1.

On January 1, Cooper Corporation purchased 30% of the outstanding common stock of the Sullivan Corporation for $2,475,000. During the year, Sullivan Corporation reported net income of $450,000 and paid cash dividends of $225,000.

The balance of the Investment in the Sullivan Corporation account on the books of Cooper Corporation at year-end is:

Select one:

a. $2,407,500

b. $2,542,500

c. $2,475,000

d. $2,610,000

2.

The proper category to classify an investment in equity securities depends on:

Select one:

A. Management's intentions in regards to when to sell the investment

B. The size of the investment relative to the purchasing company's total assets

C. The ability of the purchasing company to influence the investee company

D. Both A and C

3.

On January 1, the Bentley Company issued $320,000 of 6%, 6-year bonds when the market rate of interest was 8%. The bonds pay interest semiannually on June 30 and December 31.

How much are the proceeds that Bentley will receive from the bond issue date?

Select one:

a. $351,853

b. $293,572

c. $289,968

d. $290,414

4.

Shoes Unlimited issued $225,000 of 6%, 5-year bonds at par on July 1. The bonds pay interest semiannually. How much cash did Shoes Unlimited receive upon issuance?

Select one:

A. $244,193

B. $205,807

C. $225,000

D. More information is needed to calculate

5.

Which one of the following 6-year bonds with a maturity value of $37,000 would generate the highest proceeds upon issuance?

Select one:

A. A bond with a stated interest rate of 6% and a prevailing market rate of 6%

B. A bond with a stated interest rate of 7% and a prevailing market rate of 9%

C. A bond with a stated interest rate of 9% and a prevailing market rate of 7%

D. A bond with a stated interest rate of 8% and a prevailing market rate of 8%

6.

What is a coupon payment?

Select one:

A. The payment amount required to retire bonds before maturity

B. A payment of principal to bondholders

C. The amount of interest expense reported on the income statement by a borrower

D. The periodic payment to bondholders at each interest payment date