Question 6
On July 1, 2005, Day Co. received $ 103,288 for $ 100,000 face amount, 12 % bonds, a price that yields 10 %. Interest expense for the six months ended December 31, 2005 should be
Question 7
On July 1, 2005, Vail Corp. issued rights to stockholders to subscribe to additional shares of its common stock. One right was issued for each share owned. A stockholder could purchase one additional share for 10 rights plus $ 15 cash. The rights expired on September 30, 2005. On July 1, 2005, the market price of a share with the right attached was $ 40, while the market price of one right alone was $ 2. Vail ' s stockholders ' equity on June 30, 2005 comprised the following: By what amount should Vail ' s retained earnings decrease as a result of issuance of the stock rights on July 1, 2005?
Question 8
On January 1, 2005, Wolf Corp. issued its 10 % bonds in the face amount of $ 1,000,000, which mature on January 1, 2015. The bonds were issued for $ 1,135,000 to yield 8 %, resulting in bond premium of $ 135,000. Wolf uses the effective interest method of amortizing bond premium. Interest is payable annually on December 31. At December 31, 2005, Wolf ' s adjusted unamortized bond premium should be
Question 9
Earl was engaged by Farm Corp. to perform consulting services. Earl ' s compensation for these services consisted of 1,000 shares of Farm ' s $ 10 par value common stock, to be issued to Earl on completion of Earl ' s services. On the execution date of Earl ' s employment contract, Farm ' s stock had a market value of $ 40 per share. Six months later, when Earl ' s services were completed and the stock issued, the stock ' s market value was $ 50 per share. Farm ' s