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8. On January 1, 2009, Legion Company sold $200,00...

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8. On January 1, 2009, Legion Company sold $200,000 of 10% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $177,000, priced to yield 12%. Legion records interest at the effective rate. Legion should report bond interest expense for the six months ended June 30, 2009, in the amount of: A. $ 8,850 B. $10,000 C. $10,620 D. $12,000 9. On January 1, 2009, an investor paid $291,000 for bonds with a face amount of $300,000. The stated rate of interest is 8% while the current market rate of interest is 10%. Using the effective interest method, how much interest income is recognized by the investor in 2009 (assume annual interest payments and amortization)? A. $23,280. B. $29,100. C. $24,000. D. $30,000. 10. On January 31, 2009, B Corp. issued $600,000 face value, 12% bonds for $600,000 cash. The bonds are dated December 31, 2008, and mature on December 31, 2018. Interest will be paid semiannually on June 30 and December 31. What amount of accrued interest payable should B report in its September 30, 2009, balance sheet? A. $18,000. B. $36,000. C. $54,000. D. $48,000.

 

Paper#9473 | Written in 18-Jul-2015

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