MC Qu. 150 On January 1, a company issues...
On January 1, a company issues bonds dated January 1 with a parvalue of $370,000. The bonds mature in 5 years. The contract rateis 11%, and interest is paid semiannually on June 30 and December31. The market rate is 10% and the bonds are sold for $384,280. Thejournal entry to record the first interest payment usingstraight-line amortization is: (Rounded to the nearestdollar.)
Multiple Choice:
Debit Bond Interest Expense $18,922; debit Premium on BondsPayable $1,428; credit Cash $20,350.
Debit Bond Interest Expense $18,922; debit Discount on BondsPayable $1,428; credit Cash $20,350.
Debit Interest Payable $20,350; credit Cash $20,350.
Debit Bond Interest Expense $21,778; credit Discount on BondsPayable $1,428; credit Cash $20,350.
Debit Bond Interest Expense $21,778; credit Premium on BondsPayable $1,428; credit Cash $20,350.
MC Qu. 151 On January 1, a company issues...
On January 1, a company issues bonds dated January 1 with a parvalue of $400,000. The bonds mature in 5 years. The contract rateis 11%, and interest is paid semiannually on June 30 and December31. The market rate is 10% and the bonds are sold for $415,437. Thejournal entry to record the first interest payment using theeffective interest method of amortization is: (Rounded tothe nearest dollar.)
Multiple Choice:
Debit Bond Interest Expense 23,544.00; credit Premium on BondsPayable $1,544.00; credit Cash $22,000.00.
Debit Interest Expense $20,772; debit Premium on Bonds Payable$1,228; credit Cash $22,000.
Debit Interest Payable $22,000.00; credit Cash $22,000.00.
Debit Bond Interest Expense $20,772.00; debit Discount on BondsPayable $1,228.00; credit Cash $22,000.00.
Debit Bond Interest Expense $20,456.00; debit Premium on BondsPayable $1,544.00; credit Cash $22,000.00.
MC Qu. 152 Marwick Corporation issues...
Marwick Corporation issues 10%, 5 year bonds with a par value of$1,240,000 and semiannual interest payments. On the issue date, theannual market rate for these bonds is 8%. What is the bond's issue(selling) price, assuming the following Present Value factors:
| n= | | i= | | Present Value of anAnnuity | | Present valueof $1 |
| 5 | | 10 | % | | | 3.7908 | | 0.6209 |
| 10 | | 5 | % | | | 7.7217 | | 0.6139 |
| 5 | | 8 | % | | | 3.9927 | | 0.6806 |
| 10 | | 4 | % | | | 8.1109 | | 0.6756 |
|
Multiple Choice:
$1,240,000
$1,029,244
$1,742,876
$1,340,620
$737,124
