On July 1, 2020, Midland Company issued for $598,964, 10%, 20-year bonds with a face value of $500,000. Interest is paid semiannually on December 31 and June 30. The bonds were issued to yield 8%. Midland uses the straight-line method to recognize interest expense. What is the carrying amount of the bonds in Midland's December 31, 2021, balance sheet?

A) $596,490

B) $598,964

C) $591,542

D) $594,016

On January 1, 2020, a borrower signed a long-term note, face amount, $250,000; time to maturity, three years; stated interest rate, 8% paid annually on December 31; and cash proceeds from the loan, $243,672. Using the effective interest method, what is the amount of interest expense recognized for the year ended December 31, 2021?

A) $22,104

B) $20,000

C) $19,494

D) $21,930

McGowan Corp. issued $100,000 of 8%, 10-year convertible bonds. Each $1,000 bond is convertible into 2 shares of common stock ($1 par value per share) of McGowan Corp. The bonds were sold at 97 on January 1, 2020.

Assume that the conversion feature for 75% of the bonds is exercised on December 31, 2020, after McGowan Corp. made payments of $10,000 to shareholders to induce conversion. Assume that any discount or premium has been amortized through the date of conversion using the straight-line interest method. The common stock is selling at $80 per share on December 31, 2020. Upon conversion of 75% of the convertible bonds, McGowan Corp. would credit to Paid-in CapitalCommon Stock for the following amount:

A) $72,600

B) $97,150

C) $72,825

D) $82,825