Question Details

A corporation recognizes a gain or loss 



1.	Wittebury Corporation retires its £5,000,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $5,187,250. The entry to record the redemption will include

2.	Chang Company retired bonds with a face amount of ¥90,000,000 at 98 when the carrying value of the bond was ¥89,670,000. The entry to record the retirement would include a 
3.	Herman Company received proceeds of ₤188,500 on 10-year, 8% bonds issued on January 1, 2010. The bonds had a face value of ₤200,000, pay interest semi-annually on June 30 and December 31, and have a call price of 101. Herman uses the straight-line method of amortization.
Herman Company decided to redeem the bonds on January 1, 2012.  What amount of gain or loss would Herman report on its 2012 income statement?

	4.	Bryce Company has $1,500,000 of bonds outstanding. The unamortized premium is $21,600. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?

5.	The current carrying value of Kruger- $800,000 face value bonds is $797,000. If the bonds are retired at 102, what would be the amount Kruger would pay its bondholders?
	6.	Lahey Corporation retires its $800,000 face value bonds at 105 on January 1, following the payment of annual interest.  The carrying value of the bonds at the redemption date is $829,960.  The entry to record the redemption will include a


	7.	A $600,000 bond was retired at 103 when the carrying value of the bond was $622,000. The entry to record the retirement would include a



8.	A corporation recognizes a gain or loss 

	9.	If there is a loss on bonds redeemed early, it is
10.	A ¥600,000,000 bond was retired at 98 when the carrying value of the bond was ¥592,000,000. The entry to record the retirement would include a

Ans: d, SO: 6, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

11.	Which one of the following amounts increases each period when accounting for long term notes payable?


	12.	In the statement of financial position, mortgage notes payable are reported as

	13.	A mortgage note payable with a fixed interest rate requires the borrower to make installment payments over the term of the loan. Each installment payment includes interest on the unpaid balance of the loan and a payment on the principal. With each installment payment, indicate the effect on the portion allocated to interest expense and the portion allocated to principal.
	Portion Allocated	Portion Allocated
	to Interest Expense	to Payment of Principal



14.	The entry to record an installment payment on a long term note payable is

15.	Delmar Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,400. The mortgage carries an interest rate of 10 percent.
The entry to record the first monthly payment will include a


16.	Delmar Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,400. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be

	17.	Finney Company borrowed €800,000 from BankTwo on January 1, 2011 in order to expand its mining capabilities. The five-year note required annual payments of €208,349 and carried an annual interest rate of 9.5%. What is the amount of expense Finney must recognize on its 2012 income statement?
18.	Finney Company borrowed €800,000 from BankTwo on January 1, 2011 in order to expand its mining capabilities. The five-year note required annual payments of €208,349 and carried an annual interest rate of 9.5%. What is the balance in the notes payable account at December 31, 2012?

19.	On January 1, 2011, Michelin Company, a calendar-year company, is issued €6,000,000 of mortgage notes payable, of which €2,000,000 is due on January 1 for each of the next three years. The proper statement of financial position presentation on December 31, 2011, is

20.	Fretz Inc. Issues a CHF1,250,000, 8%, 20-year mortgage on January 1, 2011. The terms call for semi-annual installment payments of CHF126,310.
		The entry to record the first installment payment will include




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