M131BCH17PRACTICEPROBLEMSwithsolutions

# Intermediate Accounting

This preview shows pages 1–2. Sign up to view the full content.

M131B: INTERMEDIATE ACCOUNTING CHAPTER 17 PRACTICE PROBLEMS NAME:_______________________________________ ID#__________________________________________ 1. On November 1, 2007, Morton Co. purchased Gomez, Inc., 10-year, 9%, bonds with a face value of \$250,000, for \$225,000. An additional \$7,500 was paid for the accrued interest. Interest is payable semiannually on January 1 and July 1. The bonds mature on July 1, 2014. Morton uses the straight-line method of amortization. Ignoring income taxes, the amount reported in Morton's 2007 income statement as a result of Morton's available-for-sale investment in Gomez was a. \$4,375. b. \$4,167. c. \$3,750. d. \$3,333. (\$250,000 × .045) + (\$25,000 × 2/80) – \$7,500 = \$4,375. 2. During 2005, Plano Co. purchased 2,000, \$1,000, 9% bonds. The carrying value of the bonds at December 31, 2007 was \$1,960,000. The bonds mature on March 1, 2012, and pay interest on March 1 and September 1. Plano sells 1,000 bonds on September 1, 2008, for \$988,000, after the interest has been received. Plano uses straight-line amortization.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 3

M131BCH17PRACTICEPROBLEMSwithsolutions - M131B INTERMEDIATE...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online