Bus 242 final study guide

Which of the following equations best represents the reporting shown in a statement of partnership equity? a.Beginning Balance of Partner Capital + Capital Additions + Net Income - Partner Withdrawals = Ending Balance of Partner Capital b.Ending Balance of Partner Capital + Capital Additions - Partner Withdrawals = Partnership Net Income c.Partner Withdrawals - Net Income - Partner Deficiency = Ending Balance of Partner Capital d.Beginning Balance of Partner Capital - Capital Additions - Net Income - Partner Withdrawals = Ending Balance of Partner Capital

a.Beginning Balance of Partner Capital + Capital Additions + Net Income - Partner Withdrawals = Ending Balance of Partner Capital

Which of the following is the appropriate general journal entry to record the declaration of cash dividends? a.Cash Dividends Cash Dividends Payable b.Retained Earnings Cash c.Paid-In Capital Cash Dividends Payable d.Cash Dividends Distributable Cash

a.Cash Dividend Cash Dividends Payable

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a a.Cash inflow in the investing activities section. b.Cash inflow in the operating activities section. c.separate schedule. d.Cash inflow in the financing activities section.

a.Cash inflow in the investing activities section.

Which of the following statements is true concerning stock splits? a.Each shareholder will own the same total par amount of stock before and after the split. b.Stock splits require journal entries to be recorded. c.The total number of shares outstanding does not change after the stock split. d.None of these choices are correct.

a.Each shareholder will own the same total par amount of stock before and after the split.

Which of the following is not a term used to refer to owners' equity in a corporation? a.Members' equity b.Shareholders' investment c.Capital d.Stockholders' equity

a.Members' equity

Which of the following statements is not correct with regard to prior period adjustments? a.Prior period adjustments are reported as an adjustment to the ending balance of retained earnings in the current period. b.Prior period adjustments arise from mathematical mistakes in a previous period. c.Prior period adjustments are errors found in a period after the error occurred. d.All of these choices are correct.

a.Prior period adjustments are reported as an adjustment to the ending balance of retained earnings in the current period.

Which of the following is a characteristic of a partnership? a.The partners have mutual agency. b.The partnership has an unlimited life. c.The partners have liability protection. d.The partnership is subject to federal income tax.

a.The partners have mutual agency.

A bond is a.a form of an interest-bearing note. b.not allowed if a company issues preferred stock. c.used for short-term borrowing. d.a note where interest is due in total at maturity.

a.a form of an interest-bearing note

Revenue per employee is a.a measure of the efficiency of the business in generating revenues. b.a measure of the volume in units of employee purchases. c.a measure of the dollar amount of employee purchases. d.None of these choices are correct.

a.a measure of the efficiency of the business in generating revenues.

Reporting changes in partnership capital accounts is similar to reporting changes for a.a proprietorship. b.a corporate shareholder. c.a limited liability trust. d.None of these choices are correct.

a.a proprietorship.

The portion of bonds or notes payable that is due within one year is reported as a(n) a.current liability on the balance sheet. b.long-term liability on the balance sheet. c.part of stockholders' equity. d.expense on the income statement.

a.current liability on the balance sheet.

The journal entry a company records for the issuance of bonds when the contract rate is higher than the market rate of the bond is a.debit Cash and credit Premium on Bonds Payable and Bonds Payable. b.debit Bonds Payable and credit Cash. c.debit Cash and credit Bonds Payable. d.debit Cash and Discount on Bonds Payable and credit Bonds Payable.

a.debit Cash and credit Premium on Bonds Payable and Bonds Payable.

When a corporation issues bonds, the price that buyers are willing to pay for the bonds does not depend on which of the following? a.denominations in which the bonds are sold b.market rate of interest c.contract rate of the bonds d.periodic interest to be paid on the bonds

a.denominations in which the bonds are sold

One of the main disadvantages of the corporate form of business is a.double taxation. b.the charter. c.its suitability for raising capital. d.professional management.

a.double taxation

Treasury stock shares are a.issued shares that are held by the treasurer of the corporation. b.part of the total outstanding shares but not part of the total issued shares of a corporation. c.shares held by the U.S. Treasury Department. d.issued shares held by stockholders in the treasury.

a.issued shares that are held by the treasurer of the corporation.

