Accounting Questions

A. How would I show the interest on a $2,000,10%,1-year note receivable would be?

b.The maturity value of a $15,000, 12%,3-month note receivable ?

c. If Lj company acquires land for $36,000 cash. Additional costs are as follows:
Removal of shed $ 300
Filling and grading 1,500
Salvage value of lumber of shed 120
Broker commission 1,130
Paving of parking lot 10,000
Closing cost 560
What is the acquisition cost of the land?

d. My truck was purchased for $15,000 and it was estimated to have a $3,000 salvage value at the end of its useful life. Monthly depreciation expense of $125 was recorded using the straight-line method. What is the annual depreciation rate

e. Alvin plant asset cost $32,000 and is estimated to have a $4,000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would it be $4500?

f. On July 1,2000, Woowoo sells equipment for $44,000. The equipment originally cost $120,000, had an estimated 5-year life and an excepted salvage value of $20,000.The Accumulated Depreciation account had a balance of $70,000 on January 1,2000. Using the straight-line method. What would be the gain or loss on the disposal? I came up with $4000 loss

g. From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that bond interest is deductible for tax purposes or interest must be paid on a periodic basis regardless of earnings or income to stockholders may increase as a result of trading on the equity or the bondholders do not have voting rights?

h. If the market rate of interest is greater than the contractual rate of interest, bonds will they sell at a premium,or face value,or discount or only after the stated rate of interest is increased?

i. The present value of a $10,000,5-year bond, will be less than $10,000 if the contractual rate of interest is less than he market rate of interest or contractual rate of interest is greater than the market rate of interest or bond is convertible or contractual rate of interest is equal to the market rate of interest?

j. If bonds are issued at a discount, does it mean that the financial strength of the issuer is suspect or market interest rate is higher than the contractual interest rate or market interest rate is lower than the contractual interest rate or bondholder will receive effectively less interest than the contractual rate of interest?

K. On January 1, Lorette's Company purchased as a temporary investment a $1,000,12%, bond, for $1,040. The bond pays interest on January 1 and July 1. The bond is sold on October 1 for $1,050 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold?

a. Cash 1,050
Debt Investments 1,050
b. Cash 1,080
Debt Investments 1,040
Gain on Sale of Debt Investments 10
Interest Revenue 30
c. Cash 1.080
Debt Investments 1,050
Interest Revenue 30
d. Cash 1,050
Debt Investments 1,040
Interest Revenue 10

L. Which of the following is not a true statement about the accounting for long-term debt investments? would the investment is initially recorded at cost or the cost includes any brokerage fees or the accounting for long-term debt investments is similar to the accounting for temporary debt investments or the cost includes any accrued interest

M. Big Al and Coman Corporation makes a temporary investment in 100 shares for Renfro Company's common stock. The stock is purchased for $50 a share plus brokerage fees of $300. The entry for the purchase is:

a. Debt Investments 5,000
Cash 5,000
b. Stock Investments 5,300
Cash 5,300
c. Stock Investments 5,000
Brokerage Fee Expense 300
Cash 5,300
d. Stock Investments 5,000
Cash 5,000

N. Lorette's Corporation's trading portfolio at the end of the year is as follows:

Security Cost Market Value
Common Stock A $12,000 $14,000
Common Stock B 8,000 5,000
$20,000 $19,000

At the end of the year, what should Lorette Corporation do?

a. set up a Market Adjustment account for Stock B
b. set up a Market Adjustment account for the portfolio
c. recognize an Unrealized Gain or Loss-Income for $3,000
d. report a loss on the income statement for $3,000 under "Other Expenses and Losses."

O. Lorette subsequently sell Stock B for $12,000. What entry is made to record the sale?

a. Cash 12,000
Stock Investments 12,000
b. Cash 12,000
Market Adjustment 4,000
Stock Investments 8,000
c. Cash 12,000
Stock Investments 8,000
Gain on sale of stock Investments 4,000
d. Cash 12,000
Stock Investments 6,000
Gain on Sale of Stock Investments 6,000

Thanks for your help LJ

Solution Summary

The solution has various accounting questions