51. On January 1, a company issues bonds dated January 1 with a par value of $580,000. The bonds mature in 5 years. The contract rate is 6%, and interest is paid semiannually on June 30 and December 31. The market rate is 7% and the bonds are sold for $555,871. The journal entry to record the second interest payment using the effective interest method of amortization is:

• Debit Interest Expense $15,344.52; debit Discount on Bonds Payable $2,055.48; credit Cash $17,400.00.

• Debit Interest Expense $15,344.52; debit Premium on Bonds Payable $2,055.48; credit Cash $17,400.00.

• Debit Interest Expense $19,527.42; credit Discount on Bonds Payable $2,127.42; credit Cash $17,400.00.

• Debit Interest Payable $17,400.00; credit Cash $17,400.00.

• Debit Interest Expense $19,455.48; credit Discount on Bonds Payable $2,055.48; credit Cash $17,400.00.

58. Sweet Companys outstanding stock consists of 1,800 shares of cumulative 5% preferred stock with a $100 par value and 11,800 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

	Dividend Declared
year 1	$	3,800
year 2	$	6,200
year 3	$	41,000

The amount of dividends paid to preferred and common shareholders in year 3 is:

• $41,000 preferred; $0 common.

• $17,000 preferred; $24,000 common.

• $0 preferred; $41,000 common.

• $9,000 preferred; $32,000 common.

• $27,000 preferred; $14,000 common.

62. Marwick Corporation issues 12%, 5 year bonds with a par value of $1,030,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%. What is the bond's issue (selling) price, assuming the following Present Value factors:

n=		i=			Present Value of an Annuity			Present value of $1
5		12	%			3.6048		0.5674
10		6	%			7.3601		0.5584
5		10	%			3.7908		0.6209
10		5	%			7.7217		0.6139

• $819,244

• $1,030,000

• $1,109,518

• $1,507,201

• $552,799

65. Eastline Corporation had 11,500 shares of $5 par value common stock outstanding when the board of directors declared a stock dividend of 3,795 shares. At the time of the stock dividend, the market value per share was $15. The entry to record this dividend is:

• Debit Common Stock Dividend Distributable $56,925; credit Retained Earnings $56,925.

• Debit Retained Earnings $56,925; credit Common Stock Dividend Distributable $56,925.

• No entry is needed.

• Debit Retained Earnings $56,925; credit Common Stock Dividend Distributable $18,975; credit Paid-In Capital in Excess of Par Value, Common Stock $37,950.

• Debit Retained Earnings $18,975; credit Common Stock Dividend Distributable $18,975.