Answer are words in bold letter

• When a bond’s stated rate of interest is higher than the market rate of interest, the bond will sell at:
  • a premium
  • its face value
  • its maturity value
  • a discount

 

• When a bond’s stated rate of interest is lower than the market rate of interest, the bond will sell at:
  • a premium
  • its face value
  • its maturity value
  • a discount

 

• When the market rate of interest for bonds is higher than a bond’s stated rate of interest, the bond will sell at:
  • a premium
  • its face value
  • its maturity value
  • a discount

 

• $1,000,000 of 10% bonds is issued at 102 1/2.  What is the amount of cash received from the sale?
  • $25,000
  • $975,000
  • $1,025,000
  • $1,000,000

 

• $4,000,000 of 12% bonds are issued at 101.  What is the amount of cash received from the sale?
  • $4,040,000
  • $4,000,000
  • $4,080,000
  • $3,520,000

 

• $1,000,000 of 10% bonds is issued at 94.  What is the amount of cash received from the sale?
  • $60,000
  • $940,000
  • $960,000
  • 1,000,000

 

• $4,000,000 of 12% bonds are issued at 92 1/2.  What is the amount of cash received from the sale?
  • $3,700,000
  • $4,000,000
  • $4,100,000
  • $4,300,000
• Angelina Corporation just issued bonds.  The stated rate of interest is greater than the market rate.  The proper entry to record this transaction is:
  • Debit, Bonds Payable; Credit, Cash
  • Debit, Cash and Discount on Bonds Payable; Credit, Bonds Payable
  • Debit, Cash; Credit Premium on Bonds Payable and Bonds Payable
  • Debit, Cash; Credit, Bonds Payable

 

• Angelina Corporation just issued bonds.  The stated rate of interest is less than the market rate.  The proper entry to record this transaction is:
  • Debit, Bonds Payable; Credit, Cash <br>
  • Debit, Cash and Discount on Bonds Payable; Credit, Bonds Payable <br>
  • Debit, Cash; Credit Premium on Bonds Payable and Bonds Payable <br>
  • Debit, Cash; Credit, Bonds Payable <br>

 

• Angelina Corporation just issued bonds at a premium.  The entry to record the semiannual payment of interest is:
  • Debit, Premium on Bonds Payable and Interest Expense; Credit, Cash
  • Debit, Interest Expense; Credit, Premium on Bonds Payable and Cash
  • Debit, Interest Expense; Credit, Cash
  • Debit, Bonds Payable; Credit, Interest Expense

 

• Angelina Corporation just issued bonds at a discount.  The entry to record the semiannual payment of interest is:
  • Debit, Discount on Bonds Payable and Interest Expense; Credit, Cash
  • Debit, Interest Expense; Credit, Discount on Bonds Payable and Cash
  • Debit, Interest Expense; Credit, Cash
  • Debit, Bonds Payable; Credit, Interest Expense

 

• Angelina Corporation employs the straight-line method for amortization of bond premium/discount. Which of the following statements is true?

• Annual interest expense will increase over the life of the bond with the amortization of bond premium.

• Annual interest expense will remain the same over the life of  the bond with the amortization of bond discount.
• Annual interest expense will decrease over the life of the bond with the amortization of bond discount.
• Annual interest expense will increase over the life of the bond with the amortization of bond discount.

 

• Angelina Corporation employs the straight-line method for amortization of bond premium/discount. Which of the following statements is true?
  • The annual interest expense and the premium amortization will increase over the life of the bonds for the amortization of bond premium.
  • The annual interest expense and the discount amortization will decrease over the life of the bonds for the amortization of bond discount.
  • The annual interest expense and the premium amortization will be the same over the life of the bonds for the amortization of bond premium.
  • The annual interest expense will increase and the discount amortization will decrease over the life of the bonds for the amortization of bond discount.
• Jolina Corporation recently issued $1,000,000 of 10%, 20-year bonds, interest payable annually, at a time when the market rate of interest is 12%.  Jolina utilizes the straight-line method for amortizing bond discount/premium.  Which of the following statements is true?
  • The amount of the annual interest expense is computed at 10% of the bond-carrying amount at the beginning of the year.
  • The amount of the annual interest expense gradually decreases over the life of the bonds.
  • The amount of unamortized discount decreases from its balance at issuance date to a zero balance at maturity.
  • The amount of unamortized premium decreases from its balance at issuance date to a zero balance at maturity.

 

• Jolina Corporation recently issued $500,000 of 11%, 15-year bonds, interest payable annually, at a time when the market rate of interest is 10%.  Jolina utilizes the straight-line method for amortizing bond discount/premium.  Which of the following statements is true?
  • The amount of the annual interest expense is computed at 11% of the bond-carrying amount at the beginning of the year.
  • The amount of the annual interest expense gradually increases over the life of the bonds.
  • The amount of unamortized discount decreases from its balance at issuance date to a zero balance at maturity.
  • The amount of unamortized premium decreases from its balance at issuance date to a zero balance at maturity.

