Weekly quizzes 2-6 and midterm week 4

Weekly quizzes 2-6 and midterm week 4 - Grade Details 1...

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Unformatted text preview: Grade Details 1. Question: (T CO D) Warranty4U provides extended service contracts on electronic equipment sold through major retailers. The standard contract is for three years. During the current year, Warranty4U provided 21,000 such warranty contracts at an average price of $81 each. Related to these contracts, the company spent $200,000 servicing the contracts during the current year and expects to spend $1,050,000 more in the future. What is the net profit that the company will recognize in the current year related to these contracts? Your Answer: $451 ’000' $1,501,000. $150,333. . $367,000. instructor (21,000 X $81) + 3 yrs} - $200,000 = $367,000. Chapter 13. Explanation: Points 4 of 4 Received: Comments: 2. Question: (T CO D) Mott Co. includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Mott $2.00 each. Mott estimates that 40 percent of the coupons will be redeemed. Data for 2010 and 2011 are as follows: 2010 201 1 Bags of dog food soid 500,000 800,000 Leashes purchased 18,000 22,000 Coupons redeemed 120,000 150,000 The estimated liability for premiums at December 31, 2010 is Y Answ‘g $7,500. $10,000. $17,500. $20,000. lnstrus’tor [(200,000 — 120,000) + 81X $2 = $20,000. Chapter 13. Explanation: Points 4 of4 Received: Comments: 3. Question: (l' CO D) On September 1, 2010, Herman Co. issued a note payable to National Bank in the amount of $1 200,000, bearing interest at 12% and payable in three equal annual principal payments of $400,000. On this date, the bank's prime rate was 11%. The first payment for interest and principal was made on September 1, 2011. At December 31, 2011, Herman should record accrued interest payable of Your Answer: $48’OOO' $44,000. $32,000. $29,334. 'nSWC’COF $800,000 x .12 x 4/12=$32,000. Chapter 13. Explanation: Points 4 of 4 Received: Comments: 4. Question: (I’ CO D) Edge Company's salaried employees are paid biweekly. Occasionally, advances made to employees are paid back by payroll deductions. lnfonnation relating to salaries for the calendar year 2011 is as follows: 1331110 12f3‘lf11 Employee advances $12,000 $ 18,000 Accrued salaries payable 65,000 ? Salaries expense during the ye ar 850.000 Salaries paid during the year (gross) 825,000 At December 31, 2011, what amount should Edge report for accrued salaries payable? Your _ Answer: $9o’ooo‘ $84,000. $72,000. $25,000. Instructor $650,000 + $65,000 - $625,000 = $90,000. Chapter 13. Explanation: Points 4 of 4 Received: Comments: 5. Question: (TCO D) During 2010, Eaton Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 2% within 12 months following sale and 4% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2010 and 2011 are as follows: Actual Warranty Sales Exgenditures 2010 58 800,000 $12,000 2011 1 000 000 30.000 W m At December 31, 2011, Eaton should report an estimated warranty liability of Your $0 Answer: ' $10,000. $30,000. $66,000. lnstrufiw ($1,800,000 X .06) — $42,000 = $66,000. Chapter 13. Explanation: Points 4 of 4 Received: Comments: Grade Details 1. Question: (T CO D) A bond discount should be shown on the balance sheet as Your _ an asset. Answer. a contra account to bonds payable. a reduction of stockholders‘ equity. both an asset and a liability. Instructor Chapter 14, Page 695. Explanation: Points 4 of 4 Received: Comments: 2. Question: (TCO D) A corporation borrowed money from a bank to build a building. The long-term note signed by the corporation is secured by a mortgage that pledges title to the building as security for the loan. The corporation is to pay the bank $80,000 each year for ten years to repay the loan. Which of the following relationships can you expect to apply to the situation? Your The balance of mortgage payable at a given balance sheet date will be Answe" reported as a long-tenn liability. The balance of mortgage payable will remain a constant amount over the ten- year period. The amount of interest expense will decrease each period the loan is outstanding, while the portion of the annual payment applied to the loan principal will increase each period. The amount of interest expense