ch 10/11

On January 1, 2016 Brown Co. issued $200,000 of 10%, 20-year bonds. If Bluefield's tax rate is 40%, the after-tax cost of borrowing related to these bonds for 2016 is: A. $12,000. B. $8,000. C. $20,000. D. $28,000.

12000

Williams Company issued $200,000 of callable bonds at face value on January 1, 2016. The bonds carried a 2% call premium. If Williams calls the bonds, this event would A. decrease equity by $4,000. B. decrease liabilities by $200,000. C. decrease assets by $204,000. D. all of these answer choices are correct.

all of these answer choices are correct

Jones Company issued bonds with a $200,000 face value on January 1, 2016. The five-year term bonds were issued at 97 and had a 7 ½ % stated rate of interest that is payable in cash on December 31st of each year. Jones amortizes the bond discount using the straight-line method. Based on this information: The amount of cash outflow from operating activities shown on Jones's December 31, 2017 statement of cash flows would be: A. $15,000. B. $16,200. C. $13,800. D. $17,400.

15000

Thrasher Company reported income before taxes of $180,000. The company is in a 30% income tax bracket. Also, Thrasher's income statement contained a charge for interest expense amounting to $60,000. Based on this information alone, the company's times interest ratio would be: A. 2.1. B. 3.0. C. 3.1. D. 4.0.

4.0

Bluestone Company issued bonds with a face value of $500,000 on January 1, 2016 at 90. Which of the following journal entries would be required to record the bond issue?

Debit Cash 450,000 Debit Discount on Bonds Payable 50,000 Credit Bonds Payable 500,000

Fred and Barney started a partnership. Fred invested $20,000 in the business and Barney invested $32,000. The partnership agreement stipulated that profits would be divided as follows: Each partner would receive a 15% return on invested capital with the remaining income being distributed equally between the two partners. Assuming that the partnership earned $38,000 during an accounting period, the amount of income assigned to the two partners would be:

Fred: 18100 Barney: 19900

Which of the following entities would have the "Paid-in Capital in Excess" account in the equity section of the balance sheet? A. A corporation. B. A municipality. C. A sole proprietorship. D. A partnership.

a corporation

Which of the following entities would report income tax expense on its income statement? A. A sole proprietorship. B. A corporation. C. A partnership. D. All of these answer choices are correct.

a corporation

Which of the following statements is a reason why a company would buy treasury stock? A. Because management believes the market price of stock is undervalued. B. To have stock available to issue to employees in stock option plans. C. To avoid a hostile takeover. D. All of these are reasons a company would buy treasury stock.

all of these are reasons a company would buy treasury stock

Rocco Corporation decides to issue a 7.5% stock dividend on 20,000 outstanding shares of $10 stated value common stock. The distribution is made at the time the market value of the stock is $50 a share. How will the entry to record this transaction affect the company's equity accounts?

common stock : 15000 paid in excess: 60000 retained earnings: <75000>

Which form of business organization is established as a legal entity separate from its owners? A. Sole proprietorship B. Partnership C. Corporation D. None of these

corporation

. The times-interest-earned ratio is calculated by which of the following? A. Total assets divided by interest expense. B. Net income divided by interest expense. C. Earnings before interest and taxes divided by interest expense. D. None of these answer choices is correct.

earnings before interest and taxes divided by interest expense

Ix Company issued 20,000 shares of $20 par value common stock at a market price of $32. As a result of this accounting event, the amount of stockholders' equity would A. increase by $640,000. B. be unaffected. C. increase by $240,000. D. increase by $400,000.

increase by 640000

. When the Common Stock account is disclosed on the balance sheet, it is reported at: A. current market value B. average issue price C. par or stated value D. lower of cost or market

par or stated value

Which of the following is not a common restrictive covenant included in bond indentures to reduce risk to the investor? A. Maintenance of designated thresholds measured by financial ratios B. Restrictions on future borrowing activities C. Requirements that the names and addresses of the bondholders be registered with the bond issuer D. Limitations on the payment of dividends

requirements that the names and addresses of the bondholders be registered with the bond issuer

