Accounting II Graded Exam #1

Accounting II Graded Exam #1 - My...

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Question A company must repay the bank $10,000 cash in 3 years for a loan it entered into. The loan is at 8% interest compounded annually. The present value factor for 3 years at 8% is 0.7938. The present value of the loan is: 1 Correct 6.00 points out of 6.00 Select one: a. $10,000. b. $12,400. C. $7,938 . ._/ d. $9,200. e. $7,600. The correct answer is:$ 7,938.
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Question Correct 6.00 points out of 6.00 Question Incorrect 0.00 points out of 6.00 Question Correct 6.00 points out of 6.00 Investments in held-to-maturity debt securities are always current assets. Select one: True False ._/ The correct answer is 'False'. Callable bonds reduce the bondholder's risk by requiring the issuer to create a sinking fund of assets set aside at specified amounts and dates to repay the bonds at maturity. Select one: True False X The correct answer is 'True'. A company purchased $60,000 of 5% bonds on May 1. The bonds pay interest on February 1 and August 1. The amount of interest accrued on December 31 (the company's year-end) would be: Select one: a.$ 250. b.$ 500. c.$1,250. ._/ d. $2,500. e.$3,000. The correct answer is: $1,250.
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Question Correct 6.00 points out of 6.00 Question Correct 6.00 points out of 6.00 Question Correct 6.00 points out of 6.00 On March 15, Carter Company purchased 10,000 shares of Tonya Corp. stock for $35,000. This investment is considered to be an available-for-sale investment. On June 30, the stock had a market value of $38,000. Carter must report: Select one: a. The $3,000 difference on the income statement as a gain. b. The $3,000 difference as an adjustment to the market value at year-end. c. The $3,000 difference in the equity section of the balance sheet. d.A&C e. B &C .,/ The correct answer is: B & C The party that has the right to exercise the call option on callable bonds is(are): Select one: a. The bondholders.
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