QUESTION 11

1. The debt to total assets ratio is computed by dividing

   	a.	current liabilities by total assets.
   	b.	long-term liabilities by total assets.
   	c.	total liabilities by total assets.
   	d.	total assets by total liabilities.

1 points

QUESTION 12

1. On July 1, 2009, Noble, Inc. issued 9% bonds in the face amount of $5,000,000, which mature on July 1, 2015. The bonds were issued for $4,695,000 to yield 10%, resulting in a bond discount of $305,000. Noble uses the effective-interest method of amortizing bond discount. Interest is payable annually on June 30. At June 30, 2011, Noble's unamortized bond discount should be

   	a.	$264,050.
   	b.	$255,000.
   	c.	$244,000.
   	d.	$215,000.

1 points

QUESTION 13

1. At December 31, 2010 the following balances existed on the books of Rentro Corporation: Bonds Payable $1,500,000 Discount on Bonds Payable 120,000 Interest Payable 37,000 Unamortized Bond Issue Costs 90,000 If the bonds are retired on January 1, 2011, at 102, what will Rentro report as a loss on redemption?

   	a.	$150,000
   	b.	$202,500
   	c.	$240,000
   	d.	$277,500

1 points

QUESTION 14

1. The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the

   	a.	bond indenture.
   	b.	bond future.
   	c.	registered bond.
   	d.	bond coupon.

1 points

QUESTION 15

1. The interest rate written in the terms of the bond indenture is known as the

   	a.	coupon rate.
   	b.	nominal rate.
   	c.	stated rate.
   	d.	coupon rate, nominal rate, or stated rate.

1 points

QUESTION 16

1. A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2010. Interest is paid on June 30 and December 31. The proceeds from the bonds are $19,604,145. What is interest expense for 2011, using straight-line amortization?

   	a.	$1,540,207
   	b.	$1,560,000
   	c.	$1,569,192
   	d.	$1,579,793

1 points

QUESTION 17

1. If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a

   	a.	debit to Interest Payable.
   	b.	credit to Interest Receivable.
   	c.	credit to Interest Expense.
   	d.	credit to Unearned Interest.

1 points

QUESTION 18

1. On January 1, Martinez Inc. issued $3,000,000, 11% bonds for $3,195,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Martinez uses the effective-interest method of amortizing bond premium. At the end of the first year, Martinez should report unamortized bond premium of:

   	a.	$185,130
   	b.	$184,500
   	c.	$173,550
   	d.	$165,000

1 points

QUESTION 19

1. An example of an item which is not a liability is

   	a.	dividends payable in stock.
   	b.	advances from customers on contracts.
   	c.	accrued estimated warranty costs.
   	d.	the portion of long-term debt due within one year.

1 points

QUESTION 20

1. On January 1, 2010, Ann Price loaned $45,078 to Joe Kiger. A zero-interest-bearing note (face amount, $60,000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2012. The prevailing rate of interest for a loan of this type is 10%. The present value of $60,000 at 10% for three years is $45,078. What amount of interest income should Ms. Price recognize in 2010?

   	a.	$4,508.
   	b.	$6,000.
   	c.	$18,000.
   	d.	$13,524.