QUESTION 1

1. The adjusted trial balance for Lifesaver Corp. at the end of the current year, 2010, contained the following accounts. 5-year Bonds Payable 8% $1,500,000 Bond Interest Payable 50,000 Premium on Bonds Payable 100,000 Notes Payable (3 mo.) 40,000 Notes Payable (5 yr.) 165,000 Mortgage Payable ($15,000 due currently) 200,000 Salaries Payable 18,000 Taxes Payable (due 3/15 of 2011) 25,000 The total long-term liabilities reported on the balance sheet are

   	a.	$1,865,000.
   	b.	$1,850,000.
   	c.	$1,965,000.
   	d.	$1,950,000.

1 points

QUESTION 2

1. Discount on Notes Payable is charged to interest expense

   	a.	equally over the life of the note.
   	b.	only in the year the note is issued.
   	c.	using the effective-interest method.
   	d.	only in the year the note matures.

1 points

QUESTION 3

1. A company issues $5,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2010. Interest is paid on June 30 and December 31. The proceeds from the bonds are $4,901,036. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2010 balance sheet?

   	a.	$4,903,160
   	b.	$5,000,000
   	c.	$4,906,281
   	d.	$4,902,077

1 points

QUESTION 4

1. Kant Corporation retires its $100,000 face value bonds at 102 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $96,250. The entry to record the redemption will include a

   	a.	credit of $3,750 to Loss on Bond Redemption.
   	b.	credit of $3,750 to Discount on Bonds Payable.
   	c.	debit of $5,750 to Gain on Bond Redemption.
   	d.	debit of $2,000 to Premium on Bonds Payable.

1 points

QUESTION 5

1. On January 1, 2010, Huff Co. sold $1,000,000 of its 10% bonds for $885,296 to yield 12%. Interest is payable semiannually on January 1 and July 1. What amount should Huff report as interest expense for the six months ended June 30, 2010?

   	a.	$44,266
   	b.	$50,000
   	c.	$53,118
   	d.	$60,000

1 points

QUESTION 6

1. An early extinguishment of bonds payable, which were originally issued at a premium, is made by purchase of the bonds between interest dates. At the time of reacquisition

   	a.	any costs of issuing the bonds must be amortized up to the purchase date.
   	b.	the premium must be amortized up to the purchase date.
   	c.	interest must be accrued from the last interest date to the purchase date.
   	d.	all of these.

1 points

QUESTION 7

1. Feller Company issues $20,000,000 of 10-year, 9% bonds on March 1, 2010 at 97 plus accrued interest. The bonds are dated January 1, 2010, and pay interest on June 30 and December 31. What is the total cash received on the issue date?

   	a.	$19,400,000
   	b.	$20,450,000
   	c.	$19,700,000
   	d.	$19,100,000.

1 points

QUESTION 8

1. At December 31, 2010 the following balances existed on the books of Foxworth Corporation: Bonds Payable $2,000,000 Discount on Bonds Payable 160,000 Interest Payable 50,000 Unamortized Bond Issue Costs 120,000 If the bonds are retired on January 1, 2011, at 102, what will Foxworth report as a loss on redemption?

   	a.	$370,000
   	b.	$320,000
   	c.	$270,000
   	d.	$200,000

1 points

QUESTION 9

1. The rate of interest actually earned by bondholders is called the

   	a.	stated rate.
   	b.	yield rate.
   	c.	effective rate.
   	d.	effective, yield, or market rate.
   	e.	none of these.

1 points

QUESTION 10

1. At the beginning of 2010, Winston Corporation issued 10% bonds with a face value of $600,000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for 555,840 to yield 12%. Winston uses a calendar-year reporting period. Using the effective-interest method of amortization, what amount of interest expense should be reported for 2010? (Round your answer to the nearest dollar.)

   	a.	$66,500
   	b.	$66,700
   	c.	$66,901
   	d.	$68,832

1 points