The reason bonds are sometimes issued at a discount is: A. the stated rate of interest is higher than the rate being paid on investments in the securities market with comparable risk. B. the stated rate of interest is the same as the rate being paid on investments in the securities market with comparable risk. C. the stated rate of interest is lower than the rate being paid on investments in the securities market with comparable risk. D. the bonds are being issued between interest payment dates.

the stated rate of interest is lower than the rate being paid on investments in the securities market with comparable risk

Napoli Industries had net income for the year 2016 of $650,000. Napoli had an average number of shares outstanding at the end of the year of 500,000 shares. The market price of Napoli's stock on January 1, 2016 was $20 per share. On December 31, 2016, the market price was $22 per share. The price-earnings ratio for Napoli at year end is closest to: A. 16.9 B. 16.2 C. 15.4 D. None of these answer choices are correct

16.2

Jones Company issued bonds with a $200,000 face value on January 1, 2016. The five-year term bonds were issued at 97 and had a 7 ½ % stated rate of interest that is payable in cash on December 31st of each year. Jones amortizes the bond discount using the straight-line method. Based on this information: The amount of interest expense shown on Jones's December 31, 2016 income statement would be: A. $16,200. B. $21,000. C. $15,000. D. $13,800.

16200

Jones Company issued bonds with a $200,000 face value on January 1, 2016. The five-year term bonds were issued at 97 and had a 7 ½ % stated rate of interest that is payable in cash on December 31st of each year. Jones amortizes the bond discount using the straight-line method. Based on this information: The total amount of liabilities shown on Jones's December 31, 2017 balance sheet would be: A. $191,600. B. $194,000 . C. $196,400. D. $195,200.

196400

On January 1, 2016, Sheffield Co. issued bonds with a face value of $200,000, a term of ten years, and a stated interest rate of 6%. The bonds were issued at 105, and interest is payable each December 31. Sheffield uses the straight-line method to amortize the bond discount. The carrying value of the bonds that would be reported on the December 31, 2019 balance sheet is: A. $204,000. B. $200,000. C. $205,000. D. $206,000.

206000

Victor Company issued bonds with a $250,000 face value and a 6% stated rate of interest on January 1, 2016. The bonds carried a 5-year term and sold for 95. Victor uses the straight-line method of amortization. Interest is payable on December 31 of each year. 91. The carrying value of the bond liability on the December 31, 2018 balance sheet was: A. $241,000. B. $242,500. C. $237,500. D. $245,000.

245000

Franklin Corporation reported net income of $75,000 in 2016. The company had 100,000 shares of $12 par value common stock outstanding and a market price of $18 per share. Franklin's price-earnings ratio was A. 2.4:1 B. 24:1 C. 16.6:1 D. 1.5:1

24:1

At the end of the accounting period, Houston Company had $12,000 of par value common stock issued, additional paid in capital of $11,000, retained earnings of $12,000, and $4,000 of treasury stock. The total amount of stockholders' equity is: A. $37,000. B. $39,000. C. $19,000. D. $31,000.

31000

Weller Company issued bonds with a face value of $400,000, a 10% stated rate of interest, and a 10-year term. The bonds were issued on January 1, 2016, and Weller uses the effective interest method of amortization. The market rate of interest on the date of issue was 8%. Interest is paid annually on December 31. Assuming Weller issued the bond for $431,940, the amount of interest expense appearing on the 2018 income statement would be: A. $33,649. B. $20,000. C. $34,120. D. $46,350.

33649

Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of interest, and a 10-year term. The bonds were issued on January 1, 2016, and Wayne uses the straight-line method of amortization. Interest is paid annually on December 31. Assuming Wayne issued the bond for 102½, the amount of interest expense appearing on the 2016 income statement would be: A. $34,500. B. $36,000. C. $37,500. D. $15,000.

34,500

Montana Company was authorized to issue 200,000 shares of common stock. The company had issued 50,000 shares of stock when it purchased 10,000 shares of treasury stock. The number of outstanding shares of common stock was: A. 190,000. B. 60,000. C. 40,000. D. 50,000.

