26.

Selected financial information presented below was obtained from the financial statements of the Napa Valley Brewery:

Current Assets	$40,000
Property and Equipment, net	60,000
Current Liabilities	45,000
Noncurrent Liabilities	35,000
Stockholders Equity	20,000
Sales Revenue	50,000
Net Income	18,000

What is the debt-to-assets ratio?

A.

0.350

B.

0.800

C.

0.200

D.

1.000

27.

On January 1, your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 7%. The market interest rate is 5%. The issue price of the bond was $10,866. Using the effective-interest method of amortization and rounding to the nearest dollar, the interest expense for the first year ended December 31 would be:

A.

$700.

B.

$543.

C.

$667.

D.

$759.

28.

When interest expense is calculated using the effective-interest amortization method, interest expense on a bond that pays interest annually is equal to the:

A.	actual amount of interest paid.

B.	carrying value of the bonds payable multiplied by the effective interest rate.

C.	maturity value of the bonds payable multiplied by the effective interest rate.

D.	carrying value of the bonds payable multiplied by the stated interest rate.

29.

On January 1, XYZ Corporation issued $200,000 of 8%, 5year bonds when the market rate of interest was 6%. The bonds were issued for $216,849 and interest will be paid annually on December 31. How much premium amortization will XYZ record on the first interest payment date using the effective-interest method?

A.

$0

B.

$13,011

C.

$16,000

D.

$2,989

30.

ABC Company received $9,631 for its 5-year, 10% bonds with a total face value of $10,000. The market rate of interest was 11%. The bonds pay interest annually on December 31. Approximately how much interest expense will ABC Corporation record on the first annual interest payment date using the effective-interest method?

A.

$1,059

B.

$1,000

C.

$1,074

D.

$963.10