1.If Dakota Company issues 1,500 shares of $6 par common stockfor $75,000, a. Paid-In Capital in Excess...

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1.If Dakota Company issues 1,500 shares of $6 par common stockfor $75,000,

a. Paid-In Capital in Excess of Par will be credited for$66,000

b. Common Stock will be credited for $75,000

c. Cash will be debited for $66,000

d. Paid-In Capital in Excess of Par will be credited for$9,000

2. Treasury stock shares are

a. unissued shares that are held by the treasurer of thecorporation

b. shares held by the U.S. Treasury Department

c. part of the total outstanding shares but not part of thetotal issued shares of a corporation

d. issued shares that have been reacquired by a corporation

3. The Levi Company issued $200,000 of 12% bonds on January 1 atface value. The bonds pay interest semiannually on January 1 andJuly 1. The bonds are dated January 1, and mature in five years, onJanuary 1. The total interest expense related to these bonds forthe current year ending on December 31 is

a. $18,000

b. $24,000

c. $2,000

d. $6,000

4. On January 1, $2,000,000, 5-year, 10% bonds, were issued for$1,960,000. Interest is paid semiannually on January 1 and July 1.If the issuing corporation uses the straight-line method toamortize discount on bonds payable, the semiannual amortizationamount is

a. $2,000

b. $8,000

c. $10,000

d. $4,000

5. Ruben Company purchased $100,000 of Evans Company bonds at100 plus $1,500 in accrued interest. The bond interest rate is 8%and interest is paid semiannually. The journal entry to record thepurchase would be

a. debit Investment—Evans Company Bonds, $100,000, andInterest Receivable $1,500; credit Cash $101,500

b. debit Investment—Evans Company Bonds, $101,500; creditCash, $101,500

c. debit Investment—Evans Company Bonds, $100,000; creditInterest Revenue, $1,500, and Cash, $98,500

d. debit Investment—Evans Company Bonds, $100,000; creditCash $100,000

6. Armando Company owns 17,000 of the 70,000 shares of commonstock outstanding of Tito Company and exercises a significantinfluence over its operating and financial policies. The investmentshould be accounted for by the

a. cost or market method

b. market method

c. equity method

d. cost method

7. Blanton Corporation purchased 15% of the outstanding sharesof common stock of Worton Corporation as a long-term investment.Subsequently, Worton Corporation reported net income and declaredand paid cash dividends. What journal entry would BlantonCorporation use to record the dividends it receives?

a. debit Cash; credit Dividend Revenue

b. debit Investment in Worton Corporation; credit Cash

c. debit Cash; credit Investment in Worton Corporation

d. debit Investment in Worton Corporation; credit Income ofWorton Corporation

8. Blanton Corporation purchased 35% of the outstanding sharesof common stock of Worton Corporation as a long-term investment.Subsequently, Worton Corporation reported net income and declaredand paid cash dividends. What journal entry would BlantonCorporation use to record the dividends it receives from WortonCorporation?

a. debit Investment in Worton Corporation Stock; credit Incomeof Worton Corporation

b. debit Investment in Worton Corporation Stock; credit Cash

c. debit Cash; credit Investment in Worton Corporation Stock

d. debit Cash; credit Dividend Revenue