An annuity refers to a a.series of equal cash receipts at fixed intervals. b.lump sum payment. c.principal payment. d.balloon payment

a.series of equal cash receipts at fixed intervals.

Callable bonds are advantageous to the corporation because a.the corporation reserves the right to redeem them early. b.they can be exchanged for other securities. c.Callable bonds are advantageous to the purchaser, not the corporation. d.they mature on the same date.

a.the corporation reserves the right to redeem them early.

When there is a death of a partner, all of the following are true except a.the partnership capital is automatically divided amongst the remaining partners. b.net income or loss should be determined as of the date of death. c.the asset accounts should be adjusted to current values. d.the partnership accounts should be closed as of the date of the death. Feedback

a.the partnership capital is automatically divided amongst the remaining partners.

A $1,000 bond quoted at 100 could be purchased or sold at a.$900. b.$1,000. c.$100. d.$1,100.

b.$1,000.

Ames and Barton are partners who share income in the ratio of 1:2 and have capital balances of $40,000 and $70,000, respectively, at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $80,000. What amount of loss on realization should be allocated to Barton? a.$80,000 b.$20,000 c.$30,000 d.$10,000

b.$20,000

Wave Corporation began the current year with a retained earnings balance of $25,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $5,000 on equipment. The company earned net income of $15,000 and declared cash dividends of $5,000. Compute the year-end retained earnings balance. a.$35,000 b.$30,000 c.$40,000 d.$25,000

b.$30,000

Financial statement data for the year ending December 31 for Power Company are shown below.Net income$680,000Preferred dividends$20,000Average number of common shares outstanding120,000sharesWhat is earnings per share for the year? a.$5.83 b.$5.50 c.$5.67 d.None of these choices are correct.

b.$5.50

Balance sheet and income statement data indicate the following: Bonds payable, 6% (issued 1993, due 2018)--$1,200,000 Preferred 8% stock, $100 par (no change during the year) --200,000 Common stock, $50 par (no change during the year)--1,000,000 Income before income tax for year--320,000 Income tax for year--80,000 Common dividends paid--60,000 Preferred dividends paid--16,000 Based on the data presented above, what is the times interest earned ratio (rounded to two decimal places)? a.3.44 b.5.44 c.3.50 d.4.44

b.5.44

A $1,000 bond quoted at 98 could be purchased or sold for a.between $1,000 and $1,098, depending on the maturity date of the bond. b.98% of $1,000, or $980. c.$1,000. d.$98 plus $1,000, or $1,098.

b.98% of $1,000, or $980.

If earnings per share for a company changes from $4.50 to $5.20, what does this indicate about the company's profitability? a.A neutral trend in the company's profitability is indicated. b.A favorable trend in the company's profitability is indicated. c.An unfavorable trend in the company's profitability is indicated. d.None of these choices are correct.

b.A favorable trend in the company's profitability is indicated.

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method? a.An increase in accounts payable b.An increase in accounts receivable c.Depreciation expense for the period d.An increase in income taxes payable

b.An increase in accounts receivable

Which of the following is incorrect with regard to forming a partnership? a.The investments of each partner are recorded in separate entries. b.Assets contributed by partners are debited to capital accounts. c.Assets contributed by partners are debited to asset accounts. d.Liabilities assumed by a partnership are credited to liability accounts.

b.Assets contributed by partners are debited to capital accounts.

When a cash dividend is declared, which of the following accounts is credited? a.Paid-In Capital b.Cash Dividends Payable c.Cash Dividends d.Common Stock

b.Cash Dividends Payable

All of the following statements are true regarding earnings per common share (EPS) except a.EPS is calculated as (Net Income - Preferred Dividends)/Average Number of Common Shares Outstanding. b.EPS cannot be calculated if a company has no preferred stock. c.corporations whose stock is publicly traded must report EPS on their income statements. d.EPS is sometimes called basic earnings per share.

b.EPS cannot be calculated if a company has no preferred stock.

If Smart Company issues 1,000 shares of $5 par value common stock for $90,000, a.Paid-In Capital in Excess of Par will be credited for $5,000. b.Paid-In Capital in Excess of Par will be credited for $85,000. c.Cash will be debited for $95,000. d.Common Stock will be credited for $90,000.

b.Paid-In Capital in Excess of Par will be credited for $85,000.