40000

Weller Company issued bonds with a face value of $400,000, a 10% stated rate of interest, and a 10-year term. The bonds were issued on January 1, 2016, and Weller uses the effective interest method of amortization. The market rate of interest on the date of issue was 8%. Interest is paid annually on December 31. Assuming Weller issued the bonds for $431,940, the carrying value of the bonds on the December 31, 2018 balance sheet would be closest to: A. $420,615. B. $426,495. C. $414,264. D. $404,800.

414264

Gilligan Corporation was established on February 15, 2014. Gilligan is authorized to issue 500,000 shares of $6.00 par value common stock. As of December 2016, Gilligan's stockholders' equity accounts report the following balances: common stock 6$ par, 500,000 shares authorized, 55,000 shares issued and outstanding: 330,000 PIC in excess of par - common: 440,000 (added up to 770000) retained earnings 1400000 total stockholders equity 21700000 At the end of 2016, Gilligan decides to issue a 5% stock dividend. At the time of issue, the market price of the stock was $22 per share Calculate the number of shares outstanding after the stock dividend is issued. A. 57,750 shares B. 55,000 shares C. 52,250 shares D. 525,000 shares

57750 shares

Gilligan Corporation was established on February 15, 2014. Gilligan is authorized to issue 500,000 shares of $6.00 par value common stock. As of December 2016, Gilligan's stockholders' equity accounts report the following balances: common stock 6$ par, 500,000 shares authorized, 55,000 shares issued and outstanding: 330,000 PIC in excess of par - common: 440,000 (added up to 770000) retained earnings 1400000 total stockholders equity 21700000 At the end of 2016, Gilligan decides to issue a 5% stock dividend. At the time of issue, the market price of the stock was $22 per share Determine the dollar value of the stock dividend issued by Gilligan Corporation. A. $60,500 B. $16,500 C. $44,000 D. $108,500.

60500

On January 1, 2016, The Hanover Corporation issued $70,500 of 8%, 5-year bonds at 97. Hanover uses the straight-line method of bond discount amortization. The interest payments are due on December 31 each year. 75. Based on the above, how much interest expense will Hanover report on its income statement on December 31, 2016? A. $423 B. $2,115 C. $5,640 D. $6,063

6063

Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of interest, and a 10-year term. The bonds were issued on January 1, 2016, and Wayne uses the straight-line method of amortization. Interest is paid annually on December 31. Assuming Wayne issued the bonds for 102½, the carrying value of the bonds on the December 31, 2016 balance sheet would be: A. $601,500. B. $613,500. C. $615,000. D. $616,500.

613500

Denver Co. issued bonds with a face value of $100,000 and a stated interest rate of 8%. The bonds have a life of five years and were sold at 102 ½. If Denver amortizes discounts and premiums using the straight-line method, the amount of interest expense each full year would be: A. $7,500. B. $8,500. C. $8,000 . D. $8,200.

7500

Curtain Co. paid dividends of $6,000; $12,000; and $20,000 during 2014, 2015 and 2016, respectively. The company had 1,000 shares of 5%, $200 par value preferred stock outstanding that paid a cumulative dividend. The amount of dividends received by the common shareholders during 2016 would be: A. $4,000 . B. $6,000 . C. $8,000. D. $10,000.

8000

Blair Scott started a sole proprietorship by depositing $75,000 cash in a business checking account. During the accounting period the business borrowed $30,000 from a bank, earned $18,000 of net income, and Scott withdrew $12,000 cash from the business. Based on this information, at the end of the accounting period Scott's capital account contained a balance of: A. $93,000. B. $111,000. C. $72,000. D. $81,000.

81000

Pace Company issued at 97 bonds with a face value of $200,000. As a result of the issue: A. Assets and liabilities would both increase by $200,000. B. Assets and liabilities would both increase by $194,000. C. Assets would increase by $194,000 and liabilities would increase by $200,000. D. Assets would increase by $200,000, and liabilities would increase by $194,000.

Assets and liabilities would both increase by 194,000

. Clayton Corporation made the following entry in its general journal on 12/31/16: Debit Interest Expense 5400 Credit Discount on bonds payable 400 Credit Cash 5000 Which of the following answers describes the above transaction? A. Clayton records interest expense and amortization of discount on bonds payable. B. Clayton issues bonds with a face value of $5,400 for $5,000 cash. C. Clayton records annual interest and amortization of premium on bonds . D. Clayton redeems callable bonds when the carrying value is $5,400.

