Use the Present Value and Future Value Tables Included in Appendix

question 10

Multiple Choice

Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-Riverview County issued a $500,000, 10 percent, 10-year bond on January 1, 2012, for 113.6 when the effective interest rate was 8 percent. Interest is payable on June 30 and December 31. Riverview uses the effective-interest method to amortize all premiums and discounts. How much premium or discount should be amortized on June 30, 2012?

• A) $2,790
• B) $2,280
• C) $2,000
• D) $1,970

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Definitions:

Dividends

Portions of a company's earnings paid out to shareholders as a reward for their investment.

FOB Destination

A shipping term indicating that the seller is responsible for goods and shipping costs until the goods reach the buyer's specified location.

Merchandise

Goods bought for the purpose of resale at a profit.

Accounting Equation

The fundamental equation that represents the relationship among assets, liabilities, and equity of a company; Assets = Liabilities + Equity.