6. (TCO D) An electronics store is running a promotion in which, for every video game purchased, the customer receives a coupon upon checkout to purchase a second game at a 50% discount. The coupons expire in 1 year. The store normally recognizes a gross profit margin of 40% of the selling price on video games. How would the store account for a purchase using the discount coupon? (Points : 5) The reduction in sales price attributed to the coupon is recognized as premium expense. The difference between the cost of the video game and the cash received is recognized as premium expense. Premium expense is not recognized. The difference between the cost of the video game and the selling price prior to the coupon is recognized as premium expense.

Question 7. 7. (TCO D) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the (Points : 5)

bond indenture. bond debenture. registered bond. bond coupon.

Question 8. 8. (TCO D) On July 1, 2009, Noble, Inc. issued 9% bonds in the face amount of $5,000,000, which mature on July 1, 2015. The bonds were issued for $4,695,000 to yield 10%, resulting in a bond discount of $305,000. Noble uses the effective-interest method of amortizing bond discount. Interest is payable annually on June 30. At June 30, 2011, Noble's unamortized bond discount should be (Points : 5)

$264,050. $255,000. $244,000. $215,000.

Question 9. 9. (TCO E) A primary source of stockholders' equity is (Points : 5)

income retained by the corporation. appropriated retained earnings. contributions by stockholders. both income retained by the corporation and contributions by stockholders.

Question 10. 10. (TCO F) Which of the following statements about property dividends is not true? (Points : 5)

A property dividend is usually in the form of securities of other companies. A property dividend is also called a dividend in kind. The accounting for a property dividend should be based on the carrying value (book value) of the nonmonetary assets transferred. All of the above