Question : 70.A company purchased $60,000 of 5% bonds May 1 at : 1258239

 

70.A company purchased $60,000 of 5% bonds on May 1 at par value. The bonds pay interest on March 1 and September 1. The amount of interest accrued on December 31 (the company’s year-end) would be:   

A. $1,000.

B. $500.

C. $1,250.

D. $2,500.

E. $1,500.

71.A company paid $37,800 plus a broker’s fee of $525 to acquire 8% bonds with a $40,000 maturity value. The company intends to hold the bonds to maturity. The cash proceeds the company will receive when the bonds mature equal:   

A. $37,800.

B. $38,325.

C. $40,000.

D. $40,525.

E. $43,200.

72.A company paid $37,800 plus a broker’s fee of $525 to acquire 8% bonds with a $40,000 maturity value as a long-term investment. The company intends to hold the bonds to maturity. The correct entry to record the purchase of the bond investment is:    

A. Debit Long-Term Investments—HTM $37,800; credit Cash $37,800.

B. Debit Long-Term Investments—HTM $38,325; credit Cash $38,325.

C. Debit Cash $40,000; credit Long-Term Investments—HTM $40,000.

D. Debit Long-Term Investments—HTM $37,800; debit Investment Expense $525; credit Cash $38,325.

E. Debit Long-Term Investments—HTM $37,800; debit Loss on Investment $525; credit Cash $38,325.

73.Kendall Corp. purchased at par value $75,000 of Shrem Company’s 8% bonds that mature in three-years. The bonds pay interest semiannually on June 1 and December 1. Kendall plans to hold the bonds until they mature. When the bonds mature, Kendall should prepare the following journal entry:   

A. debit Long-Term Investments—HTM, $75,000; credit Cash, $75,000.

B. debit Cash, $6,000; credit, Unrealized Gain-Equity, $6,000.

C. debit Cash, $75,000; credit Long-Term Investments—HTM, $75,000.

D. debit Unrealized Gain-Equity, $6,000; credit Cash, $6,000.

E. debit Cash, $75,000; credit Long-Term Investments—Trading, $75,000.

74.Kendall Corp. purchased at par value $160,000 of Barker Company’s 7% bonds that mature in 10 months. The bonds pay interest semiannually on June 1 and December 1. Kendall plans to hold the bonds until they mature. The journal entry to record Kendall’s purchase of the bonds is:    

A. debit Short-Term Investments—HTM $160,000; credit Cash, $160,000.

B. debit Cash, $169,333; credit, Short-Term Investments—HTM $169,333.

C. debit Cash, $160,000; credit Short-Term Investments—HTM $160,000.

D. debit Long-Term Investments—HTM $160,000; credit Cash $160,000.

E. debit Cash, $160,000; credit Long-Term Investments—HTM $160,000.

75.Barnes Company holds $50,000 of 8% bonds that mature in six years as a held-to-maturity security. Which of the following is the correct journal entry to record the receipt of the semiannual interest payment?    

A. debit Cash, $4,000; credit Long-Term Investments—HTM, $4,000.

B. debt Cash, $2,000; credit Long-Term Investments—HTM, $2000.

C. debit Cash, $2,000; credit Interest Revenue, $2,000.

D. debit Unrealized Gain-Equity, $2,000; credit Cash, $2,000.

E. debit Cash, $4,000; credit Unrealized Gain-Equity, $4,000.

76.Accounting for long-term investments in equity securities with controlling influence uses the:   

A. Controlling method.

B. Equity method with consolidation.

C. Investor method.

D. Investment method.

E. Consolidated method.

77.The controlling investor is called the:   

A. Owner.

B. Subsidiary.

C. Parent.

D. Investee.

E. Senior entity.

78.The investee company in a long term investment with controlling interest is called the:   

A. Owner.

B. Subsidiary.

C. Parent.

D. Creditor.

E. Senior entity.

79.A controlling influence over the investee is based on the investor owning voting stock exceeding:   

A. 10%.

B. 20%.

C. 30%.

D. 40%.

E. 50%.

 

 

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