Which of the following is not true of a corporation? a.It may buy, own, and sell property. b.The owners are personally liable for corporate actions. c.It may sue and be sued. d.It may enter into binding legal contracts in its own name.

b.The owners are personally liable for corporate actions.

Which of the following statements is not true about a 4-for-1 split? a.The market price will probably decrease. b.Total contributed capital increases. c.A stockholder with 10 shares before the split owns 40 shares after the split. d.Par value per share is reduced to one-fourth of what it was before the split.

b.Total contributed capital increases

On the statement of cash flows, the Cash flows from operating activities section would include a.payments for the acquisition of investments. b.cash payments for salaries. c.receipts from the issuance of capital stock. d.receipts from the sale of investments.

b.cash payments for salaries.

When a partnership goes out of business, it is liquidated. The last step in this process is a.division of gain or loss. b.distribution to partners. c.realization. d.payment of liabilities.

b.distribution to partners.

A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 2-for-1 stock split, the market value of the stock is a.expected to fall to approximately $95. b.expected to fall to approximately $60. c.not expected to change. d.expected to fall to approximately $5.

b.expected to fall to approximately $60.

Corporations whose stock is traded in a public market must report earnings per share on their a.balance sheet. b.income statement. c.Earnings per share is not reported on the financial statements. d.retained earnings statement.

b.income statement.

Cash received for preferred stock dividends should be shown on the statement of cash flows under __________ activities. a.noncash investing and financing b.operating c.investing d.financing

b.operating

A limited liability corporation's (LLC) equity is reported similar to that of a a.trust. b.partnership. c.sole proprietor. d.regular corporation.

b.partnership.

All of the following statements about retained earnings are true except a.retained earnings are sometimes referred to as "earnings retained for use in the business." b.retained earnings represent surplus cash. c.retained earnings are decreased when a company declares a dividend. d.retained earnings are increased when a company has net income

b.retained earnings represent surplus cash.

The balance in Unamortized Discount on Bonds Payable a.would be added to the face amount of the related bonds payable on the balance sheet. b.should be reported on the balance sheet as a deduction from the face amount of the related bonds payable. c.should be reported in the Paid-in Capital section of the balance sheet. d.should be reported separately in the Current Liabilities section of the balance sheet.

b.should be reported on the balance sheet as a deduction from the face amount of the related bonds payable.

Treasury stock that was purchased for $2,500 is sold for $3,000. As a result of these two transactions, a.stockholders' equity will be increased by $3,000. b.stockholders' equity will be increased by $500. c.stockholders' equity will not change, because the amount of authorized stock has not changed. d.income will be increased by $500

b.stockholders' equity will be increased by $500.

In the calculation of earnings per share, preferred stock dividends are a.not used in the calculation. b.subtracted from net income. c.added to net income. d.None of these choices are correct.

b.subtracted from net income.

If the market rate of interest is equal to the contract rate of interest, the bonds will sell for a.more than their face amount. b.their face amount. c.less than their face amount. d.None of these choices are correct.

b.their face amount

A partner withdraws from a partnership by selling her interest to another person who currently is not associated with the firm. As a result of this transaction, the capital account balance of the other partners in the partnership a.will decrease. b.will remain the same. c.will increase. d.may increase, decrease, or remain the same.

b.will remain the same.

Peachtree Company borrows $30,000 from the local bank at 7% interest. The term of the note is five years, and the annual payments remain constant at $7,317. Determine the decrease in notes payable that Peachtree Company should record in the first year. a.$2,100 b.$7,317 c.$5,217 d.$1,735

c.$5,217

As part of the initial investment, a partner contributes equipment that had originally cost $80,000 and on which accumulated depreciation of $50,000 has been recorded. If the partners agree on a valuation of $50,000 for the contributed equipment, what amount should be debited to the equipment account? a.$30,000 b.$80,000 c.$50,000 d.None of these choices are correct.

c.$50,000

What is the total stockholders' equity based on the following account balances? Common Stock--$100,000 Paid-In Capital in Excess of Par--500,000 Retained Earnings--190,000 Treasury Stock--40,000 a.$790,000 b.$600,000 c.$750,000 d.$830,000 Feedback

c.$750,000

Which of the following is used in calculating cash received from customers using the direct method? a.A decrease in inventory b.An increase in inventory c.A decrease in accounts receivable d.An increase in accounts payable

c.A decrease in accounts receivable

Which of the following increases retained earnings? a.Dividends b.Net loss c.Net income d.None of these choices are correct.

