25) Bonds were issued on January 1 of the current year at a premium of $3,040. If the life of the bonds is 9.5 years, what is the amount of the current years amortization and how would the Premium on Bonds Payable account be affected by the entry to record the amortization:

a) $320; Premium on Bonds Payable account debited

b) $3,040; Premium on Bonds Payable account credited

c) $320; Premium on Bonds Payable account credited

d) $3,040; Premium on Bonds Payable account debited

26) Bonds Payable has a balance of $800,000 and Discount on Bonds Payable has a debit balance of $9,500. If the issuing corporation redeems the bonds at 102, what is the amount of gain or loss on redemption?

a) $6,500 gain

b) $6,500 loss

c) $25,500 gain

d) $25,500 loss

27) Bonds with a face value of $100,000 were purchased through a broker at 100 plus accrued interest of $1,200 and brokerage commission of $120. The amount to be debited to the investment account is:

a) $100,000

b) $100,120

c) $101,320

d) $99,800

28) Brooks Corporation owns 40% of the common stock of the Fairmont Corp. as a long-term investment Company and exercises a significant influence over its operating and financing policies. The stock was purchased on January 1, of the current year, for a total cost of $150,000. At end of the current calendar, Fairmont reports net income of $60,000 and pays $50,000 in dividends to its common stockholders. As a result of these transactions, whats the ending balance in the Investment in Fairmont Corp. Common Stock account at December 31, of the current year on Brooks books?

a) $150,000

b) $174,000

c) $154,000

d) $194,000