Question Details

Which of the following statements regarding the effective-interest method 




1.	When the effective-interest method of bond premium amortization is used, the

2.	Silcon 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?

3.	Silcon 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

 4.	Silcon 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?

5.	On January 1, Patterson 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. Patterson uses the effective-interest method of amortizing bond discount. At the end of the first year, Patterson- unamortized bond discount is


6.	On January 1, Cleopatra 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 Bond Interest Expense is for

7.	On January 1, Martinez 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. Martinez uses the effective-interest method of amortizing bond discount. At the end of the first year, Martinez- unamortized bond discount is:

 8.	On January 1, Polk 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 Bond Interest Expense is for:


9.	Which of the following statements regarding the effective-interest method of accounting for bonds characteristics is false?

10.	On January 1, Grogan 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:

11.	If bonds are originally sold at a discount using the straight-line amortization method:

12.	Presented here is a partial amortization schedule for Courtney Company who sold €200,000, five year 10% bonds on January 1, 2011 for €208,000 and uses annual straight-line amortization.

	BOND AMORTIZATION SCHEDULE
Interest Period	Interest Paid	Interest Expense	Premium Amortization	Bond Carrying Value
January 1, 2011				€208,000
January 1, 2012	(i)	(ii)	(iii)	(iv)

Which of the following amounts should be shown in cell (i)?

13.	Presented here is a partial amortization schedule for Courtney Company who sold €200,000, five year 10% bonds on January 1, 2011 for €208,000 and uses annual straight-line amortization.

	BOND AMORTIZATION SCHEDULE
Interest Period	Interest Paid	Interest Expense	Premium Amortization	Bond Carrying Value
January 1, 2011				€208,000
January 1, 2012	(i)	(ii)	(iii)	(iv)

Which of the following amounts should be shown in cell (ii)?

14.	Presented here is a partial amortization schedule for Courtney Company who sold €200,000, five year 10% bonds on January 1, 2011 for €208,000 and uses annual straight-line amortization.

	BOND AMORTIZATION SCHEDULE
Interest Period	Interest Paid	Interest Expense	Premium Amortization	Bond Carrying Value
January 1, 2011				€208,000
January 1, 2012	(i)	(ii)	(iii)	(iv)

Which of the following amounts should be shown in cell (iii)?

	BOND AMORTIZATION SCHEDULE
Interest Period	Interest Paid	Interest Expense	Premium Amortization	Bond Carrying Value
January 1, 2011				€208,000
January 1, 2012	(i)	(ii)	(iii)	(iv)

Which of the following amounts should be shown in cell (iv)?

16.	On January 1, Hurley Corporation issues $2,000,000, 5-year, 12% bonds at 96 with interest payable on July 1 and January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a

17.	On January 1, 2011, ¥2,000,000,000, 10-year, 10% bonds, were issued for $1,940,000,000. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is

18.	A corporation issues ¥500,000,000, 10%, 5-year bonds on January 1, 2011, for $479,000,000. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2011- adjusting entry is

 19.	Roman Company issued $600,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming straight-line amortization, what is the total interest cost of the bonds?

20.	Sunwood Company issued $800,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year?





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