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9. (TCO D) Jenkins Corporation has $2,500,000 of short-term debt it
expects to retire with proceeds from the sale of 75,000 shares of
common stock. If the stock is sold for $20 per share subsequent to the
balance sheet date, but before the balance sheet is issued, what amount
of short-term debt could be excluded from current liabilities? (Points: 5)
10. (TCO D) Tender Foot Inc. is involved in litigation regarding a faulty
product sold in a prior year. The company has consulted with its attorney
and determined that it is possible that they may lose the case. The
attorneys estimated that there is a 40% chance of losing. If this is the
case, their attorney estimated that the amount of any payment would be
$500,000. What is the required journal entry as a result of this litigation?
(Points: 5)
11. (TCO D) If bonds are initially sold at a discount and the straight-line
method of amortization is used, interest expense in the earlier years will
(Points: 5)
12. (TCO D)When the interest payment dates of a bond are May 1 and
November 1, and a bond issue is sold on June 1, the amount of cash
received by the issuer will be (Points: 5)
13. (TCO D) Feller Company issues $20,000,000 of ten-year, 9% bonds
on March 1, 2010 at 97 plus accrued interest. The bonds are dated
January 1, 2010, and pay interest on June 30 and December 31. What is
the total cash received on the issue date? (Points: 5)
14. (TCO D) A company issues $20,000,000, 7.8%, 20-year bonds to
yield 8% on January 1, 2010. Interest is paid on June 30 and December
31. The proceeds from the bonds are $19,604,145. What is interest
expense for 2011, using straight-line amortization? (Points: 5)
15. (TCO D) On January 1, Patterson Inc. issued $5,000,000, 9% bonds
for $4,695,000. The market rate of interest for these bonds is 10%.
Interest is payable annually on December 31. Patterson uses the
effective-interest method of amortizing bond discount. At the end of the
first year, Patterson should report unamortized bond discount of (Points:
5)
(TCO C) Sisco Co. purchased a patent from Thornton Co. for $180,000
on July 1, 2008. Expenditures of $68,000 for successful litigation in