Question
1. Houghton Company issues $10,000,000, 6%, 5-year bonds on January 1. The bonds pays interest semiannually on June 30 and December 31. The bonds are
1. Houghton Company issues $10,000,000, 6%, 5-year bonds on January 1. The bonds pays interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds (market price) from the bond issue?
2.5% 3.0% 5.0% 6.0%
Present value of a single sum for 5 periods .88385 .86261 .78353 .74726
Present value of a single sum for 10 periods .78120 .74409 .61391 .55839
Present value of an annuity for 5 periods 4.64583 4.57971 4.32948 4.21236
Present value of an annuity for 10 periods 8.75206 8.53020 7.72173 7.36009
answer choices
$10,000,000
$10,432,988
$10,437,618
$10,434,616
2. Short-term obligations may be excluded from current liabilities if which of the following conditions are met:
Answer choices
A. The liability is contractually due to be settled more than one year (or operating cycle, if longer) after the balance sheet date.
B. The entity has a contractual right to defer settlement of the liability for at least one year (or operating cycle, if longer) after the balance sheet date.
C. neither A or B.
D. both A and B.
True or False 3. If the market rate is greater than the stated rate, bonds will be sold at a premium.
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