1)A company owns 9% bonds with a par value of $186,000 that pay interest on Octo

Question

1)A company owns 9% bonds with a par value of $186,000 that pay interest on October 1 and April 1. The amount of interest accrued on December 31 (the company's year-end) would be (Do not round your intermediate calculations):
a.$8,370.
b.$4,185.
c.$2,790.
d.$1,395.
e.$16,740.

2)On February 15, Seacroft buys 6,600 shares of Kebo common stock at $28.67 per share plus a brokerage fee of $470. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.29 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 25 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.44 per share less a brokerage fee of $320. The journal entry to record the purchase on February 15 is:
a. Debit Long-Term Investments-AFS $189,692; credit Cash $189,692.
b.Debit Long-Term Investments-AFS $189,222; credit Cash $189,222.
c.Debit cash $189,692; credit Long-Term Investments-AFS $189,692
d.Debit Long-Term Investments-AFS $194,304; credit cash $194,304
e.Debit cash $189,222; credit Long-Term Investments-AFS $189,222.

3)Six months ago, a company purchased an investment in stock for $65,000. The investment is classified as available-for-sale securities. The current fair value of the stock is $68,000. The company should record a:
a.Debit to Investment Revenue for $3,000.
b.Debit to Unrealized Loss-Equity for $3,000.
c.Credit to Market Adjustment - Available-for-Sale for $3,000.
d.Credit to Unrealized Gain-Equity for $3,000.
e.Credit to Investment Revenue for $3,000.

Explanation / Answer

1. D 2. B 3. A

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