Practice Quiz 4 SOLUTIONS

Practice Quiz 4 SOLUTIONS - ACCT 1201 Financial Accounting...

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ACCT 1201 Financial Accounting – Spring 2015 Quiz 4 Professor Devon Erickson STUDENT NAME: __________________________________________ STUDENT SECTION (circle one): 8:00 AM 9:15 AM 10:30 AM Multiple Choice 1. If a bond sold at 98% of its principal amount, the stated rate of interest would be: a. higher than the market rate of interest b. lower than the market rate of interest c. equal to the market rate of interest d. unrelated to the market rate of interest 2. Full-Of-It, Inc., was authorized to issue 5,000 shares of common stock. The company issued 4,000 shares and repurchased 500 shares of treasury stock. The number of shares considered in the determination of earnings per share is: 3. When a company pays cash to repurchase its own stock: 1

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4. On 1/1/2014 I-Have-Had-Enough Company issues \$50,000 bonds for a price of \$58,000. The bonds have a stated rate of 7% and a term of 10 years with interest paid annually. Assuming the company uses straight-line interest amortization, what is the amount of interest expense that the company should recognize on 12/31/2014? 5. Not-Soon-Enough Enterprises purchased 1,000 shares of its own \$5 par value common stock. The cost of the stock was \$12 per share. Which general journal entry below reflects this transaction? a. Treasury stock 12,000 Common stock 5,000 Additional paid-in capital 7,000 b. Cash 12,000 Treasury stock 5,000 Additional paid-in capital 7,000 c. Treasury stock 12,000 Cash 12,000 d. Common stock 5,000 Retained earnings 7,000 Cash 12,000

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