Question 15(5 points)

Exam Corp. is in need of cash. On 1/1/2023 Exam Corp. issues bonds with a $350,000 face value. The bonds have an 7.50% coupon rate. The market rate is 18%. The bonds have a life of 6 years, and are compounded semiannually. At the time of issuance, the price of the bonds is correctly calculated to be $218,420. All answers below can be rounded to the nearest dollar.

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What is the journal entry Exam Corp. will record when it retires the bonds in 10 years (after/not including the final coupon payment):

Question 15 options:

Dr. Bonds Payable $350,000

Cr. Cash $350,000

Dr. Bonds Payable $218,420

Dr. Discount $131,580

Cr. Cash $350,000

Dr. Interest Expense $350,000

Cr. Cash $350,000

Dr. Bonds Payable $218,420

Dr. Premium $131,580

Cr. Cash $350,000

Question 16(3 points)

Assume a $500,000 face value bond is retired early for 98% of face value. At the time of early retirement, the bond has a book value of $532,874. The journal entry to reflect the early retirement of this debt will include a....

Question 16 options:

Credit to Bonds Payable of $500,000

Debit to Bonds Payable of $532,874

Credit to Bonds Payable of $532,874

Debit to Bonds Payable of $500,000

Question 17(3 points)

Assume a $500,000 face value bond is retired early for 98% of face value. At the time of early retirement, the bond has a book value of $532,874. The journal entry to reflect the early retirement of this debt will include a....

Question 17 options:

Credit to Discount of $32,874

Debit to Discount of $32,874

Debit to Premium of $32,874

Credit to Premium of $32,874

Question 18(3 points)

Assume a $500,000 face value bond is retired early for 98% of face value. At the time of early retirement, the bond has a book value of $532,874. The journal entry to reflect the early retirement of this debt will include a....

Question 18 options:

Credit to Cash of $490,000

Debit to Cash of $500,000

Credit to Cash of $500,000

Debit to Cash of $490,000

Question 19(3 points)

Assume a $500,000 face value bond is retired early for 98% of face value. At the time of early retirement, the bond has a book value of $532,874. The journal entry to reflect the early retirement of this debt will include a....

Question 19 options:

Debit to Loss of $42,874

Debit to Gain of $42,874

Credit to Gain of $42,874

Credit to Loss of $42,874

Part 4: Shareholders' Equity

Question 20(5 points)

Silver Corp. declares a 15% stock dividend to its shareholders on 1/18. On that date, the company had 15,000 shares issued and 12,000 shares outstanding. Silver Corp. common stock has a par value of $0.50 and a fair market value of $12.75. Silver Corp. distributed the stock the dividend to its shareholders on 1/22. On 2/12 Silver Corp. declares a 2 for 1 stock split.

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What journal entry will Silver Corp. record on 1/18, when the stock dividend is declared?

Question 20 options:

Dr. Stock Dividends $22,950.00

Cr. Stock Dividend Distributable $900.00

Cr. APIC $22.050.00

Dr. Stock Dividends $22,950.00

Cr. Stock Dividend Distributable $1,800.00

Cr. APIC $21,150.00

Dr. Stock Dividends $27,562.50

Cr. Stock Dividend Distributable $2,250.00

Cr. APIC $25,312.50

Dr. Stock Dividends $22,050.00

Cr. Stock Dividend Distributable $1,800.00

Cr. APIC $20,250.00

Question 21(4 points)

Silver Corp. declares a 15% stock dividend to its shareholders on 1/18. On that date, the company had 15,000 shares issued and 12,000 shares outstanding. Silver Corp. common stock has a par value of $0.50 and a fair market value of $12.75. Silver Corp. distributed the stock the dividend to its shareholders on 1/22. On 2/12 Silver Corp. declares a 2 for 1 stock split.

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What is the impact of declaring the stock dividend on Silver Corp.'s Net Income?

Question 21 options:

Silver Corp.'s Net Income will be reduced by $22,950.

Silver Corp.'s Net Income will be reduced by $27,562.50

Silver Corp.'s Net Income will be reduced by $28,687.50.

Declaring a stock dividend does not impact net income.

Silver Corp.'s Net Income will be reduced by $21,150.