9. On October 1, 2018 Free Industries issued 4%, 10-year bonds with a face value of $6,150,000 at 106. Interest is paid every six months on October 1 and April 1, with any premiums or discounts amortized using the effective interest method. (Hint: Interest is only paid after time passes). The entry to record the issuance of the bonds would include a credit of a. $5,781,000 to Bonds Payable b. $369,000 to Discount on Bonds Payable c. $369,000 to Premium on Bonds Payable d. $123,000 to Interest Payable 10. On January 1, 2018, Ann Demas loaned $212,355 to Joe Smith. A zero-interest-bearing note (face amount, $275,000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2020. The prevailing rate of interest for a loan of this type is 9%. The present value of $275,000 at 9% for three years is $212,355. What amount of interest expense should Joe Smith recognize in 2019? Answer: 6. On March 1, 2018, Concord Co. issued at 101 plus accrued interest $3,980,000, 9% bonds. The bonds are dated January 1, 2018, and pay interest semiannually on July 1 and January 1. In addition, Concord Co. incurred $30,000 of bond issuance costs. Compute the net amount of cash received by Concord Co, as a result of the issuance of these bonds. (Round final answers to 0 decimal places, e.g. 5275.) Net cash received Answer 8. On January 1, 2013, Springs Industries issued $18,000,000 of 10% ten-year bonds at 102. The bonds are callable at the option of Springs at 104. Springs pays interest annually and has recorded amortization of the bond premium on the straight-line method (which was not materially different from the effective-interest method). On December 31, 2019, Springs called in $6,000,000 of the bonds. Ignoring income taxes, Springs should report a gain or loss of