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