Clayton records interest expense and amortization of discount on bonds payable

. On January 1, 2016, The Hanover Corporation issued $70,500 of 8%, 5-year bonds at 97. Hanover uses the straight-line method of bond discount amortization. The interest payments are due on December 31 each year. The journal entry used to record the issuance of the bond and the receipt of cash would be:

Debit Cash 68385 Debit Discount on Bonds Payable 2115 Credit Bonds Payable 70500

On January 1, 2016, The Hanover Corporation issued $70,500 of 8%, 5-year bonds at 97. Hanover uses the straight-line method of bond discount amortization. The interest payments are due on December 31 each year. The journal entry used to record the interest payment on December 31, 2017 would be:

Debit Interest Expense 6063 Credit Discount on Bonds Payable 423 Credit Cash 5640

Gilligan Corporation was established on February 15, 2014. Gilligan is authorized to issue 500,000 shares of $6.00 par value common stock. As of December 2016, Gilligan's stockholders' equity accounts report the following balances: common stock 6$ par, 500,000 shares authorized, 55,000 shares issued and outstanding: 330,000 PIC in excess of par - common: 440,000 (added up to 770000) retained earnings 1400000 total stockholders equity 21700000 At the end of 2016, Gilligan decides to issue a 5% stock dividend. At the time of issue, the market price of the stock was $22 per share What is the correct journal entry to record this transaction?

Debit retained earnings: 60500 Credit common stock: 16500 Credit PIC in excess of par -Common; 44000

The term "Retained Earnings" is best explained by which of the following statements? A. Money set aside for the redemption of bonds. B. The difference between total revenue and total expenses in an accounting period. C. Cash retained in a separate bank account designated for emergency uses. D. A measure of capital generated through operating activities.

a measure of capital generated through operating activities

Which of the following is not a reason why a corporation may choose to not pay dividends? A. The board and management prefer to reinvest all net income for future growth. B. The corporation does not have adequate cash. C. The corporation does not have adequate retained earnings. D. All of these are valid reasons to not pay dividends.

all of these are valid reasons to not pay dividends

Which of the following statements best describes the term "par value?" A. The number of shares currently in the hands of stockholders . B. The amount that must be paid to purchase a share of stock. C. Determined by dividing total stockholder's equity by the number of shares of stock. D. An amount used in determining a corporation's legal capital.

an amount used in determining a corporations legal capital

Where is treasury stock reported on a corporation's balance sheet? A. As an addition to total paid-in capital B. As a deduction from total stockholders' equity, following Retained Earnings C. As a deduction from total paid-in capital D. As a deduction from Retained Earnings

as a deduction from total stockholders equity following retained earnings

Straight-line interest amortization of a premium or discount on bonds payable: A. assigns variable amounts of interest over the term of the liability. B. uses compound interest principles. C. assigns the same amount of interest to each interest period over the term of the liability. D. is required for U.S. income tax reporting.

assigns the same amount of interest to each interest period over the term of the liability

Company A and Company B are identical in all regards except that during 2016 Company A borrowed $40,000 at an interest rate of 10%. In contrast, Company B obtained financing by acquiring $40,000 from sale of common stock. Company B agreed to pay a $4,000 cash dividend each year. Both companies are in a 30% tax bracket. Which company would show the greater retained earnings at the end of 2016, and by what amount? A. Company A's retained earnings would be higher by $4,000. B. Company B's retained earnings would be higher by $2,800. C. Company A's retained earnings would be higher by $1,200. D. Both would show the same retained earnings.

company a's retained earnings would be higher by 1200

The term "double taxation" refers to which of the following? A. Corporations must pay income taxes on their net income, and their stockholders must pay income taxes on their dividends. B. In a partnership, both partners are required to claim their share of net income on their tax returns. C. A sole proprietorship must pay income taxes on its net income and the owner is also required to pay income taxes on withdrawals. D. A sole proprietorship must pay income taxes to both the state government and the federal government.

corporations must pay income taxes on their net income and their stockholders must pay income taxes on their dividends

