Question 44

Grayson Company issues $3,000,000, 6%, 5-year bonds dated January 1, 20X1 on January 1, 20X1. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue?

Question 44 options:

	$3,099,642
	$3,000,000
	$2,744,082
	$2,485,012

Question 45

Charleston Company incurred research and development costs of $100,000 and legal fees of $30,000 to acquire a patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should Thompson record as Patent Amortization Expense in the first year?

Question 45 options:

	$ 6,500.
	$ -0-.
	$13,000.
	$ 3,000.

Question 46

Hank Waters loaned $112,695 to Ryan Phelps on April 1, 20X1. A zero-interest-bearing note (face amount, $150,000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on April 1, 20X4. The prevailing rate of interest for a loan of this type is 10%. The present value of $150,000 at 10% for three years is $112,695. What amount of interest income should Hank Waters recognize in 20X1?

Question 46 options:

	$15,000.
	$8,452.
	$7,513.
	$11,250.

Question 47

Ocho Co. has a probable loss that can only be reasonably estimated within a range of outcomes. No single amount within the range is a better estimate than any other amount. The loss accrual should be

Question 47 options:

	the maximum of the range.
	zero.
	the minimum of the range.
	the mean of the range.

Question 48

On October 1, 20X1 Jordan Corporation issued 5%, 10-year bonds with a face value of $3,000,000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. The entry to record the issuance of the bonds would include a debit of

Question 48 options:

	$3,000,000 to Cash.
	$3,120,000 to Cash.
	$120,000 to Premium on Bonds Payable.
	$3,840,000 to Bonds Payable.

Question 49

Rhode Co., which has a taxable payroll of $900,000, is subject to FUTA tax of 6.2% and a state contribution rate of 5.4%. However, because of stable employment experience, the companys state rate has been reduced to 2%. What is the total amount of federal and state unemployment tax for Rhode Co.?

Question 49 options:

	$104,400
	$25,200
	$73,800
	$36,000

Question 50

Dugan provides extended service contracts on electronic equipment sold through major retailers. The standard contract is for four years. During the current year, Dugan provided 42,000 such warranty contracts at an average price of $81 each. Related to these contracts, the company spent $400,000 servicing the contracts during the current year and expects to spend $2,100,000 more in the future. What is the net profit that the company will recognize in the current year related to these contracts?

Question 50 options:

	$400,000.
	$902,000.
	$3,002,000.
	$450,500.