chapter 15

$27,100

A corporation issues $500,000, 10%, 5-year bonds on January 1, 2010 for $479,000. Interest is paid semiannually on January 1 and July 1. If the corporation uses the straight- line method of amortization of bond discount, the amount of bond interest expense to be recognized on July 1, 2010 is (debit bond interest expense 27,100; credit bond discount for 2,100* and cash 25,000** [*bond discount: 500,000 - 479,000 = 21,000, semiannual amortization: 21,000/(5 x 2) = 2,100; ** 500,000 x .10 x 6/12 = 25,000])

6600 gain

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? (debit bonds payable 1,500,000 and premium on bonds payable 21,600; credit cash 1,515,000 and gain on redemption 6,600)

479,600

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 (debit mortgage interest expense 4000* and mortgage payable 400; credit cash 4400 [* 480,000 x .10 x 1/12)] balance after payment: 480,000 - 400 = 479,600)

at a discount

If the market interest rate is greater than the contractual interest rate, bonds will sell

debit cash for $4,080,000; credit premium on bonds payable for $80,000 and credit bonds payable for $4,000,000

On January 1, 2010, Grant Corporation issued $4,000,000, 10-year, 8% bonds at 102. Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2010 is

$750, 20

The amortization of a $15,000 bond premium on a 10 year bond payable with interest payable January and July 1 is _ over _ period(s).

$98,000

The amount of cash received on a $100,000 bond issued at 98 is

$488,000

The carrying value of a $500,000 bond payable with a $12,000 discount is

In the balance sheet, mortgage notes payable are reported as

both a current (principal amount due within 1 year) and a long-term (principal amount due after 1 year) liability.

secured bonds

have specific assets of the issuer pledged as collateral.