1. The Merchant Corporation purchased 10 - year bonds as held-to-maturity investments on January 1, 2015. The 15% bonds have a fave value of $100,000 and interest is received every January 1 and July 1. The bonds were purchased for $117,205 based on the market interest rate of 12%. The effective interest method is used to ammortize bond discounts and premiums. On July 2, 2015, how much interest should Merchant record (round to the nearest dollar)?
2. What does the equity method of accounting investments require?
i) the investment be increased by the reported net income of the investee
ii) the investment to be reported at its original cost
iii) the investment be decreased by the reported net income of the investee
iv) a year-end adjustment to revalue the shares to market
3. How are held-for-trading investments in bonds recorded?
i) at cost adjusted for the income of the investee
ii) at cost and they are reported at cost
iii) at cost, but they are reported at amortized cost
iv) at cost, but they are reported at fair market value
4. On the statement of cash flows prepared by the indirect method, what would the cash flows from operating activities section include?
i) receipts from the sale of investments
ii) amortization of premium
iii) payments for cash dividends
iv) receipts from the issuance of shares
5. On January 1, 20x1, Ramish Corporation purchased 25% of the common shares of Wong Corporation for $260,000. During 2017, Wong Corporation reported profit of $90,000 and paid cash dividends of $50,000. What is the balance of investment in Associate--Wong Corp. Common Shares account on the books of Ramish Corporation at December 31, 20x1?
6. A company had profit of $240,000. Depreciation expense is $49,000. During the year, Accounts Receivable and Inventory increased $18,000 and $42,000, respectively. Prepaid Expenses and Accounts Payable decreased $1,000 and $4,000, respectively. There was also a loss on the sale of equipment of $4,000. How much cash was provided by Operating Activities?
If anyone can help me with these questions it would be greatly appreciated.
Thanks for your time.
This post was edited by Cronky on Dec 2 2018 02:06pm