Question

44. Calculate the issue price of a $1,000,000, 10%, 10-year bond that pays interest semiannually, assuming the market rate is 8%. Use the time value factors below to help you complete your answer (you may have a small rounding error): Periods Rate 4gi S2S 825 10% Present Value of $1 0.67556 0.61391 0.46319 0.38554 0.45639 0.37689 0.21455 0.14864 10 20 8.11090 7.72173 6.71008 6.14457 3.59033 12.46221 9.81815 8.51356 Present Value of Annuity 10 20 a. $1,137,862 b. $1,135,907 c. $1,000,000 d. $1,136,781 e. S1,134,198 45. Which of the following best describes the balance of paid-in capital portion of stockholders' equity? The amount of common stock less dividends over the life of the company Revenues minus expenses and dividends over the life of the company The difference between total revenues and total expenses, less dividends for the year Total assets minus total liabilities of the company The amount of capital invested by stockholders a. b. c. d. e. Inventory records for a company revealed the following: 6. Number of Units Transaction Beginning inventory 500 Unit Cost $2.40 Apr. 1 Apr. 20Purchase 400 The company sold 700 units of inventory during the month. Cost of goods sold assuming LIFO would be: a. $1,710. b. $1,730 c. $1,720. d. $1,690 e. $1,700. Suppose a company provides services to customers in the current period but does not collect cash from those customers. How will the basic accounting equation be affected i the current year? a. Stockholders' equity increases d. Liabilities decrease b. Expenses decrease e. Assets decrease No effect in the current year c.

Answer 1

Solution 44:

Computation of bond price
Table values are based on:
n=	20
i=	4%
Cash flow	Table Value	Amount	Present Value
Par (Maturity) Value	0.45639	$1,000,000	$456,390
Interest (Annuity)	13.59033	$50,000	$679,517
Issue Price of bonds			$1,135,907

Hence option b is correct.

solution 45:

The amount of capital invested by stockholders best describes the paid in capital portion of stockholder's equity

hence option e is correct.

Solution 46:

Cost of goods sold under LIFO = (400*$2.50) + (300*$2.40) = $1,720

Hence option c is correct.

Solution 47:

Providing services to customer results in increase in revenues thus increase in stockholder's equity.

Hence option a is correct.