Jacobs Company issued bonds with $300,000 face value on January 1, 2016. The bonds were issued at 102 and carried a 5-year term to maturity. They had a 9% stated rate of interest that was payable in cash on December 31st of each year. Jacobs uses the straight-line method of amortization. Based on this information alone, the recognition of interest expense on December 31, 2016 would act to: A. Decrease equity by $25,800, decrease liabilities by $1,200, and decrease assets by $27,000. B. Decrease both assets and equity by $2,700. C. Decrease both assets and equity by $25,800. D. Increase liabilities by $1,200, decrease assets by $25,800, and decrease equity by $27,000.

decrease equity by 25800, decrease liabilities by 1200 and decrease assets by 27000

The carrying value of a bond issued at a premium: A. decreases by equal amounts each year if straight-line amortization is used. B. decreases by equal amounts each year if effective interest amortization is used. C. decreases by larger and larger amounts each year if effective interest amortization is used. D. decreases by equal amounts each year if straight-line amortization is used and decreases by increasing amounts each year if effective interest amortization is used.

decreases by equal amounts each year if straight-line amortization is used and decreases by increasing amounts each year if effective interest amortization is used

Gates, Inc. and Markham, Inc. each had the same financial position on January 1, 2016. The following is a summary of each of their balance sheets as of January 1, 2016: Current Assets 330,000 non-current assets 2970000 current liabilities 165000 non-current liabilities 1815000 common stock 907500 retained earnings 412500 Gates is about to raise $200,000 in cash by issuing bonds. Markham is going to raise $200,000 on the same day by issuing common stock. Immediately after these transactions, which of the following statements will be correct? A. Gates's current ratio will be higher than Markham's. B. Gates's current ratio will be lower than Markham's. C. Gates's debt to asset ratio will be higher than Markham's. D. Gates's debt to asset ratio will be lower than Markham's.

gates debt to asset ratio will be higher than Markham's

The par value of a company's stock A. dictates the initial price of the stock. B. may be revised each time a company issues more shares of stock. C. is generally greater than market value. D. has little connection to the market value of the stock.

has little connection to the market value of the stock

The declaration and issuance of a stock dividend will A. decrease the current ratio B. have an effect on the current ratio that depends on the market price of the stock at the time the dividend is declared C. increase the current ratio D. have no effect on the current ratio

have no effect on the current ratio

If a bond is sold at 101, its stated rate of interest would be: A. equal to the market rate. B. unrelated to the market rate. C. higher than the market rate. D. lower than the market rate.

higher than the market rate

Ogilvie Corp. issued 12,000 shares of no-par stock for $40 per share. Ogilvie was authorized to issue 35,000 shares. What effect will this event have on the company's financial statements? A. Increase assets by $1,400,000, increase equity by $1,400,000. B. Increase assets by $480,000, increase equity by $480,000. C. Increase cash flow from investing activities by $480,000. D. None of these answer choices are correct.

increase assets by 480000 increase equity by 480000

Which of the following is not considered an advantage of the corporate form of business organization? A. Ability to raise capital. B. Continuity of existence. C. Ease of transferability of ownership. D. Lack of government regulation.

lack of government regulation

The payment of a previously declared cash dividend will A. decrease assets and equity. B. increase liabilities and decrease equity. C. decrease liabilities and increase equity. D. None of these answer choices are correct.

none of these answer choices are correct

Which of the following terms designates the maximum number of shares of stock that a corporation may issue? A. Number of shares issued B. Number of shares authorized C. Par value D. Number of shares outstanding

number of shares authorized

Which of the following statements about types of business entities is true? A. For accounting purposes a sole proprietorship is not a separate entity from its owner. B. Ownership in a partnership is represented by having shares of capital stock. C. One advantage of a corporation is ability to raise capital. D. Sole proprietorships are subject to double taxation.

one advantage of a corporation is ability to raise capital

Issuing bonds payable when the market interest rate is less than the stated interest rate: A. results in bonds being issued at a premium. B. results in bonds being issued at less than their face value. C. raises the effective interest rate above the stated rate of interest. D. results in bonds being issued at a premium and the effective interest rate is higher than the stated rate.

