The following information pertains to the next four questions.

On January 1, 2018, Barker

Corporation issued a $5,000 face value bond that sold for 90. The bond had a five-year term and

paid 10% annual interest. The company uses the straight-line method of amortization.

1.

The carrying value of the bond liability on January 1, 2018, would be

a. $4,500.

b. $4,600.

c. $5,000.

d. $4,000.

2.

The amount of interest expense reported on the 2018 income statement would be

a. $450.

b. $400.

c. $600.

d. $500.

3.

Interest expense reported on the income statement over the life of the bond would

a. increase by $100 each year.

b. be the same each year.

c. decrease by $100 each year.

d. equal the stated rate of interest.

4.

The carrying value of the bond liability on December 31, 2019 is expected to be

a. $5,000.

b. $4,500.

c. $4,900.

d. $4,700.