c.Net income

Treasury stock that had been purchased for $5,500 last month was reissued this month for $6,500. The journal entry to record the reissuance would include a credit to a.Paid-In Capital from Sale of Treasury Stock for $6,500. b.Paid-In Capital in Excess of Par—Common Stock for $1,000. c.Paid-In Capital from Sale of Treasury Stock for $1,000. d.Treasury Stock for $6,500.

c.Paid-In Capital from Sale of Treasury Stock for $1,000.

The entry to record the issuance of common stock at a price above par includes a credit to a.Preferred Stock. b.Cash. c.Paid-In Capital in Excess of Par—Common Stock. d.Organizational Expenses.

c.Paid-In Capital in Excess of Par—Common Stock.

The numerator in the revenue per employee calculation is a.Revenue (beginning of year). b.Number of Employees. c.Revenue (for the period). d.None of these choices are correct.

c.Revenue (for the period).

Which of the following is not recorded with a journal entry? a.Dividend on the date of payment b.Dividend on the date of declaration c.Stock split d.All of these choices require journal entries.

c.Stock split

Which of the following is a disadvantage of a partnership when compared to a corporation? a.The partnership is more likely to have a net loss. b.The partnership is less expensive to organize. c.The partnership has unlimited liability. d.The partnership is easier to organize.

c.The partnership has unlimited liability.

The times interest earned ratio is used for all of the following except a.comparisons against the industry average for an individual company. b.comparisons between years for an individual company. c.The times interest earned ratio is used for all of these. d.comparisons between different companies.

c.The times interest earned ratio is used for all of these.

The times interest earned ratio is used for all of the following except a.comparisons between different companies. b.comparisons between years for an individual company. c.The times interest earned ratio is used for all of these. d.comparisons against the industry average for an individual company.

c.The times interest earned ratio is used for all of these.

The number of shares of stock that a corporation can issue as stated in its charter is referred to as a.issued. b.arrears. c.authorized. d.outstanding.

c.authorized

Common methods to divide partnership income or losses include all of the following except a.dividing it equally. b.basing it on partner salary allowances. c.basing it on working capital. d.basing it on interest on capital investments.

c.basing it on working capital.

When a new partner is admitted by contributing assets to the partnership, a.only total assets of the partnership are increased. b.only total owner's equity of the partnership is increased. c.both total assets and total owner's equity of the partnership are increased. d.there are no changes in either total assets or total owner's equity for the partnership.

c.both total assets and total owner's equity of the partnership are increased.

When a new partner is admitted by contributing assets to the partnership, a.only total owner's equity of the partnership is increased. b.only total assets of the partnership are increased. c.both total assets and total owner's equity of the partnership are increased. d.there are no changes in either total assets or total owner's equity for the partnership.

c.both total assets and total owner's equity of the partnership are increased.

On the statement of cash flows, the Cash flows from operating activities section would include a.payments for the acquisition of investments. b.receipts from the issuance of capital stock. c.cash payments for salaries. d.receipts from the sale of investments.

c.cash payments for salaries.

A debit balance in the capital account of a partner after selling noncash assets as part of liquidation is known as a a.gain on realization. b.gain. c.deficiency. d.cash balance.

c.deficiency.

A restriction/appropriation of retained earnings a.increases total retained earnings. b.decreases total retained earnings. c.does not change the balance in retained earnings. d.decreases total assets.

c.does not change the balance in retained earnings.

The details of a stock split are normally disclosed a.in a public service announcement. b.on the common share stock certificate. c.in the notes to the financial statements. d.in the corporate charter.

c.in the notes to the financial statements.

Cumulative preferred stock a.does not have the right to receive dividends in arrears. b.does not have the right to receive regular dividends that were not declared (paid) in prior years. c.includes the right to receive regular dividends that were not declared (paid) in prior years. d.None of these choices are correct.

c.includes the right to receive regular dividends that were not declared (paid) in prior years.

