Question 1

Company A has a line of credit with the bank. Company A can borrow up to $100,000 at prime plus 2%. In January, the company borrowed 20,000. In February, repaid $4,000. If prime for February is 4%, how much interest expense does Company A report on the income statement in February?

Question 2

On January 1, 2018, Company B borrowed 50,000 signing a 3-year installment note payable with yearly cash payments of $19,402 due each December 31. Assuming the interest rate is 8%, what is the net note payable reported on the December 31 balance sheet after the annual payment?

Question 3

On January 1, 2019, Company C issues $200,000 of its 6% bonds which mature in 10 years. Interest is paid annually on December 31. The market (effective) rate of interest is 4%. If the bond sells as 88.2, what is the discount or premium (hint: determine the price of the bond first)?

Question 4

On January 1, 2019, Company C issues $200,000 of its 6% bonds which mature in 10 years. Interest is paid annually on December 31. The market (effective) rate of interest is 4%. If the bond sells as 88.2, what the amount of interest paid reported on the Statement of Cash Flows for 2019 (hint: prepare an amortization schedule)?

Question 5

On January 1, 2019, Company C issues $200,000 of its 6% bonds which mature in 10 years. Interest is paid annually on December 31. The market (effective) rate of interest is 4%. If the bond sells as 88.2, what the amount of interest expense reported on the Income Statement for 2019 (hint: prepare an amortization schedule)

Question 6

On January 1, 2020, Company D issued 6,000 shares of its $2 par Common Stock when the market price was $30 and issued 1,000 shares of its $25 par Preferred Stock when the market price was $62 per share. What amounts would be reported on the balance sheet for Common Stock and Paid-In Common Stock?

Question 7

On January 1, 2020, Company D issued 6,000 shares of its $2 par Common Stock when the market price was $30 and issued 1,000 shares of its $25 par Preferred Stock when the market price was $62 per share. What amounts would be reported on the balance sheet for Preferred Stock and Paid-In Preferred Stock?

Question 8

On May 1, Z Company repurchased (bought back) 12,000 shares of its own $2 par common stock as treasury stock at a cost of $10 per share. On September 1, Z Company resold 5,000 shares of its treasury stock when the market prices was $15 per share. What is the ending balance in Treasury Stock? What is the ending balance in in the Paid-In Treasury Stock?

Question 9

Company E reports the following stockholders' equity:

Common Stock, 100,000 authorized, 30,000 issued, $3 par	?
Paid-In Common Stock	93,000
Less: Treasury Stock, 5000 shares	(15,000)
Retained Earnings	40,000

What was the average price the common stock was issued?

Question 10

Company E reports the following stockholders' equity:

Common Stock, 100,000 authorized, 30,000 issued, $3 par	?
Paid-In Common Stock	93,000
Less: Treasury Stock, 5000 shares	(15,000)
Retained Earnings	40,000

Assume that Company E pays a $1 per share dividend to its common shareholders. What would be the ending balance in Retained Earnings after the dividend was paid?