1)

Bronco High School issues $10 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31. A portion of the bond amortization schedule appears below:

Date	Cash Paid				Interest Expense				Increase in Carrying Value				Carrying Value
01/01/2021												$		8,800,000
06/30/2021	$	400,000		$		440,000		$		40,000				8,840,000
12/31/2021		400,000				442,000				42,000				8,882,000

What is the market annual interest rate?

1. A) 4%.
2. B) 10%.
3. C) 5%.
4. D) 8%.

2)

Innovative Products reported net income of $205,000. Beginning and ending Inventory balances were $40,000 and $45,000, respectively. Accounts Payable balances at the beginning and end of the year were $35,000 and $33,000, respectively. Assuming that all relevant information has been presented, the company would report net operating cash flows of:

A) $202,000.

B) $198,000.

C) $212,000.

D) $205,000.

3)

Hayes Corporation issues 100 shares of its $1 par value common stock for $15 per share. The entry to record the issuance will not include a:

A) Debit to Cash $1,500.

B) Credit to Additional Paid-In Capital $1,400.

C) Credit to Common Stock of $100.

D) All of the other answer choices are correct.

4)

A common advantage of obtaining long-term funds by issuing bonds, rather than borrowing from the bank, includes which of the following?

A) Bonds involve less surrendering of ownership control.

B) Bonds usually have a lower interest rate.

C) Bonds are more likely to involve borrowing from a single lender.

D) Bond issue costs are usually lower than fees charged by the bank.

5)

Jade Jewelers issued 15,000 shares of $1 par value stock for $20 per share. What is true about the journal entry to record the issuance?

A) Credit Common Stock $300,000.

B) Credit Cash $300,000.

C) Credit Common Stock $15,000.

D) Debit Additional Paid-In Capital $285,000.