1. Under the equity method, the receipt of cash dividends on an investment in common stock of Vallerio Corporation is accounted for as a debit to Cash and a credit to
a. Retained Earnings.
b. Investment in Vallerio.
c. Dividend Revenue.
d. Dividend Receivables.
2.On January 1, 2014, the Baker Corporation issued 10% bonds with a face value of $50,000. The bonds are sold for $46,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 2023. Baker records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31, 2014, is
a. $5,200
b. $5,400
c. $5,000
d. $5,800
3.The journal entry a company records for the issuance of bonds when the contract rate is less than the market rate would be
a. debit Cash, credit Bonds Payable.
b. debit Bonds Payable, credit Cash.
c. debit Cash, credit Premium on Bonds Payable and Bonds Payable.
d. debit Cash and Discount on Bonds Payable, credit Bonds Payable.
4.When the corporation issuing the bonds has the right to repurchase the bonds prior to the maturity date for a specific price, the bonds are
a. callable bonds.
b. debenture bonds.
c. unsecured bonds.
d. convertible bonds.
5.For accounting purposes, the method used to account for investments in common stock is determined by
a. whether the stock has paid dividends in past years.
b. the amount paid for the stock by the investor.
c. whether the acquisition of the stock by the investor was "friendly" or "hostile."
d. the extent of an investor's influence over the operating and financial affairs of the investee.