U. whuuu you\" A machine that cost $40,000 and had been amortized $30,000 was traded in on a what having an estimated 20-year life and priced at $50,000. if a $7,000 tradein alumnae was received on the old machine, the new machine is recorded in the mate a: a. $40,000 I). $47,000 c. $50,000 d. $53,000 6. some other amount. X-Ftay Company sold for $6,000 an x-ray machine that originally cost $10,000. The accumulated amortization on this machine was' $4,000. X-Ftay Company's gain (has) on this sale is: a. $ -0- b. $ 2,000 G. $ 4.000 d. $ (6,000) e. $10,000 Chester Company had a bulldozer destroyed by fire. The bulldOZer originality can $16,000, but insurance paid only $14,200. Accumulated amortization on this bulldozer mm. The gain (loss) from the tire is: a. $ -0- b $ 200 c. $ (200) d. $(14,000) e $(16,000) On January 1, 1993, a day on which the market rate of interest for Bullock Company's bonds was 10%, Bullock Company sold bonds having a $100,000 par value, a five-year life, and on which interest was to be paid semiannually at a 9% annual rate. 1. The buyer of these bonds received two rights: (a) the right to receive $ in interest at the end of each six-month interest period throughout the five-year life of the bond issue, and (b) the right to receive $ at the end of the bond issue's life. 2. To determine the present value of the rights received and to determine the price to pay for the rights, the buyer of the bonds should discount the rights at the (semiannual) market rate for bond interest prevailing on the day of the purchase. . The calculations for determining the present value of the bond buyer's two rights, using the tables in Chapter 10 in the text are: Present value of $100,000 to be received periods hence, discounted at % per period ($100,000 x EA Present value of $ to be received periodically for periods, discounted at ($ X Price to pay for the bonds $ . Bullock Corporation's entry to record the sale of the bonds at their present value is: DATE ACCOUNT TITLES AND EXPLANATION P.R. DEBIT CREDIT 1993 Jan Sold bonds at a discount. 5. At the end of the first semiannual interest period Bullock Corporation calculated the number of dollars of interest to be paid its bondholders as follows: X % = $ 6. The company then began its calculation of the amount of interest expense to be recorded for the first semiannual interest period and the amount of discount to be amortized by first determining the beginning- of-the-period carrying amount for the bonds with this calculation: $ 7. Using the interest method, the company then calculated the amount of interest expense to be recorded at the end of the first semiannual interest period as follows: % = $
