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1aexam4sample - ACCT1A - Financial Accounting Sample Exam 4...

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ACCT1A - Financial Accounting Sample Exam 4 Name: __________________________ Date: _____________ 1. A company issued 10%, 5-year bonds with a par value of $400,000. The market rate when the bonds were issued was 8%. The company received $432,458 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is: A) $21,622.90. B) $20,000.00. C) $ 4,324.58. D) $17,298.32 E) $16,000.00 2. A company has 3,000 shares of $2 par value common stock and 1,500 shares of 8%, $150 par, non-cumulative preferred stock outstanding. The balance in Retained Earnings at the beginnin g of the year was $400,000. The Net Loss for the current year was $30,000. If the company paid a dividend of $1 per share on its common stock, what is the balance in Retained Earnings at the end of the year? A) $349,000 B) $365,800 C) $451,000 D) $400,000 E) $409,000 3. The contract between the bond issuer and the bondholders, which identifies the rights and obligations of the parties, is called a(n): A) Debenture. B) Bond indenture. C) Mortgage. D) Installment note. E) Mortgage contract. 4. A corporation issued 300 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state . The entry to record this transaction will include: A) A $1,800 credit to Common Stock. B) A $1,500 debit to Organization Expenses. C) A $300 credit to Contributed Capital in Excess of Par Value, Common Stock. D) A $1,800 debit to Legal Expenses. E) A $1,800 credit to Cash. Page 1
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ACCT1A - Financial Accounting Sample Exam 4 5. A company issued 7-year, 8% bonds with a par value of $200,000. The market rate when the bonds were issued was 5.5%. The company received $203,010 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is: A) $8,000 B) $8,215 C) $7,785 D) $16,000 E) $4,990 6. A company retires its bonds at 105. The carrying value of the bonds at the retirement date is $103,745. The issuer's journal entry to record the retirement will include a: A) Debit to Premium on Bonds. B) Credit to Premium on Bonds. C) Debit to Discount on Bonds. D) Credit to Gain on Bond Retirement. E) Credit to Bonds Payable. 7. Buying stock in a corporation is attractive to investors because: A) Stockholders are not liable for the corporation's actions and debts. B) Stock is easily transferred. C) A corporation has unlimited life. D) Shareholders are not agents of the corporation. E) All of the above. 8. A company has bonds outstanding with a par value of $100,000. The unamortized premium on these bonds is $2,700. If the company retired these bonds at a call price of 99, the gain or loss on this retirement is: A) $ 1,000 gain. B)
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1aexam4sample - ACCT1A - Financial Accounting Sample Exam 4...

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