 

• Weltech Corporation recently issued $200,000, 12%, 10-year bonds.  Premium on the issue amounted to $25,000.  Interest is paid semiannually.  Weltech uses the straight-line method.  The amount of premium to be amortized each interest period will be:
  • $ 1,250
  • $ 2,500
  • $ 5,000
  • Some other amount

 

• Weltech Corporation issued $100,000 of 20-year, 6 percent bonds on January 1, 2001. The issue yielded $112,550.40 in cash. Interest payment dates on the bonds are January 1 and July 1. When using the straight-line method, the amount of premium to be amortized on July 1, 2001 is:
  • $ 627.60
  • $ 313.76
  • $1,553.00
  • $ 186.22

 

• Weltech Corporation issued $100,000 of 20-year, 6 percent bonds on January 1, 2001. The issue yielded $87,449.60 in cash. Interest payment dates on the bonds are January 1 and July 1. When using the straight-line method, the amount of discount to be amortized on July 1, 2001 is:
  • $ 627.60
  • $ 313.76
  • $1,553.00
  • $ 186.22

 

 

 

 

• Utilizing the straight-line amortization method, the yearly interest expense on a $500,000, 11 percent, 20-year bond issued at 94 will be:
  • $53,500
  • $55,000
  • $56,500
  • $59,000

 

• Total interest expense on a $400,000, 10 percent, 10-year bond issued at 95 would be:
  • $380,000
  • $390,000
  • $400,000
  • $420,000

 

• Gardner Corporation issued $100,000 of 8-year, 9% bonds for 98 on January 1, 2000. Interest is payable on January 1 and July 1.  Gardner Corporation uses the straight-line method of amortization.  The amount of cash received on January 1, 2000, is:
  • $100,000
  • $99,000
  • $98,000
  • $102040

 

• Gardner Corporation issued $100,000 of 8-year, 9% bonds for 98 on January 1, 2000. Interest is payable on January 1 and July 1.  Gardner Corporation uses the straight-line method of amortization.  The balance in Discount on Bonds Payable on January 1, 2000, is:
  • $0
  • $1,000
  • $2,000
  • $1,500

 

• Gardner Corporation issued $100,000 of 8-year, 9% bonds for 98 on January 1, 2000. Interest is payable on January 1 and July 1.  Gardner Corporation uses the straight-line method of amortization.  The balance in Discount on Bonds Payable on December 31, 2007, is:
  • $0
  • $1,000
  • $2,000
  • $1,500

 

• Gardner Corporation issued $100,000 of 8-year, 9% bonds for 98 on January 1, 2000. Interest is payable on January 1 and July 1.  Gardner Corporation uses the straight-line method of amortization.  The carrying value of the bond on December 31, 2007, is:
  • $100,000
  • $99,000
  • $98,000
  • $102040

 

 

 

 

 

• Gardner Corporation issued $100,000 of 8-year, 9% bonds for 98 on January 1, 2000. Interest is payable on January 1 and July 1.  Gardner Corporation uses the straight-line method of amortization.  The amount of cash repaid to bondholders on January 1, 2008, is:
  • $100,000
  • $99,000
  • $98,000
  • $102040

 

• Moore Corporation issued $150,000 of 10-year, 8% bonds for 102 on January 1, 2000. Interest is payable on January 1 and July 1.  Moore Corporation uses the straight-line method of amortization.  The amount of cash received on January 1, 2000, is:
  • $150,000
  • $147,000
  • $147,058
  • $153,000

 

• Moore Corporation issued $150,000 of 10-year, 8% bonds for 102 on January 1, 2000. Interest is payable on January 1 and July 1.  Moore Corporation uses the straight-line method of amortization.  To record the issuance of the bond on January 1, 2000:
  • Premium on Bonds Payable is credited
  • Premium on Bonds Payable is debited
  • Discount on Bonds Payable is credited
  • Discount on Bonds Payable is debited

 

• Moore Corporation issued $150,000 of 10-year, 8% bonds for 102 on January 1, 2000. Interest is payable on January 1 and July 1.  Moore Corporation uses the straight-line method of amortization.  The amount of interest paid on July 1, 2000, is:
  • $12,000
  • $6,000
  • $6,150
  • $5,850

 

• Moore Corporation issued $150,000 of 10-year, 8% bonds for 102 on January 1, 2000. Interest is payable on January 1 and July 1.  Moore Corporation uses the straight-line method of amortization.  The amount of interest expense recorded on July 1, 2000, is:
  • $12,000
  • $6,000
  • $6,150
  • $5,850

 

• Moore Corporation issued $150,000 of 10-year, 8% bonds for 102 on January 1, 2000.  Interest is payable on January 1 and July 1.  Moore Corporation uses the straight-line method of amortization.  The carrying value of the bond on December 31, 2000, is:
  • $153,300
  • $152,700
  • $150,000
  • $153,000