1. On January 1, 2017, Babb Trailers, Inc. issued $6,500,000 of par value bonds for $6,200,000. The bonds pay interest semiannually on January 1 and July 1. The contract rate of interest is 3% while the market rate of interest for similar bonds is 5%. The bond premium or discount is being amortized at a rate of $10,000 every six months. The amount of interest expense recognized by Babb Trailers, Inc. on the bond issuefor the entire yearof 2017 would be:

A..$215,000

B.$107,500

C.$117,500

D.$206,000

2.On January 1, 2017, Babb Trailers, Inc. issued $6,500,000 of par value bonds for $6,200,000. The bonds pay interest semiannually on January 1 and July 1. The contract rate of interest is 3% while the market rate of interest for similar bonds is 5%. The bond premium or discount is being amortized at a rate of $10,000 every six months. The life of these bonds is:

A.15 years

B.30 years

C.26.5 years

D.32 years

E.35 years

3.Corporate bonds are short-term debt usually issued in of $1,000 increments.

A.TRUE

B.FALSE

C.Depends on the issuer.

4.The Discount on Bonds Payable account is:

A,A liability.

B.A contra liability.

C.An adjunct/companion liability.

D.A contra asset

E.A contra equity.

5.On January 1, 2017, Babb Trailers, Inc. issued $6,500,000 of par value bonds for $6,200,000. The bonds pay interest semiannually on January 1 and July 1. The contract rate of interest is 3% while the market rate of interest for similar bonds is 5%. The bond premium or discount is being amortized at a rate of $10,000 every six months. The carrying value on January 2, 2019 is:

A.$6,160,000

B.$6,460,000

C.$6,240,000

D.$6,540,000