shares

c.

120,000 shares

d.

10,000 shares

____c 8.A corporation has 50,000 shares of $28 par value stock outstanding that has a current market value of $160. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately:

a.

$7

b.

$112

c.

$40

d.

$640

C 11. If the market rate of interest is 8%, the price of 6% bonds paying interest annually with a face value of $100,000 will be:

a.

Equal to $100,000

b.

Greater than $100,000

c.

Less than $100,000

d.

Greater than or less than $100,000, depending on the maturity date of the bonds

___a _12.A corporation issues for cash $8,000,000 of 8%, 30-year bonds, interest payable annually. The amount received for the bonds will be:

a.

present value of 60 semiannual interest payments of $320,000, plus present value of $8,000,000 to be repaid in 30 years

b.

present value of 30 annual interest payments of $640,000

c.

present value of 30 annual interest payments of $640,000, plus present value of $8,000,000 to be repaid in 30 years

d.

present value of $8,000,000 to be repaid in 30 years, less present value of 60 semiannual interest payments of $320,000

__c __14.When the market rate of interest was 12%, Newman Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was:

a.

$ 352,180

b.

$1,000,000

c.

$ 943,494

d.

$588,963

17. The Raymore Company issued 10-year bonds on January 1, 2006. The 15% bonds have a face value of $100,000 and pay interest every January 1. The bonds were sold for $116,951 based on the market interest rate of 12%. Raymore uses the effective-interest method to amortize bond discounts and premiums. On January 1, 2007, Raymore should record interest expense (round to the nearest dollar) of:

a.

$7,032

b.

$7,500

c.

$8,790

d.

$14,034

___d_ 15. The journal entry a company records for the issuance of bonds when the stated rate and the market rate are the same is:

a.

debit Bonds Payable, credit Cash

b.

debit Cash and Discount on Bonds Payable, credit Bonds Payable

c.

debit Cash, credit Premium on Bonds Payable and Bonds Payable

d.

debit Cash, credit Bonds Payable

__c__ 16. The journal entry a company records for the issuance of bonds when the stated rate is greater than the market rate would be:

a.

debit Bonds Payable, credit Cash

b.

debit Cash and Discount on Bonds Payable, credit Bonds Payable

c.

debit Cash, credit Premium on Bonds Payable and Bonds Payable

d.

debit Cash, credit Bonds Payable

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