Question :
81. The Marx Company issued $100,000 of 12% bonds April 1, : 1239299
81. The Marx Company issued $100,000 of 12% bonds on April 1, 2010 at face value. The bonds pay interest semiannually on January 1 and July 1. The bonds are dated January 1, 2010, and mature on January 1, 2014. The total interest expense related to these bonds for the year ended December 31, 2010 is
A. $1,000
B. $3,000
C. $9,000
D. 12,000
82. On January 1, 2014, the Horton Corporation issued 10% bonds with a face value of $200,000. The bonds are sold for $192,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 2018. Horton records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31, 2014, is
A. $10,800
B. $18,400
C. $21,600
D. $28,000
83. If $1,000,000 of 8% bonds are issued at 103 1/2, the amount of cash received from the sale is
A. $1,080,000
B. $965,000
C. $1,000,000
D. $1,035,000
84. If $2,000,000 of 10% bonds are issued at 95, the amount of cash received from the sale is
A. $2,200,000
B. $2,000,000
C. $2,100,000
D. $1,900,000
85. A corporation issues for cash $1,000,000 of 10%, 20-year bonds, interest payable annually, at a time when the market rate of interest is 12%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?
A. The amount of the annual interest expense is computed at 10% of the bond carrying amount at the beginning of the year.
B. The amount of the annual interest expense gradually decreases over the life of the bonds.
C. The amount of unamortized discount decreases from its balance at issuance date to a zero balance at maturity.
D. The bonds will be issued at a premium.
86. If the straight-line method of amortization of bond premium or discount is used, which of the following statements is true?
A. Annual interest expense will increase over the life of the bonds with the amortization of bond premium.
B. Annual interest expense will remain the same over the life of the bonds with the amortization of bond discount.
C. Annual interest expense will decrease over the life of the bonds with the amortization of bond discount.
D. Annual interest expense will increase over the life of the bonds with the amortization of bond discount.
87. A corporation issues for cash $2,000,000 of 8%, 15-year bonds, interest payable annually, at a time when the market rate of interest is 7%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?
A. The carrying amount increases from its amount at issuance date to $2,000,000 at maturity.
B. The carrying amount decreases from its amount at issuance date to $2,000,000 at maturity.
C. The amount of annual interest paid to bondholders increases over the 15-year life of the bonds.
D. The amount of annual interest expense decreases as the bonds approach maturity.
88. A corporation issues for cash $10,000,000 of 8%, 30-year bonds, interest payable annually, at a time when the market rate of interest is 9%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?
A. The amount of annual interest paid to bondholders remains the same over the life of the bonds.
B. The amount of annual interest expense decreases as the bonds approach maturity.
C. The amount of annual interest paid to bondholders increases over the 30-year life of the bonds.
D. The carrying amount decreases from its amount at issuance date to $10,000,000 at maturity.
89. The entry to record the amortization of a premium on bonds payable on an interest payment date includes:
A. debit Premium on Bonds Payable, credit Interest Revenue
B. debit Interest Expense, credit Premium on Bond Payable
C. debit Interest Expense, debit Premium on Bonds Payable, credit Cash
D. debit Bonds Payable, credit Interest Expense
90. The adjusting entry to record the amortization of a discount on bonds payable is
A. debit Discount on Bonds Payable, credit Interest Expense
B. debit Interest Expense, credit Discount on Bonds Payable
C. debit Interest Expense, credit Cash
D. debit Bonds Payable, credit Interest Expense
