Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

29) A company issued 5-year, 5% bonds with a par value of $104,000. The company received $101,947 for the bonds. Using the straight-line method, the

29) A company issued 5-year, 5% bonds with a par value of $104,000. The company received $101,947 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is:

A) $5200.00. B) $5610.60.

C) $2600.00. D) $2394.70.

E) $2805.30.

31) A company borrowed $42,600.00 cash from the bank and signed a 6-year note at 7% annual interest. The present value of an annuity factor for 6 years at 7% is 4.7665. The present value of a single sum factor for 6 years at 7% is 0.6663. The annual annuity payments equal:

A) $42,600.00. B) $8937.38.

C) $28,384.38. D) $63,935.16.

E) $203,052.90.

34) On January 1 of Year 1, Congo Express Airways issued $3,500,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,197,389 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $10,087 every six months.After accruing interest at year end, the company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond issue in the amount of:

A) $3,217,563. B) $3,340,063.

C) $3,782,437. D) $3,902,500.

E) $3,780,000.

35) On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $312,177. The journal entry to record the first interest payment using the effective interest method of amortization is:

A) Debit Interest Expense $12,487.08; debit Premium on Bonds Payable $1,012.92; credit Cash $13,500.00.

B) Debit Bond Interest Expense $12,487.08; debit Discount on Bonds Payable $1,012.92; credit Cash $13,500.00.

C) Debit Bond Interest Expense $14,717.70; credit Premium on Bonds Payable $1,217.70; credit Cash $13,500.00.

D) Debit Bond Interest Expense $12,282.30; debit Premium on Bonds Payable $1,217.70; credit Cash $13,500.00.

E) Debit Interest Payable $13,500; credit Cash $13,500.00.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Electronic Health Records An Audit And Internal Control Guide

Authors: Rebecca S. Busch

1st Edition

0470258209, 978-0470258200

More Books

Students also viewed these Accounting questions