will remain constant over the ten-year period. Instructor General rules of loan amortization. Chapter 14 Explanation: Points 4 of 4 Received: Comments: 3. Question: (T CO D) On January 1, 2010, Ellison Co. issued eight-year bonds with a face value of $1 £00,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are: Present value of 1 for 8 periods at 8% ......................................... .. .82? Present value of 1 for 8 periods at 8% ......................................... .. .541] Present value of 1 for 18 periods at 3% ....................................... .. .623 Present value of 1 for 18 penods at 4% ....................................... .. .534 Present value of annuity for 8 periods at 6% ............................... .. 6.210 Present value of annuity for 8 periods at 8% ............................... .. 5.?4?‘ Present vaiue of annuity for 18 periods at 3% ............................. .. 12.581 Present value of annuity for 16 periods at 4% ............................. ., 11.652 The present value of the principal is Your Answer: $534,000. $540,000. $623,000. $627,000. Instructor $1,000,000 X .534 = $534,000. Chapter 14 Explanation: Points 4 of 4 Received: Comments: 4. Question: (TCO D) Putnam Company's 2010 financial statements contain the following seiected data: income taxes $40,000 interest expense 20,000 Net income 80,000 Putnam's times interest earned for 2010 is A Y°UT 3 times nswer. 4 times. 5 times. 7 6 times. Instructor Exp'anmn- $00,000 + $40,000 + $20,000 ~—————-————————— I 0 times. $23-05” Chapter 14 Points 4 of4 Received: Comments: 5. Question: (T CO D) On June 30, 2011, Omara Co. had outstanding 8%, $3,000,000 face amount, 15—year bonds maturing on June 30, 2021. interest is payable on June 30 and December 31. The unamortized balances in the bond discount and deferred bond issue costs accounts on June 30, 2011 were $105,000 and $30,000, respectively. On June 30, 2011, Omara acquired all of these bonds at 94 and retired them. Wnat net canying amount should be used in computing gain or loss on this early extinguishment of debt? A Y°uf $2,970,000. nswer. $2,895,000. $2,865,000. $2,820,000. Instructor $3,000,000 - ($105,000 + $30,000) = $2,865,000. Chapter 14 Explanation: Points 4 of 4 Received: Comments: Grade Details ' There are 2 pages in this exam Page: 1 1. Question? (TCO C) Sisco Co. purchased a patent from Thornton Co. for $180,000 on July 1, 2008. Expenditures of $68,000 for successful litigation in defense of the patent were paid on July 1, 2011. Sisco estimates that the useful life of the patent will be 20 years from the date of acquisition. instructions: Prepare a computation of the carrying value of the patent at December 31, 2011. Your Patent purchase 180,000 Less: Amortization from 7/1/08—7/1/11 ((180,000/20yrs)‘3yrs) 27,000 711 I11 Carrying Value 153,000 Add; Litigation expenses Answer: 68,000 Carrying Value 221,000 Less: Amortization from 7/1/11-12B1/1 1 (221,000"(1/(20—3))"(6rnol12mo)) 6,500 12/31/2011 Carrying Value 214,500 instructor Solution (Chapter 12) Explanation: Cost of patent $180,000 Amortization 7/1/08 to 7/1/11 [($180,000 + 20) x 3] (27,000) Carrying value at 7/1/11 153,000 Cost of successful defense 68 000 Carrying value 221,000 Amortization 7/1/11 to 1231/11 [$221,000 x 1/(20— 3) x 1/2] (6,500) Carrying value at 12/31/11 $214,500 Points 30 of 30 Received: 2. Question (T CO 0) Under what circumstances is it appropriate to record goodwill in the accounts? How should goodwill, properly recorded on the books, be written off in accordance with generally accepted accounting principles? Your lt's appropriate to record goodwill in the accounts only when it is acquired through the purchase of another business, Under these circumstances, Answer: goodwill is recognized as having indefinite life and it should not be amortized; in addition, goodwill should also be tested annually for impairment. instruvtor (Chapter 12): Goodwill is recorded only when it is acquired through a business combination. Goodwill acquired in a business Exp‘anat'm combination is considered to have an indefinite life and therefore should not be amortized, but should be tested for impairment on at least an annual basis. Points 15 of 15 Received: 3. Question: (T 00 D) Edwards 