Question :
141. The Designer Company issued 10-year bonds January 1, 2009. The : 1246598
141. The Designer Company issued 10-year bonds on January 1, 2009. The 6% bonds have a face value of $800,000 and pay interest every January 1 and July 1. The bonds were sold for $690,960 based on the market interest rate of 8%. Designer uses the effective-interest method to amortize bond discounts and premiums. On July 1, 2009, Designer should record interest expense (round to the nearest dollar) of
A. $27,638
B. $24,000
C. $48,000
D. $55,277
142. If a company borrows money from a bank as an installment note, the interest portion of each annual payment will:
A. equal the interest rate on the note times the carrying amount of the note at the beginning of the period.
B. remain constant over the term of the note.
C. equal the interest rate on the note times the face amount.
D. increase over the term of the note.
143. On the first day of the fiscal year, Hawthorne Company obtained a $ 88,000, seven-year, 5% installment note from Sea Side Bank. The note requires annual payments of $15,208, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $4,400 and principal repayment of $10,808. The journal entry Hawthorne would record to make the first annual payment due on the note would include:
A. a debit to Cash of $15,208
B. a credit to Notes Payable for $10,808
C. a debit to Interest Expense for $4,400
D. a debit to Notes Payable for $15,208
144. On January 1, 2010, Gemstone Company obtained a $280,000, 10-year, 11% installment note from Guarantee Bank. The note requires annual payments of $47,544, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $30,800 and principal repayment of $16,744. The journal entry to record the payment of the first annual amount due on the note would include:
A. a credit to cash of $16,744
B. a credit to Interest Payable of $30,800
C. a debit to Notes Payable of $16,744
D. a debit to Interest Expense of $47,544
145. On January 1, 2010, Gemstone Company obtained a $280,000, 10-year, 11% installment note from Guarantee Bank. The note requires annual payments of $47,544, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $30,800 and principal repayment of $16,744. The journal entry to record the issuance of the installment notes for cash on January 1, 2010 would include:
A. a debit to Interest Expense of $30,800
B. a credit to Interest Payable of $195,440
C. a credit to Notes Payable of $280,000
D. a debit to Notes Payable of $475,440
146. On January 1, 2010, Zero Company obtained a $52,000, four-year, 6.5% installment note from Regional Bank. The note requires annual payments consisting of principal and interest of $15,179, beginning on December 31, 2010. The December 31, 2010 carrying amount in the amortization table for this installment note will be equal to:
A. $27,635
B. $40,201
C. $36,821
D. $48,620
147. On January 1, 2010, Zero Company obtained a $52,000, four-year, 6.5% installment note from Regional Bank. The note requires annual payments of $15,179, beginning on December 31, 2010. The December 31, 2011 carrying amount in the amortization table for this installment note will be equal to:
A. $26,000
B. $27,635
C. $21,642
D. $28,402
148. On January 1, 2010, Zero Company obtained a $52,000, four-year, 6.5% installment note from Regional Bank. The note requires annual payments of $15,179, beginning on December 31, 2010. The December 31, 2012 carrying amount in the amortization table for this installment note will be equal to:
A. $0
B. $13,000
C. $14,252
D. $16,603
149. An installment note payable for a principal amount of $48,000 at 6% interest requires Lawson Company to repay the principal and interest in equal annual payments of $11,395 beginning December 31, 2008, for each of the next five years. After the final payment, the carrying amount on the note will be
A. $5,425
B. $8,975
C. $11,395
D. $0
