ACC 577 help A Guide to career/uophelp.com ACC 577 help A Guide to career/uophelp.com | Page 40

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