Murphy Co . had 200,000 shares outstanding of $ 10 par common stock on March 30 of the current year . Murphy reacquired 30,000 of those shares at a cost of $ 15 per share and recorded the transaction 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