A Corporation Issued 8% Bonds with a Par Value of $1,000,000

question 155

Multiple Choice

A corporation issued 8% bonds with a par value of $1,000,000, receiving a $20,000 premium. On the interest date 5 years later, after the bond interest was paid and after 40% of the premium had been amortized, the corporation purchased the entire issue on the open market at 99 and retired it. The gain or loss on this retirement is:

• A) $10,000 loss.
• B) $22,000 gain.
• C) $0.
• D) $10,000 gain.
• E) $22,000 loss.

Compute predetermined overhead rates under traditional costing method.

Determine the overhead cost assigned to products under traditional costing method.

Compute activity rates under activity-based costing system.

Determine the overhead cost assigned to products under activity-based costing system.

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Definitions:

Prospect

A potential customer or client who has been identified as fitting a target market or demographic but has not yet made a purchase.

Mental Steps

The cognitive processes or stages one goes through when solving a problem or making a decision.

Purchasing Decision

The process of evaluating and choosing among alternative products or services to fulfill a need or desire.

Selling Process

A series of steps taken by a salesperson to persuade potential buyers to purchase a product or service, from initial contact to closing the sale.