4Which of the following are factors in determining the amount of money a firm actually receives when it offers a bond issue to the market?

The market interest rate

The face or par value of the bond issue

All the four statements are correct

The term to maturity

The stated or nominal interest rate

8Single Company buys inventory from Double Company on October 1 and gives a 2 month, 12% Note for $6,000. Single defaults on its payment on the maturity date of the Note. The entry that Single should make at this time includes

A credit to interest income of $80

A debit to interest expense of $480

A credit to interest income of $480

None of the above

A debit to interest expense of $80

3Assume that a firm issues bonds at a discount

Amortization of the discount using the effective interest method will result in a smaller reduction of the Bond Discount in each successive period

None of the above statements are correct

Amortization of the discount using the straight line method will decrease the reported interest expense on the income statement

Amortization using the straight line method produces a constant yield on the bonds which will be by definition equal to the market rate

Amortization of bond discount using the effective line method results in an equal interest expense each period