Reference no: EM132597330

Question 1) Bonds Payable has a balance of $987,000 and Premium on Bonds Payable has a balance of $10,857. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption?

a. $10,857 loss

b. $18,753 loss

c. $1,016,610 gain

d. $10,857 gain

Question 2) On the first day of the fiscal year, a company issues a $980,000, 7%, five-year bond that pays semiannual interest of $34,300 ($980,000 × 7% × 1/2), receiving cash of $884,176.

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 $945,000, 8%, five-year bond that pays semiannual interest of $37,800 ($945,000 x 8% x 1/2), receiving cash of $888,300. 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 $520,000 bond issue on which there is an unamortized discount of $36,000 is redeemed for $474,000. Journalize the redemption of the bonds.