QUESTION 26

1. Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles?
2. a. Amount of loss is reasonably estimable and event occurs infrequently.
3. b. Event is unusual in nature and occurrence of event is probable.
4. c. Event is unusual in nature and event occurs infrequently.
5. d. Amount of loss is reasonably estimable and occurrence of event is probable.

QUESTION 27

1. Information available prior to the issuance of the financial statements indicates that it is probable that, at the date of the financial statements, a liability has been incurred for obligations related to product warranties. The amount of the loss involved can be reasonably estimated.Based on the above facts, an estimated loss contingency should be
2. a. classified as an appropriation of retained earnings
3. b. accrued
4. c. NEITHER accrued NOR disclosed
5. d. disclosed but NOT accrued

QUESTION 28

1. On January 1, 2013, Ellison Co. issued eight-year bonds with a face value of $1,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are:
2. Present value of 1 for 8 periods at6%.................................................627
3. Present value of 1 for 8 periods at8%.................................................540
4. Present value of 1 for 16 periods at3%...............................................623
5. Present value of 1 for 16 periods at4%...............................................534
6. Present value of annuity for 8 periods at6%......................................6.210
7. Present value of annuity for 8 periods at8%......................................5.747
8. Present value of annuity for 16 periods at3%....................................12.561
9. Present value of annuity for 16 periods at4%....................................11.652
11. The present value of the principal is
12. a. $627,000
13. b. $534,000
14. c. $623,000
15. d. $540,000

QUESTION 29

1. On January 1, 2013, Ellison Co. issued eight-year bonds with a face value of $1,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are:
2. Present value of 1 for 8 periods at6%.................................................627
3. Present value of 1 for 8 periods at8%.................................................540
4. Present value of 1 for 16 periods at3%...............................................623
5. Present value of 1 for 16 periods at4%...............................................534
6. Present value of annuity for 8 periods at6%......................................6.210
7. Present value of annuity for 8 periods at8%......................................5.747
8. Present value of annuity for 16 periods at3%....................................12.561
9. Present value of annuity for 16 periods at4%....................................11.652
11. The present value of the interest is
12. a.$349,560
13. b.$376,830
14. c.$344,820
15. d.$372,600

QUESTION 30

1. On January 1, 2013, Ellison Co. issued eight-year bonds with a face value of $1,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are:
2. Present value of 1 for 8 periods at6%.................................................627
3. Present value of 1 for 8 periods at8%.................................................540
4. Present value of 1 for 16 periods at3%...............................................623
5. Present value of 1 for 16 periods at4%...............................................534
6. Present value of annuity for 8 periods at6%......................................6.210
7. Present value of annuity for 8 periods at8%......................................5.747
8. Present value of annuity for 16 periods at3%....................................12.561
9. Present value of annuity for 16 periods at4%....................................11.652
11. Theissue price of thebond is
12. a.$889,560
13. b.$999,600
14. c.$883,560
15. d.$884,820