1. On July 1, 2011, Ace Electronics issued $10 million dollars of 8%, 20-year bonds at 102. The bonds pay interest semiannually on December 31 and June 30. How much cash will Ace pay on December 31, 2011, the first interest payment date? $800,000 $408,000 $400,000 $816,000

2. On January 1, 2011, Petrel Shipping Company bought equipment that cost $55,000 with an estimated useful life of 4 years and an estimated salvage value of $5,000. The company uses the straight-line method of depreciation. At what rate will the equipment depreciate in 2011? 20% 15% 10% 25%

3. The adjusting entry to record the amount of interest owed on a bond affects how many of the financial statements?

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