Reference no: EM132597406

Question 1: Bonds Payable has a balance of $1,198,000 and Discount on Bonds Payable has a balance of $11,980. If the issuing corporation redeems the bonds at 97.5, what is the amount of gain or loss on redemption?

a. $17,970 gain

b. $17,970 loss

c. $11,980 loss

d. $11,980 gain

Question2: On the first day of the fiscal year, a company issues a $980,000, 8%, five-year bond that pays semiannual interest of $39,200 ($980,000 × 8% × 1/2), receiving cash of $884,177.

Required: Journalize the entry to record the issuance of the bonds. Refer to the Chart of Accounts for exact wording of account titles.

Question 3: On the first day of the fiscal year, a company issues an $460,000, 8%, five-year bond that pays semiannual interest of $18,400 ($460,000 x 8% x 1/2), receiving cash of $432,400. Journalize the entry to record the first interest payment and the amortization of the related bond discount using the straight-line method.

Question 4: A $525,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $467,000. Journalize the redemption of the bonds.