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Date Submitted: 10/22/2012 01:41 PM
Test 1 Intermediate Accounting II Spring 2008 Chapters 14,15,16a
Name: __________________________
Use the following to answer questions 1-2:
Cox Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%.
1.|One step in calculating the issue price of the bonds is to multiply the principal by the table value for|
A)|10 periods and 10% from the present value of 1 table.|
B)|20 periods and 5% from the present value of 1 table.|
C)|10 periods and 8% from the present value of 1 table.|
D)|20 periods and 4% from the present value of 1 table.|
2.|Another step in calculating the issue price of the bonds is to|
A)|multiply $10,000 by the table value for 10 periods and 10% from the present value of an annuity table.|
B)|multiply $10,000 by the table value for 20 periods and 5% from the present value of an annuity table.|
C)|multiply $10,000 by the table value for 20 periods and 4% from the present value of an annuity table.|
D)|none of these.|
3.|Stone, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from date of issue. If the bonds were issued at a premium, this indicates that|
A)|the effective yield or market rate of interest exceeded the stated (nominal) rate.|
B)|the nominal rate of interest exceeded the market rate.|
C)|the market and nominal rates coincided.|
D)|no necessary relationship exists between the two rates.|
Use the following to answer questions 4-6:
On January 1, 2007, Bleeker Co. issued eight-year bonds with a face value of $1,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are:
Present value of 1 for 8 periods at 6%||.627|
Present value of 1 for 8 periods at 8%||.540|
Present value of 1 for 16 periods at 3%||.623|
Present value of 1 for 16 periods at 4%||.534|
Present value of annuity for 8 periods at 6%||6.210|
Present value of annuity for 8...