Question : 91. A corporation issues for cash $15,000,000 of 8%, 30-year bonds, : 1246593

91. A corporation issues for cash $15,000,000 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 $15,000,000 at maturity.

92. 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

93. 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

94. When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually.  The selling price of this bond issue was  
A. $ 321,970
B. $1,000,000
C. $ 943,494
D. $621,524

95. When the market rate of interest was 11%, Munson Corporation issued $1,000,000, 12%, 8-year bonds that pay interest semiannually.  The selling price of this bond issue was  
A. $1,052,310
B. $1,154387
C. $1,000,000
D. $ 720,495

96. The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is  
A. debit Bonds Payable, credit Cash
B. debit Cash and Discount on Bonds Payable, credit Bonds Payable
C. debit Cash, credit Premium on Bonds Payable and Bonds Payable
D. debit Cash, credit Bonds Payable

97. The journal entry a company records for the issuance of bonds when the contract rate is greater than the market rate would be  
A. debit Bonds Payable, credit Cash
B. debit Cash and Discount on Bonds Payable, credit Bonds Payable
C. debit Cash, credit Premium on Bonds Payable and Bonds Payable
D. debit Cash, credit Bonds Payable

98. The journal entry a company records for the issuance of bonds when the contract rate is less than the market rate would be  
A. debit Bonds Payable, credit Cash
B. debit Cash and Discount on Bonds Payable, credit Bonds Payable
C. debit Cash, credit Premium on Bonds Payable and Bonds Payable
D. debit Cash, credit Bonds Payable

99. When the market rate of interest was 11%, Valley Corporation issued $100,000, 8%, 10-year bonds that pay interest semiannually.  Using the straight-line method, the amount of discount or premium to be amortized each interest period would be  
A. $4,000
B. $896
C. $17,926
D. $1,793

100. The journal entry a company records for the payment of interest, interest expense, and amortization of bond discount is  
A. debit Interest Expense, credit Cash and Discount on Bonds Payable
B. debit Interest Expense, credit Cash
C. debit Interest Expense and Discount on Bonds Payable, credit Cash
D. debit Interest Expense, credit Interest Payable and Discount on Bonds Payable