An installment note may be secured by a pledge of the borrower's assets. Such notes are called a.interest-only notes. b.short-term notes. c.mortgage notes. d.principal notes.

c.mortgage notes

A person may be admitted to a partnership by a.contributing liabilities to a partnership. b.purchasing an interest from one or more of the existing partners and contributing liabilities to a partnership. c.purchasing an interest from one or more of the existing partners. d.None of these choices are correct.

c.purchasing an interest from one or more of the existing partners.

When a partnership goes out of business, it is liquidated. The first step in this process is referred to as a.division of gain or loss. b.distribution to partners. c.realization. d.payment of liabilities.

c.realization.

An advantage of the corporate form of business entity is a.unlimited liability for stockholders. b.corporations are subject to more governmental regulations. c.the ease of transfer of ownership. d.double taxation.

c.the ease of transfer of ownership.

If $1,000,000 of 8% bonds are issued at 101 ½, the amount of cash received from the sale is a.$985,000. b.$1,000,000. c.$1,080,000. d.$1,015,000.

d.$1,015,000.

Morgan and Dana are partners. The partnership capital for Morgan is $50,000 and for Dana is $60,000. Townsend is admitted as a new partner by investing $40,000 cash. Townsend is given a 25% interest in return for her investment. The amount of the bonus to the old partners is a.$0. b.$27,500. c.$10,000. d.$2,500.

d.$2,500.

Charles, Carissa, and Clay are partners, sharing income 1:2:3. After selling all of the assets for cash, dividing losses on realization, and paying liabilities, the balances in the capital accounts are as follows: Charles, $50,000 Cr.; Carissa, $40,000 Dr.; and Clay, $20,000 Cr. How much cash is available for distribution to the partners? a.$110,000 b.$40,000 c.$20,000 d.$30,000

d.$30,000

The cost of merchandise sold during the year was $45,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total a.$47,000. b.$42,000. c.$48,000. d.$44,000.

d.$44,000.

Peachtree Company borrows $30,000 from the local bank at 7% interest. The term of the note is five years, and the annual payments remain constant at $7,317. Determine the decrease in notes payable that Peachtree Company should record in the first year. a.$1,735 b.$7,317 c.$2,100 d.$5,217

d.$5,217

The journal entry to record the sale of treasury stock might include a.a credit to Paid-In Capital from Sale of Treasury Stock. b.a credit to Treasury Stock. c.a debit to Paid-In Capital from Sale of Treasury Stock. d.All of these choices are correct

d.All of these choices are correct

A statement of stockholders' equity is normally prepared when a.there is a change in paid-in capital accounts. b.there is a purchase of treasury stock. c.there is a change in stock accounts. d.All of these choices are correct.

d.All of these choices are correct.

Corporations finance their operations using which of the following? a.debt such as purchasing on account or issuing bonds or notes payable b.issuance of common stock c.issuance of preferred stock d.All of these choices are correct.

d.All of these choices are correct.

In a liquidation, a.gains or losses are distributed according to the partnership agreement. b.the business will not continue. c.assets may be sold at amounts that differ from their original cost. d.All of these choices may occur.

d.All of these choices may occur.

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method? a.A decrease in inventory b.A decrease in prepaid expenses c.An increase in accrued expenses d.An increase in inventory

d.An increase in inventory

Which of the following is incorrect with regard to forming a partnership? a.Assets contributed by partners are debited to asset accounts. b.Liabilities assumed by a partnership are credited to liability accounts. c.The investments of each partner are recorded in separate entries. d.Assets contributed by partners are debited to capital accounts.

d.Assets contributed by partners are debited to capital accounts.

When a cash dividend is declared, which of the following accounts is credited? a.Cash Dividends b.Paid-In Capital c.Common Stock d.Cash Dividends Payable

d.Cash Dividends Payable

All of the following are normally found in a corporation's Stockholders' Equity section except a.Paid-In Capital in Excess of Par. b.Common Stock. c.Retained Earnings. d.Dividends Payable.

d.Dividends Payable.

