Question 1: A corporation issued $600,000 of 8%, 5-year bonds on January 1, at 102. Interest is paid semiannually on January 1 and July 1. If the corporation uses the straight-line method of amortization, the amount of bond interest expense to be recognized on July 1 is
a. $22,800.
b. $24,000.
c. $25,200.
d. $48,000.
Question 2: Amway Company has total cash register receipts of $7,980. This total includes a 5% sales tax. The entry to record the receipts will include a
a. debit to Sales Tax Expense for $380.
b. credit to Sales for $7,980.
c. credit to Sales Taxes Payable for $399.
d. credit to Sales Taxes Payable for $380.
Question 3: On January 1, 2003, Holt Company purchased 30,000 shares of the 100,000 common shares outstanding of Crane Company for $1,080,000. During 2003, Crane Company reported net income of $240,000 and paid a cash dividend of $110,000. The balance of the Stock Investments account on the books of Holt Company on December 31, 2003, is
a. $1,047,000.
b. $1,119,000.
c. $1,152,000.
d. $1,080,000
Question 4: Dykes Corporation purchased 2,000 shares of Kile common stock at $70 per share plus $6,000 brokerage fees as a short-term investment. The shares were subse-quently sold at $80 per share less $6,800 brokerage fees. The cost of the securities purchased and gain or loss on the sale were
Cost Gain or Loss
a. $140,000 $20,000 gain
b. $140,000 $7,200 gain
c. $146,000 $7,200 loss
d. $146,000 $7,200 gain
Question 5: Salvage (residual) value is deducted in the computation of depreciation expense in all of the following methods with the exception of
a. straight-line.
b. units-of-activity.
c. declining-balance.
d. All of the above include a deduction of salvage value.
Question 6: Todd Corporation issues long-term bonds at a discount. Amortization of the discount will
a. decrease bond interest expense.
b. increase bond interest expense.
c. decrease the carrying value of the bonds on the balance sheet.
d. be reported as a loss on the income statement.