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:
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
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
of the year?
3. The contract between the bond issuer and the bondholders, which identifies the
rights and obligations of the parties, is called a(n):
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 $1,800 credit to Common Stock.
A $1,500 debit to Organization Expenses.
A $300 credit to Contributed Capital in Excess of Par Value, Common Stock.
A $1,800 debit to Legal Expenses.
A $1,800 credit to Cash.