1.(TCO D) The printing costs and legal fees associated with the issuance of bonds should(Points : 6) | be expensed when incurred. be reported as a deduction from the face amount of bonds payable. be accumulated in a deferred charge account and amortized over the life of the bonds. not be reported as an expense until the period in which the bonds mature or are retired. | Question 2.2.(TCO D) A corporation borrowed money from a bank to build a building. The long-term note signed by the corporation is secured by a mortgage that pledges title to the building as security for the loan. The corporation is to pay the bank $80,000 each year for10 years to repay the loan. Which of the following relationships can you expect to apply to the situation? (Points : 6) | The balance of mortgage payable at a given balance sheet date will be reported as a long-term liability. The balance of mortgage payable will remain a constant amount over the 10-year period. The amount of interest expense will decrease each period the loan is outstanding, while the portion of the annual payment applied to the loan principal will increase each period. The amount of interest expense will remain constant over the 10-year period. | Question 3.3.(TCO D) On January 1, 2010, Ellison Co. issued 8-year bonds with a face value of $1,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are as follows: Present value of one for eight periods at 6% .627 Present value of one for eight periods at 8% .540 Present value of one for 16 periods at 3% .623 Present value of one for 16 periods at 4% .534 Present value of annuity for eight periods at 6% 6.210 Present value of annuity for eight periods at 8% 5.747 Present value of annuity for 16 periods at 3% 12.561 Present value of annuity for 16 periods at 4% 11.652 The present value of the interest is (Points : 6) | $344,820. $349,560. $372,600. $376,830. | Question 4.4.(TCO D) On Jan 1, 2014 Cobb Company issued 9% bonds in the face amount of $1,000,000 which mature in ten years. The bonds were issued for $939,000 to yield 10%, resulting in a bond discount of $61,000. Cobb uses the effective interest method of amortizing bond discount. Interest is payable Semi annually on July 1, and Jan 1 every year.. How much Interest Expense should Cobb record on these bonds for the year 2014.(Points : 6) | $180,000 $188,190 $90,000 $93,900 | Question 5.5.(TCO D) On January 1, 2010, Goll Corp. issued 1,000 of its 10%, $1,000 bonds for $940,000. These bonds were to mature on January 1, 2016, but were callable at 101 any time after December 31, 2013. Interest was payable annually on January 1. On Jan 1, 2015, Goll called all of the bonds and retired them. Bond discount was amortized on a straight-line basis. Before income taxes, Goll's gain or loss in 2015 on this early extinguishment of debt was(Points : 6) | $8,000 gain. $16,000 gain. $40,000 loss. $20,000 loss. | |