1. Sonic Corporation issued $50,000 of 20-year, 8 percent bonds on April 1, 2021, at 102. Interest is paid on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2041. Sonics fiscal year ends on December 31.Calculate the issue price of the bonds

Did the bonds sell at a premium or discount?

Fill in the blank?

2. On April 2, Year 1, Victor, Incorporated acquired a new piece of filtering equipment. The cost of the equipment was $560,000 with a residual value of $30,000 at the end of its estimated useful lifetime of 10 years. Victor uses a calendar year-end for financial reporting.

Assume that in its financial statements, Victor uses straight-line depreciation and the half-year convention. Depreciation recognized on this equipment in Year 1 and Year 2 will be:

Multiple Choice

• $56,000 in Year 1 and $50,400 in Year 2.

• $30,000 in Year 1 and $53,000 in Year 2.

• $26,500 in Year 1 and $53,000 in Year 2.

• $39,750 in Year 1 and $50,400 in Year 2.

  3. On April 2, Year 1, Victor, Incorporated acquired a new piece of filtering equipment. The cost of the equipment was $240,000 with a residual value of $20,000 at the end of its estimated useful lifetime of 8 years. Victor uses a calendar year-end for financial reporting.

  If Victor uses straight-line depreciation with the half-year convention, the book value of the equipment at December 31, Year 2 will be:

  Multiple Choice

• $185,000.

• $198,750.

• $192,500.

• $150,000.