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# 1. If the market rate of the interest for bonds is less than

### Resolved Question:

1. If the market rate of the interest for bonds is less than the rate printed on the face of the bonds, then the bonds will be issued at (Points: 2)
a discount
their face value
their face value less the interest rate printed on the face of the bonds

2. The direct investment made by stockholders in a corporation is known as (Points: 2)
retained earnings
donated capital
contributed capital
charter capital

3. The par value of stock is (Points: 2)
the same as market value
always greater than market value
no longer required
the nominal value assigned to each share by a corporation

4.
Blue Waters Sailing had a retained earnings account balance on January 1, 2007 of \$120,000. During 2007 the firm had net income of \$72,000 and paid a \$36,000 cash dividend. What is the December 31, 2007 retained earnings balance?
(Points: 2)
\$122,000
\$156,000
\$196,000
\$212,000
\$228,000

5.
A company sold \$100,000 of common stock at par value. This transaction should be entered into the accounting system as

Equity      Assets
(Points: 2)
Yes           Yes
Yes           No
No            Yes
No            No

6.
Debentures have which one of the following characteristics?
(Points: 2)
they have no specific due date on which they must be repaid
they are more like common stock than like debt
they have no specific collateral backing them up
they are issued by very small firms in an industry

7.
Renoir Enterprises called 400 of its \$1,000 face value bonds that had been outstanding for 7 years of the scheduled 30-year life. The bonds were recorded on the books, when called, at \$400,000 and had a market value of \$417,500. The company paid \$1,020 for each called bond. What amount of gain or loss should the company report from this transaction?
(Points: 2)
\$18,500 loss
\$8,000 loss
\$17,500 loss
\$9,500 gain

8.
Upbeat Music Stores issued \$500,000 face value of zero coupon bonds having a life of 10 years. (Zero coupon bonds pay zero percent interest.) If the market rate of interest is 8 percent, at what price did these bonds sell?
(Points: 2)
\$135,761
\$157,600
\$158,610
\$231,595

9.
Stacey Company has the following account balances in its stockholders' equity:

Preferred Stock \$8,000
Common Stock 10,000
Paid-in Capital in excess of par value 16,000
Retained earnings 25,000

What is the amount of the company's contributed capital?
(Points: 2)
\$59,000
\$34,000
\$18,000
\$16,000

10.
When the market rate for a bond is higher than the stated (or coupon) rate, the bond
(Points: 2)
will sell at par
will sell at a discount
cannot be sold until the market and stated rates are equal

11.
When a firm leases a resource for most of its useful life and controls the resource as though it had been purchased, the lease is treated as an operating lease.
(Points: 2)
True
False

12.
Which of the following situations is NOT consistent with the circumstances of a capital lease?
(Points: 2)
a company is using a resource for most of its useful life
a company controls the resource as if it had been purchased
a company records a liability equal to the present value of the lease payments
a company records a rental expense every time a lease payment is made

13.
The issue price of bonds is equal to
(Points: 2)
the present value of the principal
the present value of the interest
the present value of the principal minus the present value of the interest
the present value of the principal plus the present value of the interest
Submitted: 5 years ago.
Category: Homework
Expert:  Manal Elkhoshkhany replied 5 years ago.
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Manal Elkhoshkhany, Tutor
Category: Homework
Satisfied Customers: 9513
Experience: More than 5000 online tutoring sessions.

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