D the portion of each payment allocated to repayment

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Chapter 10 / Exercise EX10-12
Accounting
Reeve/Warren
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D. The portion of each payment allocated to repayment of principal decreases each month as the mortgage is paid off.2-155
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Accounting
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Chapter 10 / Exercise EX10-12
Accounting
Reeve/Warren
Expert Verified
Chapter 02 Basic Financial Statements74. In relation to a bond issue, the role of the underwriter is to: A. Guarantee payment to bondholders of both the periodic interest payments and the maturity value.B.Purchase the entire bond issue from the issuing corporation and then sell the bonds to the public.C. Represent the interests of the bondholders and, if necessary, to take legal action on their behalf.D. Maintain a subsidiary ledger of individual bondholders and mail out the periodic interest checks.75. If a bond is issued at par and between interest dates: A. The cash received by the corporation will be less than the face value of the bond.B.The cash received by the corporation will be greater than the face value of the bond.C. The cash received by the corporation will be the same as the face value of the bond.D. Interest receivable will be debited.76. The term "junk bonds" describes bonds with: A. Low interest rates.B. Indefinite maturity dates.C. Low maturity values.D.High risk.2-156
Chapter 02 Basic Financial Statements77. One advantage of issuing bonds instead of stock is that: A.Interest is tax deductible whereas dividends are not.B. Bonds have a longer maturity date.C. Interest rates are lower than dividend rates.D. The issuance of bonds does not affect earnings per share.78. Choose the statement that correctly summarizes the tax advantage of raising money by issuing bonds instead of common stock: A. The amount paid by the corporation to redeem bonds at maturity date is deductible in computing income subject to corporate income tax.B.Interest payments are deductible in determining income subject to corporate income tax; dividends are not deductible.C. A corporation must pay tax on the sales price of stock issued, but is not taxed on the amount received when bonds are issued.D. Both interest and dividends paid are deductible in computing taxable income, but since interest must be paid annually, the corporation usually gets a larger tax deduction over the life of the bonds payable.79. Elm Corporation plans to invest $300 million to earn about 15% before income taxes. Thecompany is considering whether it should raise the $300 million by issuing 10% bonds payable or capital stock. If the company issues the bonds, it will probably report: A.Lower net income and lower income taxes expense than if it issues capital stock.B. Higher net income and higher income taxes expense than if it issues capital stock.C. Lower net income and higher income taxes expense than if it issues capital stock.D. Higher net income and lower income taxes expense than if it issues capital stock.2-157
Chapter 02 Basic Financial Statements80. The current portion of long-term debt should be reported: A. Separately in the long-term liabilities section of the balance sheet.

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