The balance in Discount on Bonds Payable

a. would be added to the related bonds payable to determine the carrying amount of the bonds.

b. would be subtracted from the related bonds payable on the balance sheet.

c. should be reported on the balance sheet as an asset because it has a debit balance.

d. should be allocated to the remaining periods for the life of the bonds by the straight-line method, if the results obtained by that method materially differ from the results that would be obtained by the interest method.

2. Bonds with a face amount $1,000,000, are sold at 96. The entry to record the issuance is

3. The Victor Corporation issues 1,000, 10-year, 8%, $1,000 bonds dated January 1, 2011, at 96. The journal entry to record the issuance will show a

a. debit to Cash of $1,000,000.

b. credit to Discount on Bonds Payable for $40,000.

c. debit to Cash for $960,000.

d. credit to Bonds Payable for $960,000.

4. A $289,000 bond was redeemed at 98 when the carrying value of the bond was $284,665. What amount of gain or loss would be recorded as part of this transaction?

Select the correct answer.

loss on bond redemption of $1,445.

gain on bond redemption of $1,445.

loss on bond redemption of $4,335.

gain on bond redemption of $5,780.

5.

Blanton Corporation purchased 15% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record the dividends it receives?

a. debit Investment in Worton Corporation; credit Income of Worton Corporation

b. debit Cash; credit Dividend Revenue

c. debit Cash; credit Investment in Worton Corporation

d. debit Investment in Worton Corporation; credit Cash

6.

Top of Form

When the market rate of interest was 12%, Newman Corporation issued $449,000, 11%, five-year bonds that pay interest semiannually. Determine the selling price of this bond issue. Use the present value tables below.

Present Value of $1 to Be Paid in the Future

Present Value of a Series of $1 Payments to Be Paid in the Future

Periods	5.0%	5.5%	6.0%	6.5%
1	$0.952381	$0.947867	$0.943396	$0.938967
2	$0.907029	$0.898452	$0.889996	$0.881659
3	$0.863838	$0.851614	$0.839619	$0.827849
4	$0.822702	$0.807217	$0.792094	$0.777323
5	$0.783526	$0.765134	$0.747258	$0.729881
6	$0.746215	$0.725246	$0.704961	$0.685334
7	$0.710681	$0.687437	$0.665057	$0.643506
8	$0.676839	$0.651599	$0.627412	$0.604231
9	$0.644609	$0.617629	$0.591898	$0.567353
10	$0.613913	$0.585431	$0.558395	$0.532726
Periods	11.0%	11.5%	12.0%	12.5%
1	$0.900901	$0.896861	$0.892857	$0.888889
2	$0.811622	$0.804360	$0.797194	$0.790123
3	$0.731191	$0.721399	$0.711780	$0.702332
4	$0.658731	$0.646994	$0.635518	$0.624295
5	$0.593451	$0.580264	$0.567427	$0.554929
6	$0.534641	$0.520416	$0.506631	$0.493270
7	$0.481658	$0.466741	$0.452349	$0.438462
8	$0.433926	$0.418602	$0.403883	$0.389744
9	$0.390925	$0.375428	$0.360610	$0.346439
10	$0.352184	$0.336706	$0.321973	$0.307946

Periods	5%	5.5%	6%	6.5%
1	$0.952381	$0.947867	$0.943396	$0.938967
2	$1.859410	$1.846320	$1.833393	$1.820626
3	$2.723248	$2.697933	$2.673012	$2.648476
4	$3.545951	$3.505150	$3.465106	$3.425799
5	$4.329477	$4.270284	$4.212364	$4.155679
6	$5.075692	$4.995530	$4.917324	$4.841014
7	$5.786373	$5.682967	$5.582381	$5.484520
8	$6.463213	$6.334566	$6.209794	$6.088751
9	$7.107822	$6.952195	$6.801692	$6.656104
10	$7.721735	$7.537626	$7.360087	$7.188830
Periods	11%	11.5%	12%	12.5%
1	$0.900901	$0.896861	$0.892857	$0.888889
2	$1.712523	$1.701221	$1.690051	$1.679012
3	$2.443715	$2.422619	$2.401831	$2.381344
4	$3.102446	$3.069614	$3.037349	$3.005639
5	$3.695897	$3.649878	$3.604776	$3.560568
6	$4.230538	$4.170294	$4.111407	$4.053839
7	$4.712196	$4.637035	$4.563757	$4.492301
8	$5.146123	$5.055637	$4.967640	$4.882045
9	$5.537048	$5.431064	$5.328250	$5.228485
10	$5.889232	$5.767771	$5.650223	$5.536431

Select the correct answer.

$449,000

$344,908

$353,102

$432,477