Reference no: EM132809217

Problem 1: The contract interest rate for bonds ___________.

a) must equal the effective interest rate

b) will fluctuate over the life of the bond

c) has no relation to the cash flow associated with a particular bond

d) is greater than the effective interest rate when bonds are issued at a premium

e) none of these

Problem 2: Petty Corporation issued $100,000 of 3%, 10-year bonds on April 1, 201, at 104. Interest is paid on April 1 and October 1. The proper entry to record issuance of the bonds includes a debit to Cash for ____________.

a) $102,167

b) $107,000

c) $100,000

d) $103,000

e) $104,000