Reference no: EM132870393

Questions -

Q1. On June 30, 2016, Hardy Corporation issued $12.5 million of its 10% bonds for $11.3 million. The bonds were priced to yield 12%. 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?

Q2. On January 1, 2016, Zebra Corporation issued 1,900 of its 7%, $1,000 bonds at 98.3. Interest is payable semiannually on January 1 and July 1. The bonds mature on January 1, 2026. Zebra paid $53,000 in bond issue costs. Zebra uses the straight-line amortization method. What is the bond book value reported in the December 31, 2016, balance sheet?

Q3. Cramer Company sold five-year, 10% bonds on October 1, 2016. The face amount of the bonds was $175,000, while the issue price was $184,000. Interest is payable on April 1 of each year. The fiscal year of Cramer Company ends on December 31. How much interest expense will Cramer Company report in its December 31, 2016, income statement (assume straight-line amortization)? (Do not round intermediate calculations.)

Q4. On April 1, 2016, Austere Corporation issued $320,000 of 13% bonds at 106. Each $1,000 bond was sold with 30 detachable stock warrants, each permitting the investor to purchase one share of common stock for $20. On that date, the market value of the common stock was $16 per share and the market value of each warrant was $4. Austere should record what amount of the proceeds from the bond issue as an increase in liabilities?

Q5. Nickel Inc. bought $700,000 of 3-year, 9% bonds as an investment on December 31, 2015 for $763,000. Nickel uses straight-line amortization. On May 1, 2016, $140,000 of the bonds were redeemed at 114. As a result of the retirement, Nickel will report (Do not round intermediate calculations and round final answer to nearest whole dollar.):

Q6. On March 1, 2016, E Corp. issued $1,300,000 of 8% nonconvertible bonds at 103, due on February 28, 2026. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitled the holder to purchase, for $60, one share of Evan's $45 par common stock. On March 1, 2016, the market price of each warrant was $3. By what amount should the bond issue proceeds increase shareholders' equity?

Q7. On June 30, 2016, K Co. had outstanding 8%, $18,500,000 face value bonds maturing on June 30, 2021. Interest is payable semiannually every June 30 and December 31. On June 30, 2016, after amortization was recorded for the period, the unamortized bond premium and bond issue costs were $58,000 and $185,000, respectively. On that date, K acquired all its outstanding bonds on the open market at 99 and retired them. At June 30, 2016, what amount should K Co. recognize as gain on redemption of bonds before income taxes?

Q8. On January 1, 2011, F Corp. issued 2,500 of its 9%, $1,000 bonds for $2,596,000. These bonds were to mature on January 1, 2021, but were callable at 101 any time after December 31, 2014. Interest was payable semiannually on July 1 and January 1. On July 1, 2016, F called all of the bonds and retired them. The bond premium was amortized on a straight-line basis. Before income taxes, F Corp.'s gain or loss in 2016 on this early extinguishment of debt was: