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%.
