using the cost method on April 15. Murphy reissued the 30,000 shares at $ 20 per share and recognized a $ 50,000 gain on its income statement on May 20. Which of the following statements is correct?
Question 3
On January 1, 2005, Celt Corp. issued 9 % bonds in the face amount of $ 1,000,000, which mature on January 1, 2015. The bonds were issued for $ 939,000 to yield 10 %, resulting in a bond discount of $ 61,000. Celt uses the effective interest method of amortizing bond discount. Interest is payable annually on December 31. At December 31, 2005, Celt ' s unamortized bond discount should be
Question 4
In 2000, May Corp. acquired land by paying $ 75,000 down and signing a note with a maturity value of $ 1,000,000. On the note ' s due date, December 31, 2005, May owed $ 40,000 of accrued interest and $ 1,000,000 principal on the note. May was in financial difficulty and was unable to make any payments. May and the bank agreed to amend the note as follows: The $ 40,000 of interest due on December 31, 2005 was forgiven. The principal of the note was reduced from $ 1,000,000 to $ 950,000 and the maturity date extended 1 year to December 31, 2006. May would be required to make one interest payment totaling $ 30,000 on December 31, 2006. As a result of the troubled debt restructuring, May should report a gain, before taxes, in its 2005 income statement of
Question 5
Universe Co. issued 500,000 shares of common stock in the current year. Universe declared a 30 % stock dividend. The market value was $ 50 per share, the par value was $ 10, and the average issue price was $ 30 per share. By what amount will Universe decrease stockholders ' equity for the dividend?