1.

A company issues 9%, $340,000 bonds at par value on April 1, 2013. These bonds pay interest annually. What is the total cash interest payment on April 1, 2014 by the bond issuer?

$30,600

$5,100

$17,850

$2,550

$20,400

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2.

A company must repay the bank $40,000 cash in three years for a loan. The loan agreement specifies 8% interest compounded annually. The present value factor for three years at 8% is 0.7938. How much cash did the company receive from the bank on the day they borrowed this money?

$30,400

$31,752

$40,000

$36,800

$49,600

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3.

On January 1, 2013, a company issued and sold a $350,000, 7%, 10-year bond payable and received proceeds of $346,500. 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:

Bond interest expense	12,075
Discount on bonds payable	175
Cash		12,250

Bond interest expense	24,500
Cash		24,500

Bond interest expense	12,250
Discount on bonds payable	175
Cash		12,425

Bond interest expense	12,250
Cash		12,250

Bond interest expense	12,425
Cash		12,250
Discount on bonds payable		175

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4.

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 $682,200 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:

$12,780.00

$42,000.00

$47,754.00

$23,877.00

$21,000.00

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5.

A company issued 10-year, 8% bonds with a par value of $480,000. The company received $456,000 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is:

$40,800

$20,400

$38,400

$18,000

$19,200

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6.

A company issued 25-year, 8% bonds with a par value of $1,060,000. The company received $1,176,600 cash for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is:

$47,064.0

$42,400.0

$37,736.0

$40,068.0

$44,732.0

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7.

A company has bonds outstanding with a par value of $375,000. The unamortized premium on these bonds is $10,125. If the company retired these bonds at a call price of 99, the gain or loss on this retirement is:

$10,125 gain

$3,750 gain

$13,875 gain

$10,125 loss

$3,750 loss