Investment Quiz Questions And Answers

On October 1, 2008, Pentel Company purchased 6,000 of the P1,000 face value, 10% bonds of Ophra Company for P6,600,000 including accrued interest of P150,000. The bonds, which mature on January 1, 2015, pay interest semiannually on January 1 and July 1. Pentel used the straight-line method of amortization and appropriately recorded the bonds as long-term investments. On Pentel's December 31, 2009 balance sheet, the bonds should be reported at:

On April 1, 2009, Sailor Company purchased P2,000,000 face value, 9%, Treasury Notes for P1,985,000, including accrued interest of P45,000. The notes mature on July 1, 2010, and pay interest semiannually on January 1 and July 1. Sailor uses the straight-line method of amortization. In its October 31, 2009 balance sheet, the carrying amount of this investment should be:

On July 1, 2009, Hillary Company purchased Esau Company's ten-year 12% bonds as a long-term investment, with a face value of P5,000,000 for P4,760,000. Interest is payable semiannually on January 1 and July 1. The bonds matured on July 1, 2013. Hillary uses the straight-line method of amortization. What amount of interest income should Hillary report in its income statement for the year ended December 31, 2009?

On January 1, 2009, Cart Company purchased Fae Company 9% bonds with a face amount of P4,000,000 for P3,756,000 to yield 10%. The bonds are dated January 1, 2009, mature on December 31, 2018, and pay interest annually on December 31. The cart uses the interest method of amortizing bond discount. In its income statement for the year ended December 31, 2009, what total amount should Cart report as interest revenue from the long-term bond investment?

On January 1, 2009, Den Company purchased ten-year bonds with a face value of P1,000,000 and a stated interest rate of 8% per year, payable semiannually on July 1 and January 1. The bonds were acquired to yield 10%. Present value factors are as follows:Present value of 1 for 10 periods at 10%                                                        .386Present value of 1 for 20 periods at 5%                                                          .377Present value of an annuity of 1 for 10 periods at 10%                                 6.145Present value of an annuity of 1 for 20 periods at 5%                                 12.462The purchase price of the bonds is:

On January 1, 2009, Russo Company purchased 5-year bonds with a face value of P8,000,000 and stated interest of 10% per year, payable semiannually on January 1 and July 1. The bonds were acquired to yield 8%. Present value factors are:Present value of an annuity of 1 for 1 period at 5% 7.72Present value of an annuity of 1 for 10 periods at 4% 8.11Present value of 1 for 10 periods at 4% 0.6756What is the purchase price of the bonds?

On January 1, 2009, Riyadh Company purchased serial bonds with the face value of P3,000,000 and stated 12% interest payable annually every December 31. The bonds mature at an annual installment of P1,000,000 every December 31. The rounded present value of 1 at 10% for:                   One period                                              0.91                                Two periods                                            0.83                   Three periods                                          0.75What was the market price of the serial bonds on January 1, 2009?

On January 1, 2009, Cameron Company purchased bonds with the face value of P5,000,000 at the cost of P4,700,000. The stated interest is 10% payable annually every December 31. The bonds mature in 4 years or January 1, 2011.How much interest income should be reported by Cameron Company for the year ended December 31, 2009, using the effective interest method?

On October 1, 2009, York Company purchased 4,000 of the P1,000 face value, 10% bonds of Dell Company for P4,400,00 which includes accrued interest of P100,000. The bonds, which mature on January 1, 2016, pay interest semiannually on January 1 and July 1. York uses the straight-line method of amortization and appropriately records the bonds as a long-term investment. The bonds should be shown on York's December 31, 2009 balance sheet at:

On January 1, 2009, Camelot Company established a sinking fund in connection with its issue of bonds due in 2014. A bank was appointed as an independent trustee of the fund. On December 31, 2009, the trustee held P364,000 cash in the sinking fund account representing P300,000 in annual deposits. How should the sinking fund be reported in Camelot's balance sheet on December 31, 2009?