00. includes one coupon in each bag of dog food it sells. in return for four coupons, customers receive a dog toy that the company purchases for $1 .20 each. Edwards‘s experience indicates that 60 percent of the coupons will be redeemed. During 2010, 100,000 bags of dog food were sold, 12,000 toys were purchased, and 40,000 coupons were redeemed. During 2011, 120,000 bags of dog food were sold, 16,000 toys were purchased, and 60,000 coupons were redeemed. lndructions: Determine the premium expense to be reported in the income statement and the estimated liability for premiums on the balance sheet for 2010 and 2011. Your Premium Expense for 2010: $18,000 100,000 bags*.60 coupons redeemed'($1.20l4ccupons) = $18,000 Estimated liability for premiums for 2010: Answer: $6,000 40,000 coupons redeemed] 4coupons = 10,000 (100,000 bags*.60 coupons redeemedll-lcoupons) - 10,000 = 5,000 5,000bags‘$1.20 = $6,000 Premium Expense for 2011: $21,600 120,000 bags". 60 coupons redeemed‘($1.20/4coupons) = $21,600 Estimated liability for premiums for 2010: $9,600 60,000 coupons redeemed/ 4coupons = 15,000 ((100,000 bags*.60 coupons redeemed/4coupons) - 10,000) + (120,000 bags‘BO coupons redeernendoupons) - 15,000 = 8,000 8,000bags’$1.20 = $9,600 lnsthctor Explanation: Premium a?" "‘5 9 Estimated :‘ ' r1} » . r u ‘li Points 30 of 30 Received: 4. Question: (TCO D) Grider industries, Inc. issued $6,000,000 018% debentures on May 1, 2010 and received cash totaling $5,323,577. The bonds pay interest semiannually on May 1 and November 1. The maturity date on these bonds is November 1, 2018. The firm uses the efiedive—interest method of amortizing discounts and premiums. The bonds were sold to yield an effective-interest rate of 10%. instructions: Calculate the total dollar amount of discount or premium amortization during the first year (5/1110 through 4/30/1 1 ) these bonds were outstanding. (Show computations and round to the nearest dollar.) Your 5/1 I10 Carrying value 5,323,577 1 1/1/10: Interest expense (5323577'.10*. 5) 266179 Cash interest (6000000*.04) 240000 Amortized discount (266179— Answer: 240000) 26179 Carrying value (532357726179) 5349756 511111 : interest expense (5349756‘10‘5) 267488 Cash interest (6000000‘04) 240000 Amortized discount (267488240000) 27488 Carrying value (534975627488) 5377244 Total doiial’ amount of discount amortization = 26179+27458 = 53667 instructor (Chapter 14) Explanation: r"! “ CA) A .w m . n .J. run nub MA A .4 rgr r3. (\9 “A a»... .4 Points 30 of 30 Received; 5. Question: (TCO D) Prepare journal entries to record the following retirement. (Show computations and round to the nearest dollar.) The December 31, 2010 balance sheet of Wolfe Co. included the following items: 7.5% bonds payable due December 31, 2018 $1,200,000 Unamortized discount on bonds payable 48,000 The bonds were issued on December 31, 2008 at 95, with interest payable on June 30 and December 31. (Use straight-line amortization.) On April 1, 2011, Wolfe retired $240,000 of these bonds at 101 plus accrued interest. Your Dr. interest expense (48000110yrs) 4800 Cr. cash ( 24000*.075‘3mo/1 2m) 4500 Cr. discount on bonds payable (48000‘1/5‘1/8‘3/1 2) 300 Dr. bonds Answer: payable 240000 Dr. loss on redemption of bonds 11700 Cr. discount on bonds payable ((1/5'48000)-300) 9300 Cr. cash 242400 Instructor (Chapter 14) Explanation: laterest Ewe-rise C55 “40,131.38 " T" :37: r 3512;: . Eiseouat on Bends Fayette {Sis a 1-5 ’ 1:8 » 302} ‘ Payable , 11 n n u 1’3 ('30 .3 W1I .1. i Hi D) Q Discount on Eerie-=5 Payable {:15 s £13531 Points 20 of 20 Received: There are 2 pages in this exam: Page: 1 if _ Grade Details 1. Question: (T CO E) A primary source of stockholders' equity is Y°“’Answe“ income retained by the corporation. appropriated retained earnings. contributions by stockholders. - both income retained by the corporation and contributions by stockholders. Instmfior Chapter 15. Page 744 to the end of the chapter Explanation: Points 4 of4 Received: Comments: 2. Question: (TCO E) Direct costs incurred to sell stock, such as undewvriting costs, should be accounted for as 1. a reduction of additional paid-in capital. 2. an expense of the period in which the stock is issued. 