1. On March 31, 2020, if the balance in Bonds Payable is $3,000,000 and the balance...

1. On March 31, 2020, if the balance in Bonds Payable is $3,000,000 and the balance in Unamortized Premium on Bonds Payable (Premium on Bonds Payable) is $100,000, what is the amount for the carrying value of the bonds at March 31, 2020?

		A. 3,100,000
		B. 3,000,000
		C. 2,900,000
		D. 100,000
		E. None of the above

2. STATEMENT OF CASH FLOW: Company A has a net income of 1,000,000, depreciation of 500,000, a decrease in accounts receivable of 300,000, and an increase in accounts payable of 100,000. Using the indirect method, what is the amount for net cash flow from operating activities?

		A. 1,900,000
		B. 1,700,000
		C. 1,500,000
		D. 1,100,000
		E. None of the above

3. In which comparison between the market rate and the stated rate are the bonds issued at a discount?

		A. Market rate 10% Stated rate 10%
		B. Market rate 2% Stated rate 10%
		C. Market rate 8% Stated rate 2%
		D. None of the above

Solutions

Expert Solution

Par value of bonds= $3,000,000

Unamortized bond premium = $100,000

Carrying value of bonds = Par value of bonds+ Unamortized bond premium

= 3,000,000+100,000

= $3,100,000

the amount for the carrying value of the bonds at March 31, 2020 = $3,100,000

Correct option is A.

Statement of Cash Flows (Partial)
Cash flow from Operating Activities
Net income	1,000,000
Add: Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense	500,000
Changes in current operating assets and liabilities:
Accounts receivable decrease	300,000
Accounts payable increase	100,000
Net cash provided by Operating Activities		$1,900,000

the amount for net cash flow from operating activities = $1,900,000

Correct option is A.

When market rate is more than stated rate, bonds are issued at a discount.

Correct option is C.

Kindly comment if you need further assistance. Thanks

ekkarill92 answered 1 year ago

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