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Question;d. interest paid to bondholders will be a;function of the effective-interest rate on the date the bonds are issued.;a126. When;the effective-interest method of bond premium amortization is used, the;a. amount of premium amortized will get larger;with successive amortization.;b. carrying value of the bonds will increase;with successive amortization.;c. interest paid to bondholders will increase;after each interest payment date.;d. interest rate used to calculate interest;expense will be the contractual rate.;a127. Silk Company issued $500,000;of 6%, 10-year bonds on one of its interest dates for $431,850 to yield an;effective annual rate of 8%. The effective-interest method of amortization is;to be used. Interest is paid annually.;What amount of discount;(to the nearest dollar) should be amortized for the first interest period?;a. $14,089;b. $6,815;c. $9,096;d. $4,548;a128. Silk Company issued $500,000;of 6%, 10-year bonds on one of its interest dates for $431,850 to yield an;effective annual rate of 8%. The effective-interest method of amortization is;to be used. Interest is paid annually.;The journal entry on the;first interest payment date, to record the payment of interest and amortization;of discount will include a;a. debit to Interest Expense for $30,000.;b. credit to Cash for $34,548.;c. credit to Discount on Bonds Payable for $4,548.;d. debit to Interest Expense for $40,000.;a129. Silk Company issued $500,000;of 6%, 10-year bonds on one of its interest dates for $431,850 to yield an;effective annual rate of 8%. The effective-interest method of amortization is;to be used.;How much bond interest;expense (to the nearest dollar) should be reported on the income statement for;the end of the first year?;a. $34,639;b. $34,548;c. $34,457;d. $30,000;a130. On January 1, Greene Inc. issued $5,000,000, 9% bonds for;$4,695,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Greene;uses the effective-interest method of amortizing bond discount. At the end of;the first year, Greene should report unamortized bond discount of;a. $274,500.;b. $285,500.;c. $258,050.;d. $255,000.;a131. On January 1, Dade Corporation issued $3,000,000, 14%, 5-year;bonds with interest payable on December 31. The bonds sold for $3,216,288. The;market rate of interest for these bonds was 12%. On the first interest date;using the effective-interest method, the debit entry to Interest Expense is for;a. $360,000.;b. $376,473.;c. $385,955.;d. $420,000.;a132. On January 1, Jorge Inc. issued $3,000,000, 9% bonds for $2,817,000.;The market rate of interest for these bonds is 10%. Interest is payable;annually on December 31. Jorge uses the effective-interest method of amortizing;bond discount. At the end of the first year, Jorge should report unamortized;bond discount of;a. $164,700.;b. $171,300.;c. $154,830.;d. $153,000.;a133. On January 1, Runner Corporation issued $2,000,000, 14%, 5-year;bonds with interest payable on July 1 and January 1. The bonds sold for $2,197,080.;The market rate of interest for these bonds was 12%. On the first interest;date, using the effective-interest method, the debit entry to Interest Expense;is for;a. $120,000.;b. $153,796.;c. $131,825.;d. $263,650.;a134. Which of the following statements regarding the effective-interest;method of accounting for bonds characteristics is false?;a. GAAP;always requires use of the effective interest method.;b. The;amount of periodic interest expense decreases over the life of a discounted;bond issue when the effective-interest method is used.;c. Over;the life of the bonds, the carrying value increases for discounted bonds when;using the effective-interest method.;d. The;effective-interest method applies a constant percentage to the bond carrying;value to compute interest expense.;a135. On January 1, Gage Corporation issues $1,000,000, 5-year, 12% bonds;at 96 with interest payable on July 1 and January 1. The carrying value of the;bonds at the end of the third interest period is;a. $972,000;b. $976,000;c. $944,000;d. $928,000;a136. If bonds are originally sold at a discount using the;straight-line amortization method;a. Interest;expense in the earlier years of the bond?s life will be less than the interest;to be paid.;b. Interest;expense in the earlier years of the bond?s life will be the same as interest to;be paid.;c. Unamortized;discount is subtracted from the face value of the bond to determine its;carrying value.;d.;Unamortized discount is added;to the face value of the bond to determine its carrying value.;a137. Presented here is a partial amortization;schedule for Roseland Company who sold $200,000, five year 10% bonds on January;1, 2012 for $208,000 and uses annual straight-line amortization.;BOND;AMORTIZATION SCHEDULE;Interest Period;Interest Paid;Interest Expense;Premium Amortization;Unamortized Premium;Bond Carrying Value;January 1, 2012;$8,000;$208,000;January 1, 2013;(i);(ii);(iii);(iv);(v);Which of the following;amounts should be shown in cell (i)?;a. $20,800;b. $21,600;c. $20,000;d. $4,000;a138. Presented here is a partial amortization;schedule for Roseland Company who sold $200,000, five year 10% bonds on January;1, 2012 for $208,000 and uses annual straight-line amortization.;BOND;AMORTIZATION SCHEDULE;Interest Period;Interest Paid;Interest Expense;Premium Amortization;Unamortized Premium;Bond Carrying Value;January 1, 2012;$8,000;$208,000;January 1, 2013;(i);(ii);(iii);(iv);(v);Which of the following;amounts should be shown in cell (ii)?;a. $21,600;b. $18,400;c. $20,800;d. $19,200;a139. Presented here is a partial amortization;schedule for Roseland Company who sold $200,000, five year 10% bonds on January;1, 2012 for $212,000 and uses annual straight-line amortization.;BOND;AMORTIZATION SCHEDULE;Interest Period;Interest Paid;Interest Expense;Premium Amortization;Unamortized Premium;Bond Carrying Value;January 1, 2012;$12,000;$212,000;January 1, 2013;(i);(ii);(iii);(iv);(v);Which of the following;amounts should be shown in cell (iii)?;a. $6,000;b. $12,000;c. $2,400;d. $1,200;a 140. Presented here is a partial amortization;schedule for Roseland Company who sold $200,000, five year 10% bonds on January;1, 2012 for $212,000 and uses annual straight-line amortization.;BOND;AMORTIZATION SCHEDULE;Interest Period;Interest Paid;Interest Expense;Premium Amortization;Unamortized Premium;Bond Carrying Value;January 1, 2012;$12,000;$212,000;January 1, 2013;(i);(ii);(iii);(iv);(v);Which of the following;amounts should be shown in cell (iv)?;a. $10,800;b. $7,200;c. $14,400;d. $9,600

Paper#44939 | Written in 18-Jul-2015

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