题目内容

Which of the following statements is true in relationship to a company financing with debt rather than stock?

A. The principal amount must be repaid at the maturity of the bonds.
B. Trading on equity means that the business earns less by investing borrowed funds than it pays in interest expense on bonds.
C. Earnings per share will generally be higher when a company is financed with stock rather than debt.
D. Interest expense is not tax-deductible while dividends are tax-deductible.

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On January 1st, XYZ Company issued $200,000, 5-year, 4% bonds. The market rate at the time of the sale was greater than 4% so the bonds were sold at 93. Interest is payable June 30th and December 31st. The entry to record the sale of the bonds would include a:

A. Debit to Cash for $200,000.
B. Credit to Cash for $186,000.
C. Debit to Discount on Bonds Payable for $14,000.
D. Credit to Bonds Payable for $186,000.

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On January 1st, XYZ Company issued $200,000, 5-year, 4% bonds. The market rate at the time of the sale was greater than 4% so the bonds were sold at 93. Interest is payable June 30th and December 31st. If the XYZ Company uses the straight-line method to amortize discount on the bonds, the entry to record the first interest payment would include:

A. Debit to Interest Expense for $5,400.
B. Debit to Interest Expense for $9,400.
Credit to Cash for $5,400.
Debit to Discount on Bonds Payable for $1,400.

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Carly’s began operations early this year, selling a product that carries a 1-year warranty; any defective units will be replaced within that time. The product has a cost to Carly of $55 and a selling price of $108.Carly estimates that approximately 1% of the units will be defective. During the year, 62,000 units were sold and 275 units were returned for replacement.What is the balance in Warranty Payable at the end of the current year?

A. $34,100
B. $15,125
C. $18,975
D. $37,260

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On July 1, 2015, a company issued $100,000, 8-year, 4% bonds payable for $93,472, when the market rate of interest was 5%.Interest payment dates are June 30 and December 31.Using the effective interest method of amortization, the carrying amount of the bonds on December 31, 2015 will be:

A. $93,809
B. $93,135
C. $100,000
D. $99,663

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