Solved by verified expert :1. Consider the following: A company issued $10,000,000 in bonds on January 1, 2011.The terms are: 10 year with interest paid semiannually. Refer to the following schedule.PaymentBalanceCashEffective InterestDecrease in BalanceOutstanding11,487,7471400,000344,63255,36811,432,3792400,000342,97157,02911,375,3503400,000341,26158,73911,316,611What is the interest expense on the bonds in 2012?a.b.c.d.800,000680,759342,961none of the above2. Buckeye Corporation adopted dollar-value LIFO on January 1, 2011, when theinventory value was $500,000 and the cost index was 1.0. On December 31, 2011, theinventory value at year-end costs was $535,000 and the cost index was 1.06. Buckeyewould report a LIFO inventory ofa. 504,717b. 530,000c. 505,000d. 533,0199. Eagle Company issued ten-year bonds at 96 during the current year. In the year-endfinancial statements, the discount should be:a.b.c.d.Added to bonds payableIncluded as an expense in the year of issueDeducted from bonds payableReported as a deferred charge11. Liddy Corp. began constructing a new warehouse for its operations during the currentyear. In the year Liddy incurred interest of $30,000 on a working capital loan, and intereston a construction loan for the warehouse of $60,000. Interest computed on the averageaccumulated expenditures for the warehouse construction was $50,000. What amount ofinterest should Liddy expense for the year?a.b.c.d.30,00040,00090,000140,00013. Consider the following: A company exchanged some equipment and was classified ashaving commercial substance.Case OneCase TwoBook Value$75,000$60,000Fair Value$80,000$56,000Cash Received$12,000$10,000Referring to Case Two the company will record a gain or loss of how much?a.b.c.d.4,000 gain4,000 loss10,000 lossNone of the above16. CPA Inc. shipped the wrong shade of paint to a customer. The customer agreed tokeep the paint upon being offered a 15% price reduction. CPA would record thisreduction by crediting accounts receivable and debiting:a. Salesb. Sales discountsc. Sales returnsd. Sales allowances18. In the current year, CPA Company reported warranty expense of $190,000 and thewarranty liability account increased by $20,000. What were warranty expenditures duringthe year?a. 190,000b. 170,000c. 210,000d. 020. Consider the following: A company exchanged some equipment and was classified ashaving commercial substance.Case OneCase TwoBook Value$75,000$60,000Fair Value$80,000$56,000Cash Received$12,000$10,000In Case One the company would record the new equipment at:a. 68,000b. 63,750c. 67,250d. None of the above22. On October 31, 2011, CPA Co. borrowed $16 million cash and issued a 7-month,noninterest-bearing note. The loan was made by The Finance Co. whose stated discountrate is 8%. CPA’s effective interest rate on this loan is:FOR THIS QUESTION, WHICH OF THE FOLLOWING ARE CORRECT?MORE THAN ONE ANSWER MAY APPLY!a. More than the stated discount rate of 8%b. Less than the stated discount rate of 8%c. Equal to the stated discount rate of 8%d. Unrelated to the stated discount rate of 8%23. Consider the following: A company issued $10,000,000 in bonds on January 1, year1. The terms are: 10 year with interest paid semiannually. Refer to the followingschedule.PaymentBalanceCashEffective InterestDecrease in BalanceOutstanding11,487,7471400,000344,63255,36811,432,3792400,000342,97157,02911,375,3503400,000341,26158,73911,316,611What is the stated annual rate of interest on the bonds:a. 3%b. 4%c. 6%d. 8%24. Which of the following is not a current liability?a. Accounts payableb. Interest due in 6 months on a 10 year note payablec. Accrued taxes payabled. All are current liabilities29. CPA, Inc. exchanged equipment and $18,000 cash for similar equipment. The bookvalue and the fair value of the old equipment were $82,000 and $90,000, respectively.Assuming that the exchange does not have commercial substance, CPA will record again/(loss) of how much?a. 26,000 gainb. 8,000 lossc. 8,000 gaind. No gain or loss30. In a nonmonetary exchange of equipment, if the exchange has commercial substance,a gain is recognized if:a. The fair value of the equipment received exceeds the book value of the equipmentreceivedb. The book value of the equipment received exceeds the fair value of the equipmentgiven upc. The fair value of the equipment surrendered exceeds the book value of the equipmentgiven upd. None of the above is correct
