1. On February 15, Seacroft buys 7,000 shares of Kebo common stock at $28.53 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.15 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The journal entry to record the dividend on April 15 is:
a. Debit Cash $7,350; credit Dividend Revenue $7,350.
b. Debit Cash $8,050; credit Dividend Revenue $8,050.
c. Debit Cash $8,050; credit Interest Revenue $8,050.
d. Debit Cash $7,350; credit Interest Revenue $7,350.
e. Debit Cash $8,050; credit Gain on Sale of Investments $8,050.
2. A company owns 9% bonds with a par value of $100,000 that pay interest on October 1 and April 1. The amount of interest accrued on December 31 (the company's year-end) would be:
a. $750.
b. $1,500.
c. $2,250.
d. $4,500.
e. $9,000.
3. A company issues at par 9% bonds with a par value of $100,000 on April 1, which is 4 months after the most recent interest date. The cash received for accrued interest on April 1 by the bond issuer is:??Answer
a. . $750.
b. . $5,250.
c. . $1,500.
d. . $3,000.
e. . $6,000.
4. An investor purchased at par value $75,000 of Cort's 8% bonds, that mature in three-years. The bonds pay interest semiannually on June 1 and December 1. The investor plans to hold the bonds until they mature. When the bonds mature, the investor should prepare the following journal entry:
a. debit Long-Term Investments-HTM, $75,000; credit Cash, $75,000.
b. debit Cash, $6,000; credit, Unrealized Gain-Equity, $6,000.
c. debit Cash, $75,000; credit Long-Term Investments-HTM, $75,000.
d. debit Unrealized Gain-Equity, $6,000; credit Cash, $6,000.
e. debit Cash, $75,000; credit Long-Term Investments-Trading, $75,000.