3. an intangible asset. Your Answer: , 1 2 3 1 or 3 instructor Chapter 15. Page 748 Explanation: Points 4 of 4 Received: Comments: 3. Question: (T CO E) Berry Corporation has 50,000 shares of $10 par common stock authorized. The following transactions took place during 2010, the first year of the corporation's existence: Sold 5,000 shares of common stock for $18 per share. Issued 5,000 shares of common stock in exchange for a patent valued at $100,000. At the end of the Berry's first year, the additional paid-in capital amounted to Your Answer: $40 000' $90,000. $100,000. ~ $190,000. lNCORRECT instructor (5,000 X $8) + 50,000 = $90,000. Explanation: Chapter 15_ Points 0 of 4 Received: Comments: 4. Question: (T CO F) Pierson Corporation owned 10,000 shares of Hunter Corporation. These shares were purchased in 2007 for $90,000. On November 15, 2011, Pierson declared a property dividend of one share of Hunter for every ten shares of Pierson held by a stockholder. On that date, when the market price of Hunter was $14 per share, there were 90,000 shares of Pierson outstanding. What gain and net reduction in retained earnings would result from this property dividend? W __a_ig Net Reduction in Retained Earnings a. $0 $120,000 b. $0 $ 81,000 0. $45,000 33 01,000 at. $45,000 3; 30,000 YourAnswer: a b c d Inswctor ($90,000 + $10) x $14 = $126,000 Exp'anafim‘i [$14 — ($90,000 + 10000)] x 9,000 = $45,000 $126,000 — $45,000 = $81,000. Chapter 15. Points 4 of 4 Received: Comments: Question: (TCO F) Written, Inc. has outstanding 300,000 shares of $2 par common stock and 60,000 shares of no-par 8% preferred stock with a stated value of $5. The preferred stock is cumulative and nonparticipating. Dividends have been paid in every year except the past two years and the current year. Assuming that $150,000 will be distributed as a dividend in the current year, how much will the common stockholders receive? Your Answer: ' Zero - $78,000. $102,000. $126,000. Instructor $150,000 - (60,000 X $5 X .08 X 3) = $78300 Explanabon: Chapter 15_ Points 4 of 4 Received: Comments: ’V Grade Details 1'. Question: (T cg, A) On July 1, 2010, an interest payment date, $60,000 of Parks Co. bonds were converted into 1,200 shares of Parks Co. common stock, each having a par value of $45 and a market value of $54. Theretis,$2,400 unamortized discount on the bonds. Using the book value method, Parks would record Amy: no change in paid-in capital in excess of par. ‘ a $3,6mincrease in paid-in capital in excess of par. a $7,200 increase in paid-in capital in excess of par. a $4,800 increase in paid-in capital in excess of par. "‘3er $60,000 -— (1,200 X $45) - $2,400 = $3,600. Chapter 16. Explanation: Points 4 of 4 Received: Comments: 2. Question: (T CO A) During 2010, Gordon Company issued at 104 three hundred, $1,000 bonds due in ten years. One detachable stock warrant entitling the holder to purchase 15 shares of Gordon's common stockmas attached to each bond. At the date of issuance,the market value of the bonds, without the stock warrants, was quoted at 96. The market value of each detachable warrant was quoted at $40. VWat amount, if any, of the proceeds from the issuance should be accounted for as part of Gordon's stockholders' equity? Y Ami”; ' $0 ’ $12,000 - $12,480 $11,856 instructor Exp‘am”: ($300,000 x .00) + (300 >< $40) = $300,000; $300,000 x 1.04 : $312,000 $12,000 — X $312,000 2 $12,480. $300,000 Chapter 16. Points 4 of4 Received: Comments: 3. Question: (TCO A) On January 1, 2010, Trent Company granted Dick \Mlliams, an employee, an option to buy 100 shares of Trent Co. stock for $30 per share, the option exercisable for five years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $900. Williams exercised his option on September 1, 2010, and sold his 100 shares on December 1, 2010. Quoted market prices of Trent Co. stock during 2010 were: January 1 $30 per share September 1 $30 per share December 1 $40 per share The service period is for two years, beginning January 1,2010. As a resutt of the option granted to Williams, using the fair value method, Trent should recognize compensation expense for 2010 on its books in the amount of Your Answer $1 ,000. , $900. 7 $450. $0. 4. 