were sold for $47.50 per share. What is the amount of gain or loss on the sale? a. $4,350 gain b. $400 gain C. $400 loss d. $16,800 loss When the affected by An intorurchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares cost method is used to account for an investment the carrying value of the investment is the dividend distributions of the investee. the net income of the investee. a. b. c. d. the earnings and dividend distributions of the investee. neither the earnings nor the dividends of the investee. 21. A company issues $50 annually on 12/31 and 6/30 and million of bonds at par on January 1, 2009. The bonds pay 10% interest semi- mature in 20 years. The journal entry when the bonds are sold is: Cash 50,000,000 A. Bonds Payable 50,000,000 Cash Interest Expense 50,000,000 2.500,000 Bonds Payable Interest Payable 50,000.000 2,500,000 B. Cash Interest Expense 50,000,000 5,000,000 Bonds Payable Interest Payable 50,000,000 5,000,000 C. Cash Interest Expense 50,000,000 500,000 Bonds Payable Interest Payable 50,000,000 500,000 D. 22. When a company sells bonds between interest dates they will pay which of the following at the first interest payment date? A. An amount less than the stated interest rate times the principal. B. An amount more than the stated interest rate times the principal. C. An amount equal to the stated interest rate times the principal. D. The company may skip the first interest payment date since the appropriate time has not passed 23. Which of the following is not an accurate statement regarding the distinction between debt and equity? A. Only equity is considered a source of financing for operations of the business, since debt must be repaid at a specified maturity date. B. If a business ceases operations and liquidates, claims of all creditors have legal priority over claims of the stockholders. C. Most debt requires the borrower to pay interest; equity financing does not obligate the company to make a specified payment D. The providers of equity are owners of the business; the providers of borrowed funds are creditors