11. -82
Eddie Industries issues $1,500,000 of 8% bonds at 105. The amountof cash received from the sale is
$1,575,000
$1,000,000
$1,425,000
$1,080,000
12. -83
If the market rate of interest is greater than the contractual rateof interest, bonds will sell
only after the stated rate of interest is increased
at a premium
at face value
at a discount
13. -90
The Glenn Corporation issues 1,000, 10-year, 8%, $2,000 bonds datedJanuary 1 at 96. The journal entry to record
the issuance will show a
debit to Cash of $2,000,000
credit to Bonds Payable for $1,920,000
debit to Discount on Bonds Payable for $80,000
credit to Cash for $1,920,000
14. -92
Bonds with a face amount of $1,000,000 are sold at 106. The journalentry to record the issuance is
15. -58
The market interest rate related to a bond is also called the
effective interest rate
contract interest rate
straight-line rate
stated interest rate
16. TF.12-03
The financial loss that each stockholder in a corporation can incuris usually limited to the amount invested by the
stockholder.
True
False
17. TF.12-05
Double taxation is a disadvantage of a corporation because thecorporation has to pay income taxes at twice the
rate applied to partnerships.
True
False
18. TF.12-09
The two main sources of stockholders' equity are investmentscontributed by stockholders and net income retained
in the business.
True
False
19. TF.12-11
The net increase or decrease in Retained Earnings for a period isrecorded by closing entries.
True
False
20. TF.12-38
Before a stock dividend can be declared or paid, there must besufficient cash.
True
False
