In: Accounting
1. On January 1, a company issues bonds dated January 1 with a par value of $260,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 6% and the bonds are sold for $271,091. The journal entry to record the first interest payment using straight-line amortization is: (Rounded to the nearest dollar.)
Multiple Choice
Debit Bond Interest Expense $10,209; credit Discount on Bonds Payable $1,109; credit Cash $9,100.
Debit Bond Interest Expense $7,991; debit Premium on Bonds Payable $1,109; credit Cash $9,100.
Debit Bond Interest Expense $10,209; credit Premium on Bonds Payable $1,109; credit Cash $9,100.
Debit Bond Interest Expense $7,991; debit Discount on Bonds Payable $1,109; credit Cash $9,100.
Debit Interest Payable $9,100; credit Cash $9,100
2. Mayan Company had net income of $33,180. The weighted-average common shares outstanding were 8,400. The company has no preferred stock. The company's earnings per share is:
Multiple Choice
$1.17.
$4.01.
$5.00.
$3.95.
$3.89.
3. James Company has 2,500 shares of $100 par preferred stock, which were issued at par. It also has 20,000 shares of common stock outstanding, and its total stockholders' equity equals $600,000. The book value per common share is:
Multiple Choice
$26.67.
$17.50.
$15.56.
$30.00.
$100.00.
1 |
Discount amortization per period = (271091-260000)/10= $1109 |
Cash interest per period = 260000*7%/2= $9100 |
Debit Bond Interest Expense $10,209; credit Discount on Bonds Payable $1,109; credit Cash $9,100. |
Option A is correct |
2 |
Earnings per share = Net income/Weighted-average common shares outstanding |
Earnings per share = 33180/8400= $3.95 |
Option D is correct |
3 |
Book value per common share = (Total stockholders' equity-Preferred stock)/Shares of common stock |
Book value per common share = (600000-250000)/20000= $17.50. |
Option B is correct |