1. A company issued 5-year, 7% bonds with a par value of $500,000. The market rate when the bonds were issued was 6.5%. The company received $510,528 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:

Multiple Choice

• $16,447.20.

• $35,000.00.

• $33,181.19.

• $17,500.00.

• $18,161.19.

2. Halverstein Company's outstanding stock consists of 9,100 shares of cumulative 5% preferred stock with a $10 par value and 3,900 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

	Dividend Declared
Year 1	$	0
Year 2	$	7,800
Year 3	$	35,000

The amount of dividends paid to preferred and common shareholders in Year 2 is:

Multiple Choice

• $5,460 preferred; $2,340 common.

• $7,800 preferred; $0 common.

• $0 preferred; $7,800 common.

• $3,900 preferred; $3,900 common.

• $4,550 preferred; $3,250 common.