On January 1, Elias Corporation issued 7% bonds with a face value of $86,000. The bonds are sold for $83,420. 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.$6,278

b.$2,580

c.$6,020

d.$502

he following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Use this information to answer the question that follow.

Assets
Cash and short-term investments	$39,272
Accounts receivable (net)	34,127
Inventory	25,733
Property, plant, and equipment	270,768
Total assets	$369,900
Liabilities and Stockholders' Equity
Current liabilities	$67,831
Long-term liabilities	85,260
Stockholders' equityCommon	216,809
Total liabilities and stockholders' equity	$369,900
Income Statement
Net Sales	$98,066
Cost of goods sold	(39,226)
Gross margin	58,840
Operating expenses	(24,997)
Interest expense	(4,903)
Net income	$28,940
Number of shares of common stock outstanding	5,025
Market price of common stock	$32
Total dividends paid	$8,500
Cash provided by operations	$39,272

Using the data provided for Diane Company, what is the return on total assets?

a.11.4%

b.9.6%

c.9.1%

d.8.8%

1. Question Content Area

   Dylan Corporation issues for cash $2,000,000 of 8%, 15-year bonds, interest payable annually, at a time when the market rate of interest is 9%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?

   a.The carrying amount decreases from its amount at issuance date to $2,000,000 at maturity.

   b.The amount of annual interest paid to bondholders increases over the 15-year life of the bonds.

   c.The amount of annual interest paid to bondholders remains the same over the life of the bonds.

   d.The amount of annual interest expense decreases as the bonds approach maturity.

2. Based on the following data for the current year, what is the number of days' sales in inventory (rounded to one decimal place)? Assume 365 days a year.

   Sales on account during year	$443,556
   Cost of goods sold during year	181,265
   Accounts receivable, beginning of year	44,706
   Accounts receivable, end of year	50,750
   Inventory, beginning of year	31,266
   Inventory, end of year	42,412

   a.85.3

   b.74.1

   c.148.2

   d.62.9

3. The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Use this information to answer the question that follow.

   Assets
   Cash and short-term investments		$ 30,000
   Accounts receivable (net)		20,000
   Inventory		15,000
   Property, plant, and equipment		185,000
   Total assets		$250,000

   Liabilities and Stockholders' Equity
   Current liabilities			$ 45,000
   Long-term liabilities			70,000
   Stockholders' equityCommon			135,000
   Total liabilities and stockholders' equity			$250,000

   Income Statement
   Sales		$85,000
   Cost of goods sold		45,000
   Gross margin		$40,000
   Operating expenses		(15,000)
   Interest expenses		(5,000)
   Net income		$20,000

   Number of shares of common stock outstanding	6,000
   Market price of common stock	$20
   Total dividends paid	$9,000
   Cash provided by operations	$30,000

   Using the data provided for Diane Company, what is the asset turnover?

   a.2.94

   b.1.00

   c.0.34

   d.0.18

4. On January 1, Butte Company's valuation allowance for trading investments account has a debit balance of $23,200. On December 31, the cost of the trading securities portfolio was $80,000. The fair value was $98,000. Which of the following would Butte report on the income statement for the current year?

   a.an unrealized gain on trading investments, $5,200

   b.an unrealized loss on trading investments, $5,200

   c.an unrealized gain on trading investments, $18,000

   d.an unrealized loss on trading investments, $18,000

5. Use the information below for Privett Company to answer the question that follow.

   Privett Company
   Accounts payable	$ 30,000
   Accounts receivable	35,000
   Accrued liabilities	7,000
   Cash	25,000
   Intangible assets	40,000
   Inventory	72,000
   Long-term investments	100,000
   Long-term liabilities	75,000
   Marketable securities	36,000
   Notes payable (short-term)	20,000
   Property, plant, and equipment	400,000
   Prepaid expenses	2,000

   Based on the data for Privett Company, what is the quick ratio, rounded to one decimal point?

   a.2.9

   b.1.0

   c.1.1

   d.1.7

6. Rogers Company reported net income of $40,085 for the year. During the year, accounts receivable increased by $7,121, accounts payable decreased by $4,858, and depreciation expense of $5,995 was recorded. Net cash provided by operating activities under the indirect method for the year is

   a.$34,101

   b.$40,085

   c.$58,059

   d.$48,343