1. Bonds with a maturity value of $200,000 and an unamortized discount of $5,000 are converted into common shares. The entry will include a:

   		credit to Common Shares for $195,000
   		debit to Loss on Bonds Payable for $5,000
   		credit to Common Shares for $200,000
   		debit to Discount on Bonds Payable for $5,000

1.5 points

QUESTION 2

1. On January 2, 2020, Saturn Corporation issued $200,000, 8%, 10-year bonds for $220,000. The bonds pay interest each December 31. Saturn Corporation uses the straight-line method to amortize premium or discount. On December 31, 2020, Saturn Corporation would record a:

   		credit to Cash for $18,000
   		debit to Interest Expense for $16,000
   		debit to Interest Expense for $18,000
   		debit Premium on Bonds Payable for $2,000

1.5 points

QUESTION 3

1. Land is acquired by issuing 500 common shares. The land has a current market value of $12,000. There is no market value for the common shares available. The journal entry requires

   		Credit to common shares for $12,000
   		Debit to retained earnings for $12,000
   		Debit to cash for $12,000
   		Credit to retained earnings for $12,000

1.5 points

QUESTION 4

1. On January 2, 2020, Saturn Corporation issued $200,000, 8%, 10-year bonds for $220,000. The bonds pay interest each December 31. Saturn Corporation uses the straight-line method to amortize premium or discount. On December 31, 2020, Saturn Corporation would record a:

   		debit to Interest Expense for $16,000
   		credit Premium on Bonds Payable for $2,000
   		credit to Cash for $16,000
   		debit to Interest Expense for $18,000

1.5 points

QUESTION 5

1. Liquidation value is used to calculate:

   		Market values of common and preferred shares
   		Book value of preferred share
   		Book value of common share
   		Both book values - common shares and preferred shares

1.5 points

QUESTION 6

1. On January 2, 2020, Ming Corporation issued $200,000, 10%, 10-year bonds for $160,000. The bonds pay interest each December 31. Ming Corporation uses the straight-line method to amortize premium or discount. On December 31, 2020, Ming Corporation would record a:

   		credit Premium on Bonds Payable for $4,000
   		credit to Cash for $16,000
   		debit to Interest Expense for $16,000
   		debit to Interest Expense for $24,000

1.5 points

QUESTION 7

1. The liability related to a dividend is eliminated

   		On trading day
   		On declaration date
   		On date of record
   		On payment date

1.5 points

QUESTION 8

1. Assume the current carrying amount of bonds payable is $306,850, and the par value of the bonds is $300,000. The contract rate is 10%, and the effective rate of interest is 9%. The effective-interest method of amortization is used and interest is paid semiannually. The next journal entry to record the interest payment and amortization includes a debit to interest expense for:

   		$13,808
   		$13,500
   		$16,192
   		$15,000

1.5 points

QUESTION 9

1. "Crane Corporation had operating income of $185,000, a loss of $25,000 from a flood and a gain of $8,000 from the sale of a machine the business owned. You are preparing the 2020 income statement. Crane Corporation is in a 25% tax bracket. The Income tax expense would be:"

   		"$57,120"
   		"$48,450"
   		"$46,250"
   		"$42,000"

1.5 points

QUESTION 10

1. Amortizing the discount on a bond payable:

   		decreases the amount of the cash paid to the bondholders
   		has no effect on the book value of the bonds payable
   		increases the interest expense for the period
   		decreases the book value of bonds payable