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$150,000. Nast incorrectly used the straight-line method
instead of the effective interest method to amortize the
discount. How is the carrying amount of the bonds affected by
the error?
Question 18
Deb Co. records all sales using the installment method of
accounting. Installment sales contracts call for 36 equal
monthly cash payments. According to the FASB's conceptual
framework, the amount of deferred gross profit relating to
collections 12 months beyond the balance sheet date should be
reported in the
Question 19
Mirr, Inc. was incorporated on January 1, 2005, with proceeds
from the issuance of $750,000 in stock and borrowed funds of
$110,000. During the first year of operations, revenues from
sales and consulting amounted to $82,000, and operating costs
and expenses totaled $64,000. On December 15, Mirr declared
a $3,000 cash dividend, payable to stockholders on January 15,
2006. No additional activities affected owners' equity in 2005.
Mirr's liabilities increased to $120,000 by December 31, 2005.
On Mirr's December 31, 2005 balance sheet, total assets should
be reported at
Question 20
The following information pertains to Meg Corp.: Dividends
on its 1,000 shares of 6%, $10 par value cumulative preferred
stock have not been declared or paid for 3 years. Treasury