On July 1, 2019, $10.5 million face amount of 7%, 12-year bonds were issued. The bonds pay interest on an annual basis on June 30 each year. The market interest rates were slightly higher than 7% when the bonds were sold.

Required:

1. How much interest will be paid annually on these bonds? (Enter your answer in whole dollar, not in millions)
2. Were the bonds issued at a premium or discount?
3. Will the annual interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year?

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On April 15, 2019, Powell Inc. obtained a six-month working capital loan from its bank. The face amount of the note signed by the treasurer was $125,900. The interest rate charged by the bank was 5.50%. The bank made the loan on a discount basis.

Required: a-1. Calculate the loan proceeds made available to Powell.

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Glennelle's Boutique Inc. operates in a city in which real estate tax bills for one year are issued in May of the subsequent year. Thus, tax bills for 2019 are issued in May 2020 and are payable in July 2020.

Required: a. How the amount of tax expense for calendar 2019 and the amount of taxes payable (if any) at December 31, 2019, can be determined?

Multiple Choice

• The amount is estimated based on prior year taxes.

• The amount is estimated based on future year taxes.