Reference no: EM131809645
On January 1, 2016, Legion Company sold $290,000 of 4% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $156,949, priced to yield 12%. Legion records interest at the effective rate. Legion should report bond interest expense for the six months ended June 30, 2016, in the amount of (Round your answer to the nearest dollar amount):
$17,400
$9,417
$5,800
$23,200
A bond issue with a face amount of $1,300,000 bears interest at the rate of 9%. The current market rate of interest is 10%. These bonds will sell at a price that is:
Equal to $1,300,000.
More than $1,300,000.
Less than $1,300,000.
The answer cannot be determined from the information provided.
On January 1, 2016, Solo Inc. issued 1,400 of its 9%, $1,000 bonds at 98. Interest is payable semiannually on January 1 and July 1. The bonds mature on January 1, 2026. Solo paid $54,000 in bond issue costs. Solo uses straight-line amortization. The amount of interest expense for the year is:
$134,200
$137,000
$126,000
$128,800
On January 1, 2016, an investor paid $303,000 for bonds with a face amount of $320,000. The stated rate of interest is 9% while the current market rate of interest is 11%. Using the effective interest method, how much interest income is recognized by the investor in 2016 (assume annual interest payments and amortization)?
$33,330.
$27,270.
$28,800.
$35,200.
On January 31, 2016, B Corp. issued $600,000 face value, 9% bonds for $600,000 cash. The bonds are dated December 31, 2015, and mature on December 31, 2025. Interest will be paid semiannually on June 30 and December 31. What amount of accrued interest payable should B report in its September 30, 2016, balance sheet? (Do not round intermediate calculations.)
$13,500.
$27,000.
$40,500.
$36,000.
Auerbach Inc. issued 5% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $350 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 7%.
How much cash interest does Auerbach pay on March 31, 2017? (Answer should be in million rounded to two decimal places.)
$17.50 million
$12.25 million
$8.75 million
$24.50 million
Auerbach Inc. issued 6% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $325 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 8%.
Assuming that Auerbach issued the bonds for $280,832,468, what interest expense would it recognize in its 2016 income statement? (Do not round intermediate calculations and round final answer to nearest whole dollar.)
$0.
$5,616,649.
$11,233,299.
$6,500,000.
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During the year, Hamlet Inc. paid $26,000 to have bond certificates printed and engraved, paid $170,000 in legal fees, paid $16,000 to a CPA for registration information, and paid $180,000 to an underwriter as a commission. What is the amount of bond issue costs?
$392,000.
$196,000.
$350,000.
$26,000.
On June 30, 2016, Hardy Corporation issued $8.5 million of its 8% bonds for $7.7 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2016, and mature on June 30, 2026. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2016?
$43,500.
$51,500.
$68,000.
$45,000.
On February 1, 2015, Pat Weaver Inc. (PWI) issued 7%, $1,700,000 bonds for $2,000,000. PWI retired all of these bonds on January 1, 2016, at 104. Unamortized bond premium on that date was $176,800. How much gain or loss should be recognized on this bond retirement?
$140,000 gain.
$108,800 gain.
$0 gain.
$119,000 gain.