Ch14 Computational

c

63. Downing Company issues $5,000,000, 6%, 5-year bonds dated January 1, 2020 on January 1, 2020. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue? a. $5,000,000 b. $5,216,494 c. $5,218,809 d. $5,217,309

c

64. Feller Company issues $20,000,000 of 10-year, 9% bonds on March 1, 2020 at 97 plus accrued interest. The bonds are dated January 1, 2020, and pay interest on June 30 and December 31. What is the total cash received on the issue date? a. $19,400,000 b. $20,450,000 c. $19,700,000 d. $19,100,000

c

65. Everhart Company issues $25,000,000, 6%, 5-year bonds dated January 1, 2020 on January 1, 2020. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue? a. $25,000,000 b. $26,082,470 c. $26,094,045 d. $26,086,540

c

66. Farmer Company issues $30,000,000 of 10-year, 9% bonds on March 1, 2020 at 97 plus accrued interest. The bonds are dated January 1, 2020, and pay interest on June 30 and December 31. What is the total cash received on the issue date? a. $29,100,000 b. $30,675,000 c. $29,550,000 d. $28,650,000

c

67. A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14,703,108. Using effective-interest amortization, how much interest expense will be recognized in 2020? a. $585,000 b. $1,170,000 c. $1,176,373 d. $1,176,249

a

68. A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14,703,108. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2020 balance sheet? a. $14,709,481 b. $15,000,000 c. $14,718,844 d. $14,706,232

d

69. A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2019. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14,703,108. Using straight-line amortization, what is the carrying value of the bonds on December 31, 2021? a. $14,752,672 b. $14,955,466 c. $14,725,374 d. $14,747,642

d

70. A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14,703,108. What is interest expense for 2021, using straight-line amortization? a. $1,540,208 b. $1,170,000 c. $1,176,894 d. $1,184,845

c

71. A company issues $25,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $24,505,180. Using effective-interest amortization, how much interest expense will be recognized in 2020? a. $975,000 b. $1,950,000 c. $1,960,623 d. $1,960,415

a

72. A company issues $25,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $24,505,180. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2020 balance sheet? a. $24,515,802 b. $25,000,000 c. $24,531,405 d. $24,510,385

d

73. A company issues $25,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2019. Interest is paid on June 30 and December 31. The proceeds from the bonds are $24,505,180. Using straight-line amortization, what is the carrying value of the bonds on December 31, 2021? a. $24,587,790 b. $24,925,780 c. $24,545,290 d. $24,579,403

d

74. A company issues $25,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $24,505,180. What is interest expense for 2021, using straight-line amortization? a. $1,925,260 b. $1,950,000 c. $1,961,490 d. $1,974,741

b

75. On January 1, 2020, Huber Co. sold 12% bonds with a face value of $2,000,000. The bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $2,154,500 to yield 10%. Using the effective-interest method of amortization, interest expense for 2020 is a. $200,000. b. $214,836. c. $215,400. d. $240,000.

c

76. On January 2, 2020, a calendar-year corporation sold 8% bonds with a face value of $3,000,000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $2,768,000 to yield 10%. Using the effective-interest method of computing interest, how much should be charged to interest expense in 2020? a. $240,000. b. $276,800. c. $277,720. d. $300,000.

b

81. At the beginning of 2020, Wallace Corporation issued 10% bonds with a face value of $6,000,000. These bonds mature in the five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $5,558,400 to yield 12%. Wallace uses a calendar-year reporting period. Using the effective-interest method of amortization, what amount of interest expense should be reported for 2020? (Round your answer to the nearest dollar.) a. $688,320 b. $669,018 c. $667,000 d. $665,000

b

82. 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 should report unamortized bond discount of a. $274,500. b. $285,500. c. $258,050. d. $255,000.

b

83. On January 1, Martinez Inc. issued $6,000,000, 11% bonds for $6,390,000. 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 premium. At the end of the first year, Martinez should report unamortized bond premium of: a. $370,260 b. $369,000 c. $347,000 d. $330,000

c

84. At the beginning of 2020, Winston Corporation issued 10% bonds with a face value of $4,000,000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $3,705,600 to yield 12%. Winston uses a calendar-year reporting period. Using the effective-interest method of amortization, what amount of interest expense should be reported for 2020? (Round your answer to the nearest dollar.) a. $443,334 b. $444,666 c. $446,012 d. $458,880

a

On January 1, 2020, Ellison Co. issued eight-year bonds with a face value of $6,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are: Present value of 1 for 8 periods at 6% .627 Present value of 1 for 8 periods at 8% .540 Present value of 1 for 16 periods at 3% .623 Present value of 1 for 16 periods at 4% .534 Present value of annuity for 8 periods at 6% 6.210 Present value of annuity for 8 periods at 8% 5.747 Present value of annuity for 16 periods at 3% 12.561 Present value of annuity for 16 periods at 4% 11.652 60. The present value of the principal is a. $3,204,000. b. $3,240,000. c. $3,738,000. d. $3,762,000.

b

On January 1, 2020, Ellison Co. issued eight-year bonds with a face value of $6,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are: Present value of 1 for 8 periods at 6% .627 Present value of 1 for 8 periods at 8% .540 Present value of 1 for 16 periods at 3% .623 Present value of 1 for 16 periods at 4% .534 Present value of annuity for 8 periods at 6% 6.210 Present value of annuity for 8 periods at 8% 5.747 Present value of annuity for 16 periods at 3% 12.561 Present value of annuity for 16 periods at 4% 11.652 61. The present value of the interest is a. $2,068,920. b. $2,097,360. c. $2,235,600. d. $2,260,980.

a

On January 1, 2020, Ellison Co. issued eight-year bonds with a face value of $6,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are: Present value of 1 for 8 periods at 6% .627 Present value of 1 for 8 periods at 8% .540 Present value of 1 for 16 periods at 3% .623 Present value of 1 for 16 periods at 4% .534 Present value of annuity for 8 periods at 6% 6.210 Present value of annuity for 8 periods at 8% 5.747 Present value of annuity for 16 periods at 3% 12.561 Present value of annuity for 16 periods at 4% 11.652 62. The issue price of the bonds is a. $5,301,360. b. $5,308,920. c. $5,337,360. d. $5,997,600.

b

On October 1, 2020 Bartley Corporation issued 5%, 10-year bonds with a face value of $8,000,000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. 79. The entry to record the issuance of the bonds would include a a. credit of $200,000 to Interest Payable. b. credit of $320,000 to Premium on Bonds Payable. c. credit of $7,680,000 to Bonds Payable. d. debit of $320,000 to Discount on Bonds Payable.

c

On October 1, 2020 Bartley Corporation issued 5%, 10-year bonds with a face value of $8,000,000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. 80. Bond interest expense reported on the December 31, 2020 income statement of Bartley Corporation would be a. $108,000. b. $184,000. c. $92,000. d. $100,000.

d

On October 1, 2020 Macklin Corporation issued 5%, 10-year bonds with a face value of $6,000,000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. 77. The entry to record the issuance of the bonds would include a credit of a. $150,000 to Interest Payable. b. $240,000 to Discount on Bonds Payable. c. $5,760,000 to Bonds Payable. d. $240,000 to Premium on Bonds Payable.

a

On October 1, 2020 Macklin Corporation issued 5%, 10-year bonds with a face value of $6,000,000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. 78. Bond interest expense reported on the December 31, 2020 income statement of Macklin Corporation would be a. $69,000. b. $75,000. c. $81,000. d. $138,000.