16. On July 1, 2017, Tulip Inc purchases a long-term investment in Daisy Company's 10 year, 9% bonds, with a face value of $ 100,000 for $ 95,200. Interest is payable semiannually on January 1 and July 1. The bonds mature on July 1, 2027. Tulip uses the straight-line method of amortization. What is the amount of interest revenue that Tulip should report on its income statement for the year ended December 31, 2017. (hint - include semiannual interest and semiannual discount).

a) $ 4,500

b) $ 5,700

c) $ 4,740

d) $ 3,900

17. Garden Inc issued $ 200,000 of 10 year bonds on January 1. The bonds pay interest on January 1 and July 1 and have a stated rate of 10%. If the market(effective) rate of interest at the time the bonds are sold is 8%, what will be the issuance price of the bonds?

a) $ 175,078

b) $ 227,183

c) $ 211,283

d) $ 215,902

18. Carrot Inc issued $ 200,000 10 year bonds on January 1. The bonds pay interest on January 1 and July 1 and have a stated rate of 10%. If the market (effective) rate of interest at the time the bonds are sold is 12%, what will be the issuance price of the bonds?

a) $ 190,079

b) $ 224,926

c) $ 177,059

d) $ 114,699

19. The total interest expense on a $ 300,000, 10%, 10 year bond issued at 95 would be (calculate the entire 10 year amount)

a) $ 295,000

b) $ 290,000

c) $ 315,000

d) $ 300,000

20. The effective interest rate of a 10 year, 8%, $ 1,000 bond issued at 103 would be approximately

a) 8%

b) 8.2%

c) 7.8%

d) 7.6%

21. On January 1, 2017, Yearly Corporation issued $ 500,000 of 10%, 10 year bonds at 88.5. Interest is payable on December 31. If the market rate of interest was 12% at the time the bonds were issued, how much cash was paid for interest in 2017?

a) $ 60,000

b) $ 53,100

c) $ 44,250

d) $ 50,000

22. On January 1, 2017, Maine General Medical Center issued a $ 250,000, 10%, 5 year bond for $ 231,601. Interest is payable on June 30 and December 31. Maine General uses the effective interest method to amortize all premiums and discounts. Assuming an effective interest rate of 12%, approximately how much discount will be amortized on December 31, 2017?

a) $ 987

b) $ 1,396

c)$ 2,230

d) $ 1,480

23. If a $ 1,000, 9%, 10 year bond was issued at 96 plus accrued interest one month after the authorization date, how much cash was received by the issuer?

a) $ 967.50

b) $ 992.50

c) $ 960

d) $ 1,007.50

24. Potato Inc, a calendar year firm is authorized to issue $ 200,000 of 10%, 20 year bonds dated January 1, 2017, with interest payable on January 1 and July 1 of each year. If the bonds were issued on April 1, 2017, the amount of accrued interest on the date of sale is?

a) $ 2,500

b) $ 20,000

c) $ 10,000

d) $ 5,000

25. All of the following are major components included in the FASB's definition of laiabilities except:

a) a liability is the obligation of a particular entity

b) a liability involves a probable future transfer of assets or services

c) a liability is one in which performance by both parties is still in the future

d) a liability is a result of past transactions or events

26. According to IAS for a refinaceable obligation to be classified as long term the refinancing must take place by?

a) the time that the obligation is satisfied with current assets

b) the balance sheet date, not the later date when the financial statements are finalized.

c) the date that the financial statements are finalized

d) no later than the end of the month following the close of the balance sheet year.

27. Current liabilities are define as?

a) liabilities that are part of a negotiated arrangement with a lender in which the terms are agreed to prior to the need for borrowing.

b) liabilities that have specific assets pledged as security.

c) liabilities whose liquidation will not require the use of current assets to satisfy the obligation within one year.

d) liabilities that are claims arising from operations that must be satisfied with current assets within one operating cycle