Question

Please explain if you can. Thank you!

Sample CPA Exam Questions 1. On December 31, 2016, Moss Co. issued $1,000,000 of 11% bonds at 109. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitled the bondholder to purchase one share of $5 par common stock for $25. Immediately after issuance, the market value of each warrant was $4. On December 31, 2016, what amount should Moss record as discount or premium on issu ance of bonds? (a) $40,000 premium (b) $90,000 premium (c) $110,000 discount (d) $200,000 discount 2. On July 31, 2016, Dome Co. issued $1,000,000 of 10%, 15-year bonds at par and used a portion of the proceeds to call its 600 outstanding 119%, $1,000 face value bonds, due on July 31, 2024, at 1020 that date, unamortized bond premium relating to the 11% bonds was $65,000. In its 2016 income statement, what amount should Dome report as of bonds? gain or loss, before income taxes, from retirement (a) $53,000 gain (b) $0 (c) ($65,000) loss (d) ($75,000) loss

Answer 1

Answe Given Daa Tota mbe womats 50 rdl assoiatd = $1,00okencs Tolal num bes - Total nods deachaialı slock punchoz uonmont 450x$100 Tok volue c unnants- so , co0 X $y - 4200, 2oo00o Total net Proerds 09x 1,000,000 ,040,000 value 1, 090,000- $20,0c» 0,000

bnds 1,000,000$890,000 DisCour on bonds =$0,000distourt . Distount en cption c is Coect Givea numbes dbonds600 tatpice unamenticd nniu 6000 The wodue $1, ooo X 60o 0, 000 02 x600 I000 $6la,000

3 600,000-+465,000 6G5,000 Cangng value ond the drcae$665,000-12,000 453000 The dene on debt= 53,000n Opion a is Conet ansuxr.