Accounting

684 Words3 Pages
1. Question : (TCO A) On July 1, 2010, an interest payment date, $60,000 of Parks Co. bonds were converted into 1,200 shares of Parks Co. common stock, each having a par value of $45 and a market value of $54. There is $2,400 unamortized discount on the bonds. Using the book value method, Parks would record Student Answer: no change in paid-in capital in excess of par. a $3,600 increase in paid-in capital in excess of par. a $7,200 increase in paid-in capital in excess of par. a $4,800 increase in paid-in capital in excess of par. Instructor Explanation: Chapter 16, $60,000 – (1,200 X 445) – $2,400 = $3,600 Points Received: 4 of 4 Comments: 2. Question : (TCO A) On March 1, 2010,…show more content…
As a result of the option granted to Williams, using the fair value method, Trent should recognize compensation expense for 2010 on its books in the amount of Student Answer: $1,000. $900. $450. $0. Instructor Explanation: Chapter 16, $900 / 2 = $450 Points Received: 4 of 4 Comments: 4. Question : (TCO A) On January 2, 2010, Farr Co. issued 10-year convertible bonds at 105. During 2012, these bonds were converted into common stock having an aggregate par value equal to the total face amount of the bonds. At conversion, the market price of Farr's common stock was 50 percent above its par value. On January 2, 2010, cash proceeds from the issuance of the convertible bonds should be reported as Student Answer: paid-in capital for the entire proceeds. paid-in capital for the portion of the proceeds attributable to the conversion feature and as a liability for the balance. a liability for the face amount of the bonds and paid-in capital for the premium over the face amount. a liability for the entire proceeds. Instructor Explanation: Chapter 16 Points Received: 4 of 4 Comments: 5. Question : (TCO A) Marsh Co. had 2,400,000 shares of common stock outstanding on January 1 and December 31, 2011. In connection with the acquisition of a subsidiary company in June
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