Question Details

What is the amount of interest expense Herman will show with relation to these bonds  



1.	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.
What is the amount of interest expense Herman will show with relation to these bonds  for year ended December 31, 2012?
a.	$16,000
b.	$15,080
c.	$17,150
d.	$14,850


2.	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.
What is the carrying value of the bonds on January 1, 2012?
a.	$200,000
b.	$190,800
c.	$197,700
d.	$189,650

		
		
Use the following information for questions 3-5.

On January 1, 2011, Bentley Company issued £20,000,000, 5-year, 7% bonds, were issued for £19,700,000. Interest is paid annually on December 31. Bentley uses the straight-line method to amortize discount on bonds payable

	3.	The annual amortization of bond discount is
a.	£30,000.
b.	£60,000.
c.	£80,000.
d.	£280,000.

a4.	The amount of bond interest expense reported on the 2011 income statement will be
a.	£0.
b.	£1,460,000.
c.	£1,400,000.
d.	£1,340,000.


a5.	The December 31, 2011 journal entry to record the cash payment to bondholders and amortization of discount will include
a.	a debit to Bonds Payable for £60,000.
b.	a credit to Interest Payable for £1,400,000.
c.	a credit to Bonds Payable for £1,340,000.
d.	a debit to Interest Expense for £1,460,000.




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