results in bonds being issued at a premium

Bonds that mature at specified intervals throughout the life of the issuance are called: A. term bonds. B. registered bonds. C. coupon bonds. D. serial bonds.

serial bonds

Which of the following is one of the main advantages of using long-term debt financing instead of equity financing? A. Not having to pay back the principal. B. Ability to raise large amounts of capital. C. Tax-deductibility of interest. D. Tax-deductibility of dividends.

tax-deductibility of interest

At the time that Kirby Company issued a 2-for-1 stock split, the company had 5,000 shares of $6 par value common stock outstanding. Stockholders' equity also contained $15,000 of additional paid in capital and $22,000 of retained earnings. Immediately after the stock split, A. the balance in the common stock account would amount to $30,000. B. the amount of paid-in capital would be equal to $150,000. C. the balance in the retained earnings account would amount to $11,000. D. the number of outstanding shares of common stock would be 2,500.

the balance in the common stock account would amount to 30000

Which of the following statements about Treasury Stock is correct? A. The balance in the Treasury Stock account increases paid-in capital. B. The balance in the Treasury Stock account reduces paid-in capital. C. The balance in the Treasury Stock account reduces total Stockholders' Equity. D. The balance in Treasury Stock reduces Retained Earnings.

the balance in the treasury stock account reduces total stockholders equity

A discount or premium on bonds payable can be defined by which of the following statements? A. The difference between the market price on the issue date and the face value. B. The difference between the call price and the face value of the bond. C. The market rate of interest on the date of the bond issuance. D. The difference between the interest rate and the market price of the bond.

the difference between the market price on the issue date and the face value

On June 10, 2016, Burton Builders, Inc., a publicly traded company, announced that it had been awarded a contract to build a football stadium at a contract price of $500 million. This contract would increase its projected revenues by 20% over the next three years. Which of the following statements is correct with regard to this announcement? A. The market price of Burton's stock will probably be higher on June 11, 2016 than on June 10th. B. Burton's net cash flow from operations will increase by 20% over the next three years. C. Burton's assets should be increased by $500 million on June 10, 2016 to recognize this contract. D. Burton's net income will increase by 20% over the next three years.

the market price of burton's stock will probably be higher on june 11 2016 then on june 10

Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of interest, and a 10-year term. The bonds were issued on January 1, 2016, and Wayne uses the straight-line method of amortization. Interest is paid annually on December 31. If Wayne issued the bonds for 96, A. the market rate of interest was equal to the stated rate of interest. B. the market rate of interest was lower than the stated rate of interest. C. the market rate of interest was higher than the stated interest rate. D. the bonds carried a variable or floating rate that changed in response to market conditions.

the market rate of interest was higher than the stated interest rate

On January 2, 2016, Torres Corporation issued 20,000 shares of $10 par-value common stock for $11 per share. Which of the following statements is true? A. The Common Stock account will increase by $220,000. B. The Cash account will increase by $200,000. C. Total equity will increase by $200,000. D. The Paid-in Capital in Excess of Par Value account will increase by $20,000.

the paid-in capital in excess of par value account will increase by 20000

Which of the following is not normally a preference given to the holders of preferred stock? A. The right to receive a specified amount of dividends prior any being paid to common stockholders. B. The right to vote before the common stockholders at the corporation's annual meeting. C. The right to receive preference over common stockholders as to the distribution of assets during a liquidation process. D. All of these are preferences given to preferred stock.

the right to vote before the common stockholders at the corporations annual meeting

A five-year, $500,000 bond was issued on January 1, 2016. The stated rate of interest was 8%, and the effective rate of interest was 10%. The interest is paid semiannually. Which of the following statements is correct? A. This bond was issued at a premium, and each semiannual cash payment is $25,000. B. This bond was issued at a discount, and each semiannual cash payment is $20,000. C. This bond was issued at a discount, and the annual interest expense is $40,000. D. This bond was issued at a premium, and the annual interest expense is $40,000.

this bond was issued at a discount and each semiannual cash payment is 20000

A reason often given for a corporate stock split is: A. to reduce the market price of the stock. B. to protect the interest of creditors. C. to increase the par value of the stock. D. to absorb the treasury stock.

