Multiple choice. Show your work.

2. The printing costs and accounting/legal fees associated with the issuance of bonds should:

(A) Be expensed when incurred.

(B) Be reported as a deduction from the face amount of the bonds payable on the balance sheet.

(C) Be accumulated in a deferred charge account (unamortized asset) and amortized to expense over the life of the bonds.

(D) Be recorded as an expense all in the year the bonds mature or are retired.

(E) None of the above.

3. On January 1, Russel Corp. issued 8-year bonds with a face value of $100,000 and a stated annual coupon rate of 6%, payable semiannually on June 30 and Dec. 31 of each year. The bonds were sold to yield an annual effective market rate of 8%. Present values interest factors from time-value-of-money tables are shown below. Note: If you use financial calculators instead of the interest factors below, the rounding error could be as much as $10.

0.627 Present value, single sum, 8 periods, 6%

0.540 Present value, single sum, 8 periods, 8%

0.623 Present value, single sum, 16 periods, 3%

0.534 Present value, single sum, 16 periods, 4%

6.210 Present value, ordinary annuity, 8 periods, 6%

5.747 Present value, ordinary annuity, 8 periods, 8%

12.561 Present value, ordinary annuity, 16 periods, 3%

11.652 Present value, ordinary annuity, 16 periods, 4%

These bonds will sell for a total price of:

(A) $88,356

(B) $99,983

(C) $112,544

(D) $81,330

(E) None of the above.

4. On July 1, 2020, Howe Co. issued 300 of its 10%, $1000 face value bonds at 99 plus accrued interest. The bonds are dated on April 1, 2020 and mature on April 1 2030. Interest is payable semi-annually on April 1 and October 1 of each year. What amount of total cash did Howe receive on July 1, 2020?

(A) $289,500

(B) $297,000

(C) $300,000

(D) $304,500

(E) None of the above.

5. On January 1, 2020, Hart Co. redeemed (retired) its 15-year bonds of $500,000 par value for 102. They were originally issued on January 1, 2008 at 98 with a maturity date of January 1, 2023. The original bond issue costs relating to these bonds totaled $20,000. Hart amortized discounts, premiums, and bond issue costs up to the retirement date using the straight-line method. What amount of loss should Hart record in the redemption of these bonds (ignoring income taxes)?

(A) $0

(B) $10,000

(C) $12,000

(D) $16,000

(E) None of the above.