5. instructor Explanation: Points Received: Comments: Question: Your Answer: lnstructor Explanation: Points Received: Comments: Question: Your Answer: Instructor Explanation: Points Received: Comments: $900 + 2 = $450. Chapter 16 4of4 (T CO A) On January 1, 2010, Korsak, Inc. established a stock appreciation rights plan for its executives. It entitled them to receive cash at any time during the next four years for the difference between the market price of its common stock and a pre-established price of $20 on 60,000 SARs. Current market prices of the stock are as follows: January 1 , 2010 $35 per share December 31 , 2010 38 per share December 31 , 2011 30 per share December 31 , 2012 33 per share Compensation expense relating to the plan is to be recorded over a four-year period beginning January 1, 2010. What amount of compensation expense should Korsak recognize for the year ended December 31, 2011? $0 $30,000 $300,000 $150,000 ($30 — $20)X 60,000 X .5 = $300,000 $300,000 — $270,000 = $30,000. Chapter 16 4 of 4 (T CO A) Foyle, Inc, had 560,000 shares of common stock issued and outstanding at December 31 , 2010. On July 1, 2011, an additional 40,000 shares of common stock were issued for cash. Foyle also had unexercised stock options to purchase 32,000 shares of common stock at $15 per share outstanding at the beginning and end of 2011. The average market price of Foyle‘s common stock was $20 during 2011. What is the number of shares that should be used in computing diluted eamings per share for the year ended December 31 , 2011? 580,000 . 588,000 i ' ' ' 608,000 612,000 560,000 + (40,000 X 6/12) + [32,000 — (32,000 X $15 '1' $20)] = 588,000. Chapter 16. 4 of4 I"|uw"' I There are 2 pages in this exam: Page: 2 1. Question: (TCO C) The cost of an intangible asset includes all of the following except Y°m mm" purchase price. legal fees. other incidental expenses. 7 all of these are included. MM“ Chapter 12 Explanation: Points 5 of 5 Received: 2. Question: (TCO C) Which of the following is not an intangible asset? Your Answer: Trade name . Research and development costs Franchise Copyrights Insfluctof Chapter 12 Explanation: Points 5 of 5 Received: 3. Question: (TCO C) A loss on impairment of an intangible asset is the difference between the asset’s Y°”r mm" carrying amount and the expected future net cash flows. : carrying amount and its fair value. fair value and the expected future net cash flows. book value and its fair value. Instructor Chapter 12 Explanation: Points 5 of 5 Received: 4. 01195110": (TCO C) ELO Corporation purchased a patent for $90,000 on September 1, 2008. It had a useful life of ten years. On January 1, 2010, ELO spent $22,000 to succe$fully defend the patent in a lawsuit ELO feels that as of that date, the remaining useful life is five years. \Mtat amount should be reported for patent amortization expense for 2010? Your Answer: $20 600 $20,000. $18,800. $15,600. Instructor Chapter 12. $90,000 - [($90,000 + 10) x 1 1/3] = $78,000. Exp'anafic’": ($78,000 + $22,000) + 5 = $20,000. Points 5 of 5 Received: 5. Question: (TCO C) Floyd Company purchases Haeger Company for $800,000 cash on January 1, 2011. The book value of Haeger Company's net assets, as reflected on its December 31, 2010 balance sheet, is $620,000. An analysis by Floyd on December 31, 2010 indicates that the fair value of Haeger‘s tangible assets exceeded the book value by $60,000, and the fair value of identifiable intangible assets exceeded book value by $45,000. How much goodwill should be recognized by Floyd Company when recording the purchase of Haeger Company? Your Answer: 5 _0_ $180,000 7 $120,000 $75,000 MSW?!” Chapter 12. $620,000 + $60,000 + $45,000 = $725,000. Explanation: $800,000 — $725,000 = $75,000. Points 5 of 5 Received: 6. Question: (TCO 0) Which of these is not included in an employer's payroll tax expense? Y°”’ Answer: F.l.C.A. (social security) taxes Federal unemployment taxes State unemployment taxes Federal income taxes Instructor Chapter 13 Explanation: Points 5 of 5 Received: 7. Question: (TCO D) \Miich of the following taxes does not represent a payroll deduction a company may incur? Y°“’ Answer: Federal income taxes. F lCA taxes. State unemployment taxes. State income taxes. MSW” Chapter 13 Explanation: Points 5 of 5 Received: 8. Question: (TCO D) Information available prior to the issuance of the financial statements indicates that it is probable that, at the date of the financial statements, a liability has been incurred for obligations related to product warranties. The amount of the loss involved can be reasonably estimated. Based on die above facts. an estimated loss contingency should be - accrued. disclosed but not accrued. neither accrued nor disclosed. classified as an appropriation of retained earnings. MSW?