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The present value of a bond is also known as its 



1.	Whitmore Corporation Issues a £1,200,000, 10%, 10-year mortgage on December 31, 2011. The terms call for semi-annual installment payments of £96,290.The entry to record the first installment payment will include

	2.	The adjusted trial balance for Beneteau Corporation at the end of the 2011 included the following accounts:

				5-year Bonds Payable 8%			€6,120,000
				Bond Interest Payable			     240,000
				Notes Payable (3 mo.)			       50,000
				Notes Payable (5 yr.)				  1,650,000
				Mortgage Payable (€150,000 due currently)   2,000,000
				Salaries Payable				       68,000
				Taxes Payable (due 3/15 of next yr)		       85,000

		The total non-current liabilities reported on the statement of financial position at December 31, 2011 are

3.	Selected data from 2011 financial statements of Xi Corporation include the following (amount in millions):

			Current Assets		¥ 759
			Total Assets		1,200
			Current Liabilities		   400
			Total Liabilities		   850
			Cash			     80
			Interest Expense		     50
			income Taxes		   100
			Net Income		   160

		The debt to total assets ratio is

	4.	Each of the following may be shown on a supporting schedule instead of on the statement of financial position except the

	5.	The times interest earned ratio is computed by dividing



	6.	In a recent year Hill Corporation had net income of $140,000, interest expense of $40,000, and tax expense of $20,000. What was Hill Corporation- times interest earned ratio for the year?

7.	In a recent year Cey Corporation had net income of $250,000, interest expense of $50,000, and a times interest earned ratio of 9. What was Cey Corporation- income before taxes for the year?

8.	The adjusted trial balance for Lifesaver Corp. at the end of the current year, 2011, contained the following accounts.
	5-year Bonds Payable 8%	$1,600,000
	Bond Interest Payable	50,000
	Notes Payable (3 mo.)	40,000
	Notes Payable (5 yr.)	165,000
	Mortgage Payable ($15,000 due currently)	200,000
	Salaries Payable	18,000
	Taxes Payable (due 3/15 of 2012)	25,000
	The total non-current liabilities reported on the statement of financial position are


9.	The 2011 financial statements of Shadow Co. contain the following selected data (in millions).
	Current Assets	$  75
	Total Assets	140
	Current Liabilities	40
	Total Liabilities	85
	Cash	8
The debt to total assets ratio is

	
a10.	The present value of a bond is also known as its 

a 11.	¥2 billion, 8%, 10-year bonds are issued at face value. Interest will be paid semi-annually. When calculating the market price of the bond, the present value of

a 12.	On January 1, 2011, Asianic Inc. issued 10-year bonds with a face amount of ¥20,000,000 and a contract rate of 8% payable annually on January 1. The effective-interest rate on the bonds is 10%. Present value factors are as follows:
												At 8%		At 10%
		PV of 1 for 10 periods							0.463		0.386
		PV of an ordinary annuity if 1 for 10 periods				6.710		6.145

		Total issue price of the bonds was

a 13.	On January 2, 2011, Provence Corporation wishes to issue €4,000,000(par value) of its 8%, 10-year bonds. The bonds pay interest annually on January 1. The discount rate is 10%. Using the interest factors below, compute the amount that Provence will realize from the sale of the bonds.

		Present Value of 1 at 8% for 10 periods					0.4632
		Present Value of 1 at 10% f for 10 periods					0.3855
		Present Value of an ordinary annuity at 8% for 10 periods			6.7101
		Present Value of an ordinary annuity at 10% for 10 periods			6.1446

Use the following information for 14-19 On January 1, 2011, Istanbul Inc. sold bonds with a face amount of TL4,000,000 and a contract rate of 10% for TL3,541,180. The effective-interest rate is 12%. Interest is payable semiannually on January 1 and July 1. Istanbul uses effective interest amortization of premiums and discounts.

14.	What amount should Istanbul report as interest expense for the six months ended June 30, 2011?

15.	The journal entry to record the first semi-annual payment to bondholders and amortization of discount on June 30, 2011 will include

16.	What is the carrying value of the bonds at June 30, 2011?


	a 17.	Either the straight-line method or the effective-interest method of amortization will always result in

a 18.	A corporation issued ¥600,000,000, 10%, 5-year bonds on January 1, 2011 for 648,666,000, which reflects an effective-interest rate of 8%. Interest is paid semiannually on January 1 and July 1. If the corporation uses the effective-interest method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1, 2011, is

a 19.	A bond discount must

	a 20.	When the effective-interest method of bond discount amortization is used,





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