On June 1, $400,000 of bonds were purchased as a long-term investment at 101 and $500 was paid as the brokerage commission. If the bonds bear interest at 12%, which is paid semiannually on January 1 and July 1, what is the total cost to be debited to the investment account? The cash and securities comprising a sinking fund established to redeem bonds at maturity in 2015 should be classified on the balance sheet as Answer a. fixed assets b. current assets c. intangible assets d. investments The Snow Corporation issues 10,000 shares of $50 par value preferred stock for cash at $60 per share. The entry to record the transaction will consist of a debit to Cash for $600,000 and a credit or credits to Answer a. Preferred Stock for $600,000. b. Preferred stock for $500,000 and Paid-in Capital in Excess of Par ValuePreferred Stock for $100,000. c. Preferred Stock for $500,000 and Retained Earnings for $100,000. d. Paid-in Capital from Preferred Stock for $600,000. On January 1, 2007, $1,000,000, 5-year, 10% bonds, were issued for $970,000. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the semiannual amortization amount is Answer a. $6,000. b. $5,808. c. $3,000 d. $5,000 When no-par stock is issued, the Common Stock account is credited for the selling price of the stock issued. Answer a. True b. False A corporation purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale? Answer a. $0 b. $5,000 c. $2,500 d. $10,000 The issue price of zero-coupon bonds is the present value of their face amount. Answer a. True b. False