Reference no: EM133094203

Questions -

Q1. Wilson Company issued bonds with a face value of $200,000, a 10% stated rate of interest, and a 10-year term. The bonds were issued on January 1, 2021, and Wilson uses the straight line interest method of amortization. Interest is paid annually on December 31. The bonds were issued for $220,000. What is the cash payment for interest on December 31st?

a. $22,000

b. $18,000

c. $10,000

d. $20,000

Q2. Via Company issued bonds with a $500,000 face value and a 6% stated rate of interest on January 1, 2020. The bonds carried a 5-year term and sold for 105. Via uses the straight-line method of amortization. Interest is payable on December 31 of each year.

The amount of interest expense appearing on the December 31, 2023 income statement would be

a. $35,000

b. $15,000

c. $25,000.

d. $30,000.

Q3. Jack Grimes started a sole proprietorship by depositing $45,000 cash in a business checking account. During the accounting period the business earned $6,000 of net income and Grimes withdrew $4,000 cash from the business. Based on this information, at the end of the accounting period Grimes' capital account contained a balance of:

a. $51,000.

b. $47,000.

c. $44,000.

d. $40,000.