12.

Auerbach Inc. issued 6% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $430 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 6%.

Assuming that Auerbach issued the bonds for $371,562,000, what would the company report for its net bond liability balance after its first interest payment on March 31, 2017, rounded up to the nearest thousand?

a) $356,699,000

b) $358,662,024

c) $386,424,000

d) $373,524,480

20.

On January 1, 2011, F Corp. issued 2,900 of its 10%, $1,000 bonds for $2,994,000. These bonds were to mature on January 1, 2021, but were callable at 101 any time after December 31, 2014. Interest was payable semiannually on July 1 and January 1. On July 1, 2016, F called all of the bonds and retired them. The bond premium was amortized on a straight-line basis. Before income taxes, F Corp.'s gain or loss in 2016 on this early extinguishment of debt was:

a) $76,000 gain

b) $22,700 gain

c) $29,000 loss

d) $13,300 gain