On June 30, 2021, Nevin Corporation issued $4 million of its 8% bonds for $3.5 million. The bonds were priced to yield 9.4%. The bonds are dated June 30, 2021. Interest is payable semi-annually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2021?

A. $4,500.

B. $3,500..

C. $4,800.

D. $9,000.

Magenta Company purchased a machine from Pink Corporation on October 31, 2021. In payment for

the $288,000 purchase, Magenta issued a one-year installment note to be paid in equal monthly payments of $25,588 at the end of each month. The payments include interest at the rate of 12%. The amount of interest expense that Magenta will report in its income statement for the year ended

December 31, 2021, is:

A. $2,559.

B. $2,880.

C. $5,760.

D. $5,533.

Tall Corporation issued $100,000 of 3-year, 6% bonds outstanding on December 31, 2020 for $106,000. The bonds pay interest annually and MSG uses straight-line amortization. On May 1, 2021, $10,000 of the bonds were retired at 112. As a result of the retirement, Tall will report:

A. a $667 loss.

B. a $600 loss.

C. a $1,200 loss.

D. a $1,200 gain.

In 2019, Sally , Inc. issued $1 par common stock for $35 per share. No other common stock transactions occurred until July 31, 2021, when Sally acquired some of the issued shares for $30 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement?

A. 2021 net income is decreased.

B. Additional paid-in capital is decreased.

C. 2021 net income is increased.

D. Retained earnings is increased.