“ Chapter 13 Explanation: Points 5 of 5 Received: 9. Question: (TCO D) Stine Co. is a retail store operating in a state with a 6% retail sales tax. The retailer may keep 2% of the sales tax collected. Stine Co. records the sales tax in the Sales account. The amount recorded in the Sales account during May was $148,400. Your Answer: The amount of sales taxes (to the nearest dollar) for May is Your Answer: $8 726. $8,400. $8,904. $9,438. instruct, °r Chapter 13. s + .063 = $148,400, \3 = $140,000. Explanation: $148_400 — $140,000 = $8,400. Points 5 of 5 Received: 10. Question: (TCO D) CalCount pays a weekly payroll of $85,000 that includes federal taxes withheld of $12,700, FICA taxes withheld of $7,890, and 401 (k) withholdings of $9,000. What is the effect of assets and liabilities from this transaction? Y°“' Answer: Assets decrease $85,000 and liabilities do not change. Assets decrease $64,411 0 and liabilities increase $20,590. Assets decrease $64,410 and liabilities decrease $20,590. Assets decrease $55,410 and liabilities increase $29,590. Instrugtor Chapter 13. $12,700 + $7.890 + $9,000 = $29,590; EXP‘WW“ $85,000 — 529.590 = $55,410. Points 5 of 5 Received: 11 . Question: (TCO D) If bonds are initially sold at a discount and the straight—line method of amortization is used, interest expense in the eartier years will Your Answefi exceed what it would have been had the effective-interest method of amortization been ' used. be less than what it would have been had the effective-interest method of amortization been used. be the same as it would have been had the effective—interest method of amortiza-tion been used. be less than the stated (nominal) rate of interest. Instructor Chapter 14 Explanation: Points 5 of 5 Received: 12. Question: (TCO D) The printing costs and legal fees associated with the issuance of bonds should Y°ur Answer: be expensed when incurred. be reported as a deduction from the face amount of bonds payable. be accumulated in a deferred charge account and amortized over the life of the bonds. not be reported as an expense until the period the bonds mature or are retired. instructor Chapter 14 Explanation: Points 5 of 5 Receivai: 13. Question: (TCO D) Feller Company issues $20,000,000 of ten-year, 9% bonds on March 1, 2010 at 97 plus accrued interest The bonds are dated January 1, 2010, and pay interest on June 30 and December 31. What is the total cash received on the issue date? Your Answer: $19 400 000 $20,450,000 - $19,700,000 $19,100,000 WWW Chapter 14. ($20,000,000 X .97) + ($1,800,000 X 2/12) = $19,700,000. Explanation: Points 5 of 5 Received: 14. Question: (TCO D) A company issues $20,000,000, 7.8%, 20—year bondsto yield 8% on January 1, 2010. Interest is paid on June 30 and December 31 . The proceeds from the bonds are $19,604,145. What is interest expense for 2011 , using straight-line amortization? Your Answer: $1 540 207 $1,560,000 $1 569,1 92 . $1,579,793 7 mmo, Chapter 14,. ($20,000,000 x 078) + ($395,355 + 20) = $1,579,793. Explanation: Points 5 of 5 Received: 15. Question: (TCO D) On January 1, Patterson inc. issued $5,000,000, 9% bonds for $4,695,000. The market rate of interest for these bonds is 10%. interest is payable annually on December 31. Patterson uses the effective-interest method of amorfizing bond discount. At the end of the first year, Patterson should report unamcrtized bond discount of Your Answer: 5274 500. 1 $285,500. ' $258,050. $255,000. instrugztor Chapter 14.. ($4,695,000 x .10) — ($5,000,000 x .09) = $19,500 5‘9th ($5,000,000 — $4,695,000) — $19,500 = $285,500. Points 5 of 5 Received: There are 2 pages in this exam: Page: 2 ...
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Weekly quizzes 2-6 and midterm week 4 - Grade Details 1...

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