4. On January 1, 20X1, Mira Corporation issues $100,000 of 8-year bonds, paying 5% (contractual rate) interest semiannually on June 30 and December 31. The market rate of interest on the date of sale is 3%. The entry to record the sale of the bonds on the date of issue is:

a. Cash 102,690

Bonds Payable . 102,690

b. Cash 114,131

Bonds Payable . 114,131

c. Cash 100,000

Bonds Payable . 100,000

d. Cash 111,441

Bonds Payable . 111,441

e. Cash 113,901

Bonds Payable . 113,901

5. If a company sells a bond at a discount:

a. The market rate of interest was lower than the contractual rate of interest.

b. Interest expense for each period is less than it would have been if the bond had been sold at face value.

c. Interest expense for each period is more than it would have been if the bond had been sold at face value.

d. The bond amortized cost (carrying amount) of the bond payable would be more than its face value.

6. On January 1, 20X1, ABC Corporation issued $100,000 of 10-year bonds that pay 8% (contractual rate) interest annually on December 31. At the time of the issue, bond investors were demanding only a 7% (market rate) return on their investment. The cash proceeds of the bond issue to ABC Corporation were $107,024. Assuming the effective-interest method, the premium amortization to be recorded on December 31, 20X1 is:

a. $7,492

b. $ 702

c. $ 562

d. $ 508

e. $ 492