1. A company has bonds outstanding with a par value of $125,000. The unamortized premium on these bonds is $3,375. If the company retired these bonds at a call price of 99, the gain or loss on this retirement is:

A) $1,250 loss

B) $3,375 loss

C) $1,250 gain

D) $4,625 gain

E) $3,375 gain

2. A company issued 20-year, 6% bonds with a par value of $1,200,000. The company received $1,219,200 cash for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is:

A) $36,480

B) $36,576

C) $35,040

D) $35,520

E) $36,000

3. A company issued five-year, 7% bonds with a par value of $600,000. The market rate when the bonds were issued was 6.5%. The company received $606,840 cash for the bonds. Using the effective interest method, the amount of recorded interest expense for the first semiannual interest period is:

A) $21,000.00

B) $42,000

C) $39,444.60

D) $10,500.0

E) $19,722.30

4. A company issued 10-year, 9% bonds with a par value of $420,000. The company received $399,000 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is:

A) $18,900

B) $17,850

C)$37,800

D) $39,900

E) $19,950

5. On January 1, 2013, a company issued and sold a $550,000, 7%, 10-year bond payable and received proceeds of $544,500. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is:

A)

Bond interest expense	19,250
Cash		19,250

B)

Bond interest expense	38,500
Cash		38,500

C)

Bond interest expense	19,250
Discount on bonds payable	275
Cash		19,525

D)

Bond interest expense	19,525
Cash		19,250
Discount on bonds payable		275

E)

Bond interest expense	18,975
Discount on bonds payable	275
Cash		19,250

6. A company issued 7%, 4-year bonds with a par value of $640,000. The current market rate is 7%. The journal entry to record each semiannual interest payment is:

A)

Bond interest expense	22,400
Cash		22,400

B)

Bond interest expense	44,800
Cash		44,800

C)

Bond interest expense	640,000
Cash		640,000

D)

Bond interest expense	752,000
Bond payable		752,000

E) No entry is needed, since no interest is paid until the bond is due

7) A company issues 6%, 20-year bonds with a par value of $1,225,000. The current market rate is 6%. The amount of interest owed to the bondholders for each semiannual interest payment is.

A) $1,225,000

B) $73,500

C) $2,450,000

D) $0

E) $36,750