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Unit 6 CPA - the bond 6 On Beau Corp issued $300,000...

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CPA Question 1. The market price if a bond issued at a discount is the present value of its principal amount a the market effective rate of interest Answer : C Plus the present vlaue of all future interest payments at the market (effective) rate of interest.
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2. A bond issue on June 1, 2011, has intesrt payment dates of April 1 and October 1. Bond interest expense for the year ended Deceber 31, 2011 Is for the period of Answer: D Seven Months 4. Camp Corp's
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Answer: B $807 5. For a bond issue that seells for less than its face value, the market rate of interest is Answer: A higher than the rate stated on
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Unformatted text preview: the bond 6. On January 31, 2011, Beau Corp. issued $300,000 maturity value, 12% bonds for $300,000 cash. The bonds are dated December 31, 2010, and mature on December 31, 2020. Interest will be paid semiannually on June 30 and December 31. What amount of accrued interest payable should Beau report in its September 30, 2011, balance sheet? Answer: Solution: Computation of the interest payable reported in balance sheet Interest payable for 3 months need to shown in balance sheet July 1st to Sep 30th Interest payable = 300,000*0.12*3/12 = 9000 Hence the Answer is A...
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