Old Exam Ron Lazer - ACCT 2331 Review Final Exam Dr. Ron...

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ACCT 2331 Review – Final Exam Dr. Ron Lazer Source: Old Exams 1.Which of the following is not a characteristic of Bonds? A. Payment of interest to bondholders is required B. They are not secured by any specific assets of the corporation C. Bondholders have priority over common stockholders in the liquidation of assets D. Bonds cannot be retired before the end of their life 2. F Corporation has authorized an issue of 15%, 10-year bonds. At the issue date the market rate of interest for this type of bond is 13.5%. On these facts it might be expected that: A. The company will find it difficult to sell the bonds B. The bonds will be sold at a premium C. The bonds will be sold at a discount D. The bonds will be sold at face value E. The bond contract will be rewritten because it is inconsistent. 3. On January 1, 2002, ABC Company issued $10,000 of 8%, 12 year bonds for $9,632 cash. The bonds are dated January 1, 2002, and pay interest annually each December 31. The market rate of interest on the bonds is 8.5% on the issue date. The bond interest expense to be reported on the income statement for the year ended December 31, 2002 will be somewhere between (using the effective interest method to amortize any premium or discount): A. Less than $775 B. $755-794 C. $795-814 D. $815-834 E. More than $834
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issued $10,000 of 8%, 12 year bonds for $9,632 cash. The bonds are dated January 1, 2002, and pay interest annually each December 31. The market rate of interest on the bonds is 8.5% on the issue date. The cash paid for interest on December 31, 2002 would be: A. $768 B. $800 C. $816 D. $850 5. An investor wishes to have $1,000 available in five years. How much should be invested today, if the current interest rate is 5 percent (round to the nearest dollar)? A. $784 B. $614 C. $433 D. $772 6. On January 1, 2002, Sawyer Company issued $100,000 of its 10 year bonds payable to generate cash for expansion. The bonds will retire in 10 years, and have a stated rate of 5 percent. Interest will be paid annually each December 31, starting December 31, 2002. If Sawyer issued the bonds to yield an effective (market) rate of 4 percent, what amount of cash would Sawyer receive at issue (round to nearest whole dollar)? A. $100,000 B. $108,115 C. $ 67,560 D. $ 92,277 7. Turbo Distributors issued bonds with a face value of $100,000 on January 1, 20X1 for $110,000. On December 31, 20x5, they retired these bonds at 104. At that time, the balance in the premium account was $5,000. What is the gain or loss reported on the retirement of the bonds? A. $5,000 loss
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Old Exam Ron Lazer - ACCT 2331 Review Final Exam Dr. Ron...

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