The journal entry to issue 1,000,000 shares of $5 par common stock for $9 per share on July 2 would be a.July 2 Cash 9,000,000 Common Stock 9,000,000 b.July 2 Cash 5,000,000 Common Stock 5,000,000 c.July 2 Cash 5,000,000 Paid-In Capital in Excess of Par—Common Stock 4,000,000 Common Stock 9,000,000 d.July 2 Cash 9,000,000 Common Stock 5,000,000 Paid-In Capital in Excess of Par—Common Stock 4,000,000

d.July 2 Cash 9,000,000 Common Stock 5,000,000 Paid-In Capital in Excess of Par—Common Stock 4,000,000

Luke Enterprises has 300,000 shares of $20 par common stock outstanding. On January 19, Luke Enterprises declared a 3% stock dividend. The market price of the stock on January 19 was $28 per share. The journal entry to record the stock dividend would include a.a debit to Cash for $252,000. b.a debit to Stock Dividends Distributable for $252,000. c.a credit to Stock Dividends for $180,000. d.None of these choices are correct.

d.None of these choices are correct.

Price and Phil share income and losses equally after allowing for salaries of $24,000 to Price and $30,000 to Phil. Net income for the partnership is $45,000. Income should be divided as a.Price, $22,500; Phil, $22,500. b.Price, $27,000; Phil, $18,000. c.Price, $20,000; Phil, $25,000. d.Price, $19,500; Phil, $25,500.

d.Price, $19,500; Phil, $25,500.

When a corporation completes a 2-for-1 stock split, a.only the par value per share is decreased. b.only the ownership interest of current stockholders is decreased. c.only the market price per share of the stock is decreased. d.both market price per share and par value per share are decreased.

d.both market price per share and par value per share are decreased.

The entry to record issuance of an installment notes payable would include a a.debit to Notes Payable. b.credit to Cash. c.credit to Interest Expense. d.credit to Notes Payable.

d.credit to Notes Payable.

The entry to record an installment note payment would include a a.credit to Interest Expense. b.debit to Cash. c.credit to Notes Payable. d.debit to Notes Payable.

d.debit to Notes Payable.

On the statement of partnership equity, each partner's capital account a.is not shown. b.is shown combined into one column. c.does not reflect the changes due to capital additions, net income, or withdrawal. d.is shown as a separate column.

d.is shown as a separate column.

The payment of a portion of the amount initially borrowed of an installment note is referred to as a.principal and interest. b.interest only. c.any amount able to be paid. d.principal only.

d.principal only.

The two main sources of stockholders' equity are a.paid-in capital and liabilities. b.liabilities and retained earnings. c.net income and liabilities. d.retained earnings and paid-in capital.

d.retained earnings and paid-in capital.

Under the corporate form of business organization, a.stockholders wishing to sell their shares must get the approval of other stockholders. b.stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. c.a stockholder is personally liable for the debts of the corporation. d.stockholders wishing to sell their shares need not get the approval of other stockholders, thus making it easy to transfer ownership rights.

d.stockholders wishing to sell their shares need not get the approval of other stockholders, thus making it easy to transfer ownership rights.

A bond indenture is a.a bond that is secured by specific assets of the issuing corporation. b.a bond that is unsecured. c.a bond that has past due interest payments. d.the underlying contract between the corporation issuing the bonds and the bondholders.

d.the underlying contract between the corporation issuing the bonds and the bondholders.

A $1,000 bond quoted at 100 could be purchased or sold at a.$1,000. b.$100. c.$1,100. d.$900.

a.$1,000.

What is the total stockholders' equity based on the following data? Common stock--$900,000 Excess of issue price over par--375,000 Retained earnings (deficit--50,000 a.$1,225,000 b.$1,275,000 c.$1,325,000 d.$900,000

a.$1,225,000

Financial statement data for the year ending December 31 for Power Company are shown below.Net income$680,000Preferred dividends$20,000Average number of common shares outstanding120,000sharesWhat is earnings per share for the year? a.$5.50 b.$5.67 c.$5.83 d.None of these choices are correct.

a.$5.50

Hsu Company issued $100,000 of 8% bonds on January 1 at face value. The bonds pay interest semiannually on June 30 and December 31. The total interest expense related to these bonds for the first year ended December 31 is a.$8,000. b.$2,000. c.$12,000. d.$4,000.

a.$8,000

Creighton Company reported the following on the company's income statement for the year. Interest expense--$600,000 Income before income tax expense--4,200,000 What is the times interest earned ratio? a.8.0 b.6.0 c.7.0 d.None of these choices are correct.

a.8.0