MULTIPLE CHOICE.

8. On January 1 of the current year, Barton Corporation issued 6% bonds with a face value of $108,000. The bonds are sold for $102,600. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, five years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 is

a.$7,560

b.$8,100

c.$540

d.$3,240

10. If $545,000 of 7% bonds are issued at 95, the amount of cash received from the sale is

a.$583,150

b.$506,850

c.$517,750

d.$545,000

13. On January 1, Elias Corporation issued 10% bonds with a face value of $94,000. The bonds are sold for $91,180. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is

a.$9,400

b.$2,820

c.$783

d.$9,682

16. A $294,000 bond was redeemed at 98 when the carrying value of the bond was $286,650. The entry to record the redemption would include a

a.gain on bond redemption of $5,880.

b.gain on bond redemption of $1,470.

c.loss on bond redemption of $7,350.

d.loss on bond redemption of $1,470.

17. On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. If Lisbon uses the straight-line method for amortizing the premium, the journal entry to record the first semiannual interest payment by Lisbon Co. would include a debit to

a.Cash for $70,000

b.Interest Payable for $30,000

c.Premium on Bonds Payable for $5,500

d.Interest Expense for $32,500

19. Balance sheet and income statement data indicate the following:

Bonds payable, 9% (due in 15 years)	$1,384,950
Preferred 8% stock, $100 par
(no change during the year)	$200,000
Common stock, $50 par
(no change during the year)	$1,000,000
Income before income tax for year	$428,762
Income tax for year	$128,629
Common dividends paid	$60,000
Preferred dividends paid	$16,000

Based on the data presented above, what is the times interest earned ratio (round to two decimal places)?

a.3.44

b.1.41

c.4.44

d.2.41

29. Use this information for Pierce Company to answer the following question. On May 1, Pierce Company purchased $60,000 of Stanton Companys 12% bonds at 100 plus accrued interest of $2,400. On June 30, Pierce received its first semiannual interest. On February 1, Pierce sold $50,000 of the bonds at 103 plus accrued interest. The journal entry Pierce will record on February 1 will include a

a.credit to Interest Receivable for $600

b.credit to Gain on Sale of Investments for $1,500

c.credit to Cash for $52,500

d.credit to Interest Revenue for $1,500

31.Armando Company owns 17,000 of the 70,000 shares of common stock outstanding of Tito Company and exercises a significant influence over its operating and financial policies. The investment should be accounted for by the

a.market method

b.cost or market method

c.equity method

d.cost method

32. Zach Company owns 45% of the voting stock of Tomas Corporation and uses the equity method in recording this investment. Tomas Corporation reported a $9,000 net loss. Zach Company's entry would include a

a.credit to a loss account for $4,050

b.debit to the investment account for $4,050

33. An investor purchased 623 shares of common stock, $21 par, for $26,789. Subsequently, 100 shares were sold for $28 per share. What is the amount of gain or loss on the sale?

a.$2,200 gain

b.$1,500 loss

c.$2,200 loss

d.$1,500 gain

c.credit to cash for $4,050

d.credit to the investment account for $4,050