the konder corporation issued 10 year bonds on january 1, 19x2 with a face value of $1,000,000. the face interest rate is 8% and interest is payable semi annually on June 30 and December 31. The bonds were issued for $875,378 to yield an effective annual rate of 10%. the effective interest method of amortization is to be used.

1. the journal entry on June 3o, 19x2 to record the payment of intterest and amortization of discount will include a

A,debit to bond interest expense for $40,000

B.credit to cash for $43,769

C.credit to unamortized bond discount for $3,769

D. debit to bond interest expense for $50,000

2.The journal entry to be recorded on December 31, 19x2 for the payment of interest and the amortization of discount will include a

A.debit to bond interest expense for $40,000

B.credit to cash for $43,957

C,credit to unamorized bond discount for $3,769

D.credit to unamortized bond discount for $3,957

3.The carrying value of the bonds payable at the december 31 19x2 balance sheet date should be

A.$881,609

B.$882,916'

C.$883,104

D.none

1.A ordinary annuity represents a series of equal payments made at

A,maturity date of an obligation

B.the beginning of each perios

C,issue date of an obligation

D, the end of each period

E. none

2.the allocation of a discount or premium to interest expense over the life of a bond such that the amount of interest expense per period is identical for every period is accomplished by rhe

A straight line method

B.effective interest method

C.bonds outstanding method

D.declining balance method

E, none

3.The allocation of a discount or premium to interest expense over the life of a bond such that the amount of interest expense per period reflects the market rate of interest at the time the bond was issued is accomplished by the

A.straight line'

B.declining balance method

C.effective interest method

D.bonds outstanding method

E.none

4.the sum of the present value of the face value of a bond issued on the interest payment date and the present value of the interest payment equals

A, the maturity value of the bond

B.the cash received when the bond was issued

C.the discount or premium on the bond

D,.total cash interest payment over the life of the bond

E,none

5.interest expense is determined by multiplying the carrying value of a bond by the

A. rate expressed in the deed of trust

B.nominal rate of interest

C.interest rate provided by the bond trustee

D.interest rate in the bond contract

E, none

6.Rivers Co. purchases a bond as a long term investment assuming the straight line method is used to amortize the bond premium

A,interest income each period will be at the same effective investment rate

B.interest income each period will be the same number of dollars

C.the amount of premium amortized each period will be equal to thr amount of cash received

Enone

7.Will Co purchased 40% of the stock of cedar co, as a long term investment which of the following methods should will co use to account for the investments

A.equity method

B.purchase method

C.pooling method '

D.cost method

E.none

8.allen corp. owns 10% of billings co during the year billings pays a total of $30,000 of dividends and reports a net income of $50,000 assuming allen corp. properly accounts for the investments. how much income from the investments will be recognized?

A.3,000

B.5,000

c.8,000

d.30,000

e. none

9.larkins co, owns 30% of stacy co, stacy declared 10 % stock dividend and distributed 10,000 shares having a par value of $1 per share and a market value of $5 per share. assuming larkins co. uses the equity method, how much income should be recognized from this dividend?

A.15,000

B.3,000

C.1,000

D.10,000

E.none