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61. An advantage of bond financing is: A. Issuing bonds does not affect shareholder control. B. Interest on bonds is tax-deductible. C. Bonds can increase return on equity. D. Bonds can create financial leverage. E. All of these answers are correct. 62. A disadvantage of bonds is: A. Bonds require payment of periodic interest. B. Bonds require payment.
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91. The Premium on Bonds Payable account is a(n): A. Revenue account. B. Adjunct-revenue account. C. Contra revenue account. D. Contra liability account. E. Adjunct-liability account. 92. Emilia Inc issued $200,000, 6%, 10-year bonds, with interest payable semiannually. The market rate on the issue date was 5.5%. Emilia received $206,948 in proceeds. Which statement best describes.
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85. A(n) __________________ is a part of a company's operations that serves a particular line of business or class of customers. 86. A share dividend transfers a portion of a corporation's equity from retained earnings to _____________________________. 87. A share dividend is never a(n) ________________ on a balance sheet because it will.
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78. Kriton Corporation had net income of $375,000 and paid preferred dividends of $80,000. Kriton had 50,000 common shares outstanding. Calculate the earnings per share. 79. Explain the procedure to record the purchase and sale of treasury shares. 80. A corporation began the year with $550,000 of retained earnings, reported $140,000 net.
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96. Bonds that give the issuer an option of retiring them before they mature are known as: A. Debentures. B. Callable bonds. C. Convertible bonds. D. Registered bonds. E. Serial bonds. 97. Paul Corporation has $100,000 in bonds outstanding. The unamortized discount on these bonds is $4,500. If the corporation redeems these bonds at 97, what.
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126. Discuss the difference between operating and finance leases. 127. The XON Oil Corporation plans to invest $1 million in oil exploration. The corporation is considering two plans to raise the money. Under Plan #1, 9% bonds would be issued at par. Under Plan #2, additional common shares would be sold.
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91. Match each of the following terms with the appropriate definition. 1. Share dividend Limits that identify how much of the retained earnings balance is not available for dividends or the repurchase of shares.   2. Treasury share (Net income - Preferred dividends)/Weighted-average common shares outstanding.   3. Earnings per share An act by a corporation to call.
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66. Callable bonds: A. Can be exchanged for a fixed number of the issuing corporation's common shares. B. Do not require payment of interest over the life of the bond issue. C. Have an option whereby the issuing corporation may redeem them under specified conditions. D. Are usually not registered. E. Are also called debentures. 67..
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36. An expanded income statement for a corporation with discontinued operations includes information on: A. Continuing operations. B. Discontinued operations. C. Earnings per share. D. Net income. E. All of these answers are correct. 37. Reporting for discontinued operations includes: A. Income or loss from operating the discontinued segment (net of tax). B. Gain or loss from disposal.
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90. Match each of the following terms with the appropriate definition. 1. Share dividend Limits that identify how much of the retained earnings balance is not available for dividends or the repurchase of shares.   2. Treasury share (Net income - Preferred dividends)/Weighted-average common shares outstanding.   3. Earnings per share An act by a corporation to call.
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73. For each of the following independent situations, present the necessary journal entry: (a) Declared and distributed a 10% share dividend on 500,000 shares of common shares outstanding. Market price per share on this date was $15. (b) With 250,000 shares of common shares outstanding, declared and distributed a 2 for 1.
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6. A share dividend reduces a corporation's assets and equity. 7. A share dividend reduces the number of previously outstanding shares. 8. A share dividend increases the number of previously outstanding shares. 9. A share dividend capitalizes retained earnings because it decreases a company's contributed capital. 10. A share split decreases the market price.
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132. Fiona Inc issued $750,000, 8%, 10-year bonds on December 31, 2014, for $656,541 cash. The current market rate is 10%. The corporation uses the effective interest amortization method. Interest is payable semiannually on June 30 and December 31. Prepare an amortization schedule for the first five payment periods using the.
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133. Shorty Corporation issued $100,000, 5%, 10-year bonds, with interest payable semiannually. The market rate on the issue date was 6%. Calculate the issue price for the bond. 134. Shorty Corporation issued $100,000, 5%, 10-year bonds, with interest payable semiannually. The market rate on the issue date was 6%. Prepare the.
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106. Sami Corporation borrowed $300,000 from the bank by signing a 5-year, 8% installment note. The present value of an annuity factor at 8% for 5 years is 3.9927. To the nearest dollar, the annual payment is: A. $24,000. B. $19,964. C. $37,500. D. $60,000. E. $75,137. 107. Prof Inc borrowed $200,000 from the bank and.
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86. Roarie Inc issued $200,000, 7%, 5-year bonds. The current market rate was 7.5%. Roarie received $197,947 for the bonds. Using the effective interest method, the amount of interest expense to be recorded for the first semiannual payment was: A. $6,500.00. B. $6,673.01. C. $6,705.30. D. $7,423.01. E. $7,000.00. 87. Willa Inc issued $110,000, 9%, 5-year.
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111. Don Corporation leases machinery from Demarcation Corporation for $1,200 per month for one year. Payments are made on the first day of each month beginning April 1, 2015. The conditions of the lease require it to be treated as an operating lease. The entry to record the first lease.
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31. Purchasing treasury shares reduces retained earnings. 32. As part of the year-end closing process the Share Dividends account is closed to Retained Earnings. 33. If a company resells treasury shares below the acquisition cost, then it must report a loss from the sale of treasury shares. 34. Company purchases and retirements of.
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92. Match each of the following terms with the appropriate definition. Restricted retained earnings Retained earnings that are not available for dividends because of legal or contractual limitations. 1. Share dividend Limits that identify how much of the retained earnings balance is not available for dividends or the repurchase of shares.   2. Treasury share (Net.
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26. Changes in accounting estimates are applied in determining expenses for the current and future periods. 27. After using an expected useful life of seven years and no residual value to depreciate its machine over the preceding two years, a company decided early this year that the machine would last only.
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138. On December 31, 2015, Jenna Corp issued $1,000,000, 8%, 5-year bonds. Interest is payable semiannually on June 30 and December 31. The corporation uses the effective interest method of amortizing bond premium or discount. Using the present value tables, estimate the issue price of the bonds under the following.
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21. Earnings per share is calculated by dividing the number of common shares outstanding by net income. 22. The cumulative effect of changing accounting principles is only reported for the year of the change. 23. Retained earnings are part of the shareholders' claim on the company's net assets. 24. Changes in accounting estimates.
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136. Seinfeld Corporation issued $500,000, 11%, 3-year bonds when the market rate was 12%, and received $487,567.50 in proceeds. Prepare the journal entry to record the issuance of the bonds. The bonds pay quarterly interest. 137. Levi Corporation issued $500,000, 11%, 10-year bonds when the market rate was 12%, and received.
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71. The contract between the bond issuer and the bondholders, which identifies the rights and obligations of the parties, is called a(n): A. Bond indenture. B. Debenture. C. Mortgage. D. Installment note. E. Mortgage contract. 72. Bonds that mature at different dates with the result that the entire debt is repaid gradually over a number of.
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