Question :
31) On September 30, 2011, Ace Electronics issued $100,000 of : 1253326
31) On September 30, 2011, Ace Electronics issued $100,000 of 10-year, 8% bonds at 100. The bonds pay interest semiannually on September 30 and March 31. These bonds sold at 100, which is ________.
A) par
B) a premium, because the market rate of interest is higher than 8%
C) a premium, because the market rate of interest is lower than 8%
D) a discount, because the market rate of interest is higher than 8%
32) On September 30, 2011, Ace Electronics issued $100,000 of 10-year, 8% bonds at 100. The bonds pay interest semiannually on September 30 and March 31. On its income statement for the year ended December 31, 2011, the year the bonds were issued, Ace Electronics will show Interest expense of ________.
A) $8,000
B) $4,000
C) $2,000
D) This is a trick question. Interest expense appears on the balance sheet, not on the income statement.
33) On September 30, 2011, Ace Electronics issued $100,000 of 10-year, 8% bonds at 100. The bonds pay interest semiannually on September 30 and March 31. On its statement of cash flows for the year ended December 31, 2011, Ace will show Cash paid for interest of ________.
A) $0
B) $(4,000) in the cash flows from financing activities section of the statement
C) $(4,000) in the cash flows from operating activities section of the statement
D) $(2,000) in the cash flows from operating activities section of the statement
34) On September 30, 2011, Ace Electronics issued $100,000 of 10-year, 8% bonds at 100. The bonds pay interest semiannually on September 30 and March 31. Which of the following will appear on Ace’s balance sheet at December 31, 2011?
A) Bonds payable $108,000
B) Bonds payable $100,000
C) Bonds payable $2,000
D) Interest expense $2,000
35) On September 30, 2011, Ace Electronics issued $100,000 of 10-year, 8% bonds at 100. The bonds pay interest semiannually on September 30 and March 31. How much cash will the company pay for interest on March 31, 2012, the first interest payment date?
A) $2,000
B) $8,000
C) $4,000
D) $4,120
36) On November 30, 2011, Just in Thyme, Inc. issued $10,000 of 20-year, 9% bonds at 100. The bonds pay interest semiannually on May 31 and November 30. How much cash did Just in Thyme receive when the bonds were issued?
A) $10,000
B) $10,900
C) $9,100
D) $0
37) On November 30, 2011, Just in Thyme, Inc. issued $100,000 of 20-year, 9% bonds at 100. The bonds pay interest semiannually on May 31 and November 30. These bonds sold at 100, which is ________.
A) par
B) a premium, because the market rate of interest is higher than 9%
C) a premium, because the market rate of interest is lower than 9%
D) a discount, because the market rate of interest is higher than 9%
38) On November 30, 2011, Just in Thyme, Inc. issued $100,000 of 20-year, 9% bonds at 100. The bonds pay interest semiannually on May 31 and November 30. How much cash will the company pay for interest on May 31, 2012, the first interest payment date?
A) $2,000
B) $8,000
C) $4,000
D) $4,120
39) On November 30, 2011, Just in Thyme, Inc. issued $100,000 of 20-year, 9% bonds at 100. The bonds pay interest semiannually on May 30 and November 30. How much cash will Just in Thyme pay when the bonds mature?
A) $100,000
B) $109,000
C) $91,000
D) $0
40) On October 31, 2011, Bondable, Inc. issued $20,000 of 10-year, 6% bonds at 100. The bonds pay interest annually on October 31. How much cash will the company pay for interest on October 31, 2012, the first interest payment date?
A) $2,000
B) $1,000
C) $1,200
D) $200
