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11) When a bond sells at a premium A) B) C) D) El It means that the bond is a zero coupon bond. The contract rate is below the market rate. The contract rate is above the market rate. The contract rate is equal to the market rate. The bond pays no interest. 12) Amortizing a bond discount: A) B) Decreases interest expense each period. Allocates a portion of the discount to interest expense each interest pay period. Increases the market value of the bond payable. Increases cash flow from the bond. Decreases the bond payable account D E) A company sells its product subject to a warranty that covers the cost of parts for repairs during 13) month of July, the company used $11,000 of parts to perform warranty work. Sales for July were $450,000. the six months after the date of sale. Warranty costs are estimated to be 5 % of sales. During the Prepare the journal entry to record the warranty expense for the month of July (7/31). (4 points) Credit A) Debit Account Titles Date Prepare the journal entry to record the costs of the warranty work completed in July (7/31). B) (4 points) Credit Debit Account Titles Date C) If the Estimated Warranty Liability account had a credit balance of $10,000 on June 30, what was the account balance at July 31? (5 points) Page 3

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