Q1 On May 1, year 1, Frk corporation issued bonds payable at face value, bond has face value 30m face value, 12% interest per years for 20 years. Interest on the bond is payable every six months on May 1, and Nov. 1 Answer:

On May 1, general entry to record the issuance of the bond:

The first interest payment to bondholder will be on Novemeber1, year 1. The general entry on Nov 1 will be

What will be the adjusting entry on Dec.31,year 1 related to this bond issue:

The corporation balance sheet on Dec.31 will include

Bonds payable of x

Bonds payable of Y

Bonds payable of a and interest payable of b

Bonds payable of Y as well as interest payable x Answer:

Q An company in the USA has many branches over the world, their branch in French, seized by French government, is this a example of discontinuing item. T&F Answer:

Q For the current year, Lydia company Q On March 31, 2015 North bank have 500,000 shares and 2 dollar par value, common stock issue, on that date, the company declared 10 % stock dividends , the market price of each shares is $25, the immediately effect of this stock dividends on North Bank books is

the reduction of Retain earning of y dollars

Reduction in cash of x dollars

Liability to the shareholders of x dollars Answer:

Q Extraordinary item and Discounting operation are present on the income statement net of any related tax effect. Answer:

T &F Q The account discount bonds payable represents interest expense will be amortized over the life of the bonds. Answer:

T/F True Q When interest rate in the market go up, the price of bond issue(already issued) will go down. Anwer:

T/F True -Interest rates and bond prices have an inverse relationship; so when one goes up, the other goes down. Answer:

QIf the market interest rates go up after the bond has been issued, the price of the bond must go down above par, so that the bond gives a competitive yield to the current market. Answer:

Q What is the definition of a line of credit? Credit limit, bank give amount If over credit line, transaction will be declined Answer:

Q Dividends pay by corporation to its shareholders, are tax deductible by a corporation, but interest on bond is not. T/F Answer: Q Matos corporation invested 320,000 cash in marketable securities on Dec.4. On Dec. 31, the market value for this securities is 337,000, which of the following statement is correct: Answer:

Matos Balance sheet report market securities 337,000 and unrealized gained of 17,000

If Matos sell this investment on Jan. 2 for 300,000 , it will report loss of 37,000

Matos's Decembers income statement includes a 17,000 gain on investment

Matos's Dec. balance sheet report Market securities at 320,000 on unrealized gained on 17,000

Q When bonds issued at discount, the corporation must pay the bond holders more at the maturity day than they received back on the date that they issued.

Q What is prior period adjustment? T&F Q why are junk bond to attract investor? T/F Q The amortization of bond discount reduces the amount of interest expense record of the life of the bond. T/F False Answer: -When a bond is sold at a discount, the amount of the bond discount must be amortized to interest expense over the life of the bond. Since the debit amount in the account Discount on Bonds Payable will be moved to the account Interest Expense, the amortization will cause each period's interest expense to be greater than the amount of interest paid during each of the years that the bond is outstanding.

- Amortization of bond discount increases interest expense relative to interest paid: i.e., the total amount of interest expense over the life of the bond is greater than the total interest paid.

Q The FASB has not definitely list what is consider to be extraordinary items ,as result the determination extraordinary or not left up to the business management. T/F Answer: