Reference no: EM132597328

Question 1) If $518,000 of 10% bonds are issued at 96, the amount of cash received from the sale is

a. $518,000

b. $569,800

c. $497,280

d. $466,200

Question 2) If $1,124,000 of 6% bonds are issued at 102 3/4, the amount of cash received from the sale is

a. $1,154,910

b. $843,000

c. $1,124,000

d. $1,191,440

Question 3) On January 1, Elias Corporation issued 10% bonds with a face value of $65,000. The bonds are sold for $63,050. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is

a. $6,695

b. $542

c. $6,500

d. $1,950

Question 4) Merchant Company issued 10-year bonds on January 1. The 8% bonds have a face value of $766,000 and pay interest every January 1 and July 1. The bonds were sold for $636,630 based on the market interest rate of 9%. Merchant uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (round to the nearest dollar) of

a. $28,648

b. $25,465

c. $34,470

d. $30,640

Question 5) A $287,000 bond was redeemed at 104 when the carrying value of the bond was $352,000. The entry to record the redemption would include a

a. loss on bond redemption of $53,520.

b. gain on bond redemption of $53,520.

c. gain on bond redemption of $65,000.

d. loss on bond redemption of $65,000.