to reduce the market price of the stock

Which of the following is a negative or contra stockholders' equity account? A. Retained Earnings B. Paid-in Capital in Excess of Par C. Treasury Stock D. Appropriated Retained Earnings

treasury stock

Which of the following is a disadvantage of a sole proprietorship? A. Entrenched management. B. Double taxation. C. Unlimited liability. D. Excessive regulation.

unlimited liability

If a company uses the effective interest method of amortizing a bond discount, the interest expense that is recognized each year A. will be greater than the interest payment. B. will increase from year to year. C. will remain the same from year to year. D. will be greater than the interest payment and also will increase from year to year.

will be greater than the interest payment and also will increase from year to year

If a company uses the effective interest method of amortizing a bond premium, the carrying value of the bond A. will decrease by equal amounts each year. B. will decrease by smaller amounts each year. C. will decrease by larger amounts each year. D. will be lower than the face value of the bond until maturity.

will decrease by larger amounts each year

Victor Company issued bonds with a $250,000 face value and a 6% stated rate of interest on January 1, 2016. The bonds carried a 5-year term and sold for 95. Victor uses the straight-line method of amortization. Interest is payable on December 31 of each year. The amount of interest expense appearing on the December 31, 2018 income statement would be: A. $17,500. B. $12,500. C. $14,250 . D. $15,000.

17500

Which of the following would not be a reason for the market price of Carlyle Corporation to increase? A. Carlyle Corp. has had good earnings in the present period . B. A sustained increase in key interest rates. C. The general condition and future outlook of the economy is good. D. Investors believe Carlyle Corp. will do well in the future.

a sustained increase in key interest rates

On September 1, 2016, Orville Corporation has unrestricted Retained Earnings of $600,000, Appropriated Retained Earnings of $400,000, Cash of $850,000, and Accounts Payable of $50,000. What is the maximum amount that can be used for cash dividends? A. $850,000 B. $600,000 C. $800,000 D. $450,000

600000

Which of the following conditions indicate a company has a relatively high level of financial risk? A. A low times interest earned ratio. B. A low debt to assets ratio. C. A high return on equity. D. A high current ratio.

a low times interest earned ratio

Llewelyn Company purchased 1,000 shares of its own $10 par value common stock when the market price of the stock was $36 per share. Select the journal entry that correctly records Llewelyn's purchase of treasury stock.

debit treasury stock: 36000 credit cash 36000

The issuance of a stock dividend will A. decrease total assets. B. increase retained earnings . C. decrease paid-in capital. D. not affect total equity.

not effect total equity

For 2016, the Sacramento Corporation had beginning and ending Retained Earnings balances of $208,054 and $231,012 respectively. Also during 2016, the corporation declared and paid cash dividends of $29,000 and issued stock dividends valued at $16,000. Total expenses were $32,916. Based on this information, what was the amount of total revenue for 2016? A. $68,158 B. $143,154 C. $100,874 D. $179,132

100874

Eureka Company issued $100,000 in bonds payable on January 1, 2016. The bonds were issued at face value and carried 5-year term to maturity. They had a 7% stated rate of interest that was payable in cash on January 1st of each year beginning January 1, 2017. Based on this information, the amount of total liabilities appearing on the December 31, 2016 balance sheet would be: A. $100,000. B. $7,000. C. $99,300. D. $107,000.

107000

Flagler Corporation shows a total of $660,000 in its Common Stock account and $1,600,000 in its Paid-in Capital Excess account. The par value of Flagler's common stock is $8. How many shares of Flagler stock have been issued? A. 117,500. B. 200,000. C. 82,500. D. It cannot be determined

82500

Helena Corporation declared a 2-for-1 stock split on 8,000 shares of $6 par value common stock. If the market price of the stock had been $25 a share before the split, the par value, number of shares, and approximate market value after the split would be:

Par Value: 3.00 No. of Shares: 16000 Market Value: 25.00

The price-earnings ratio is calculated as: A. The market price of a share of stock divided by the earnings per share. B. The interest rate on borrowed money divided by the current prime rate. C. The price of a company's products as compared to its net income. D. The market value of a company's stock divided by average earnings over the past three years.

the market price of a share of stock divided by the earnings per share