Question 6 (-12) Lang Corporation issued $600,000 of 8%, 10-year bonds on January 1, 2020, for $560,975. This price provided a yield of 9% on the bonds. Interest is payable semiannually on June 30 and December 31. If Lang uses the effective-interest method, the amount of interest expense to record if financial statements are issued on December 31, 2020 should be: $50,544. (2) $49,448. * $48,685. 4 $48,000. Question 7 -- /2 Freedom Corporation buys and sells debt securities which it classifies as available-for-sale. The company's fiscal year ends on December 31. On December 27, 2020, Freedom purchased Western Communications bonds at par for $200,000 and sold the bonds on January 3, 2021 for $240,000. At December 31, the bonds had a fair value of $210,000. What pretax amounts did Freedom include in its 2020 and 2021 net income as a result of this investment? (1) 2020 net income: $0; 2021 net income: $30,000. 2020 net income: $0; 2021 net income: $40,000. 2020 net income: $10,000; 2021 net income: $30,000. (4) 2020 net income: $10,000; 2021 net income: $(40,000). Question 8 -- / 2 On June 30, 2020, Johnstone Computers issued 6% stated rate bonds with a face amount of $1 million. The bonds mature on June 30, 2035 (15 years). The market rate of interest for similar bond issues was 5%. Interest is paid semiannually on June 30 and December 31, beginning on December 31, 2020. The price of the bonds on June 30, 2020 should be: $1,104,649. (2) $1,103,800. (3$1,097,345. (4) $1,088,600. Question 9 (-12) -- /2 On January 1, 2020, Rainbow Corporation acquired as long-term investment $600,000 of 8% bonds, dated January 1. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 9% for bonds of similar risk and maturity. Rainbow paid $560,975 for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2020, was $580,000. At what amount will Rainbow report its investment in the December 31, 2020, balance sheet? 1 $580,000. $575,728. (3) $570,245. (4) $563,519. Question 10 ( --12) Bluebonnet Company purchased office furniture and equipment for $20,000 and agreed to pay for the purchase by making four annual installment payments beginning one year from today. The installment payments include interest at 9%. What is the required annual installment payment? $4,717.