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Use the following information to answer the next 4 questions: On July 1, 20X7, Parker Co, issued $200,000,8%, 10-year bonds at 87.5, when the market
Use the following information to answer the next 4 questions: On July 1, 20X7, Parker Co, issued $200,000,8%, 10-year bonds at 87.5, when the market rate of interest was 10%. Interest is payable semiannually on the bonds, on 1/1 and 7/1. Parker uses the straight-line method of amortization. 14. What are the proceeds on July 1, 20X7? A. $200,000 C. $216,000 B. $220,000 D. $175,000 15. The adjusting entry on December 31, 20x7 would read: A. Interest Expense 8,000 Interest Payable 8,000 B. Interest Expense 9,250 Discount on Bonds Payable 1.250 Interest Payable 8.000 C. Interest Expense 9,250 Discount on Bonds Payable 1,250 Cash 8,000 D. Interest Expense 11,250 Discount on Bonds Payable 1.250 Interest Payable 10,000 16. What does Parker Company report on their 20X7 income statement, as interest expense related to these bonds, and what is the interest income received by the bondholders for 20X7? Interest Expense Interest Received A. $9,250 s-0- B. $9.250 8,000 C. $10.000 8.000 D. 58.000 17. On December 31, 20X7, the balance sheet will report what net (carrying) value for these bonds? A. $200,000 B. $175,000 C. $173,750 D. $176,250 -0
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