5. Multiple Choice (21 points) Use the following information for questions 1 and 2: 72 11 Cox Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield for 1. One step in calculating the issue price of the bonds is to multiply the principal (face) by the table value for a. 10 periods and 10% from the present value of $1 table. b. 20 periods and 5% from the present value of $1 table. c. 10 periods and 8% from the present value of $1 table. d. 20 periods and 4% from the present value of $1 table. 2. Another step in calculating the issue price of the bonds is to compute the semi-annual interest as follows: a. Multiply $10,000 by the table value for 10 periods and 10% from the present value of an ordinary annuity table. b. Multiply $5,000 by the table value for 20 periods and 5% from the present value of an ordinary annuity table. c. Multiply $5,000 by the table value for 20 periods and 4% from the present value of an ordinary annuity table. d. None of these. 3. Stone, Inc. issued bonds with a maturity amount of $200,000 and a maturity of ten years from date of issue. If the bonds were issued at a premium, this indicates that at the date of issuance a. the market rate of interest exceeded the stated rate b. the stated rate of interest exceeded the market rate c. the yield and nominal rates coincided d. no necessary relationship exists between the two rates 4. The interest rate printed in the terms of the bond indenture is known as the a. yield rate b. effective rate c. stated rate d. market rate Bond discount should be presented in the financial statements of the issuer as a(n) a. contra liability b. adjunct liability c. deferred charge d. contra asset 6. Under the effective interest method the amortization of a bond discount will a. Increase the carrying value of the bond b. Decrease the carrying value of the bond c. Increase the face value of the bond d. Have no effect on the carrying value of the bond