Question : 111.Refer to the information above. Interest expense this bond issue : 1237429

 

 

111.Refer to the information above. Interest expense on this bond issue reported in Cricket’s Year 1, income statement is:   

A.$2,400,000.

 

B.$4,800,000.

 

C.$5,400,000.

 

D.$7,200,000.

$60,000,000 × 12% × 9/12 = $5,400,000

 

 

 

112.Refer to the information above. The adjustment necessary at December 31, Year 1 (if any), related to this bond issue involves:   

A.Recognition of interest expense of $3,600,000.

 

B.Recognition of interest expense of $1,800,000.

 

C.Payment of cash of $1,800,000.

 

D.There is no adjustment necessary.

$60,000,000 × 12% × 3/12 = $1,800,000

 

 

 

113.Refer to the information above. With respect to this bond issue, Cricket Corporation’s balance sheet at December 31, Year 1, will include:   

A.Bonds payable of $61,800,000.

 

B.Bonds payable of $63,600,000.

 

C.Bonds payable of $60 million, as well as interest payable of $1,800,000.

 

D.Bonds payable of $60 million, as well as interest payable of $3,600,000.

 

 

 

 

On April 1, Year 1, Greenway Corporation issues $20 million of 10%, 20-year bonds payable at par. Interest on the bonds is payable semiannually each April 1 and October 1.

 

114.Refer to the information above. The journal entry to record the first cash payment to bondholders on October 1, year 1, will include:   

A.A credit to Cash of $2,000,000.

 

B.A debit to Bonds Payable of $1,000,000.

 

C.A debit to Interest Expense of $1,000,000.

 

D.A credit to Interest Payable of $1,000,000.

$20,000,000 × 10% × 6/12 = $1,000,000

 

 

 

115.Refer to the information above. The adjusting entry (if any) required on December 31, Year 1, related to this bond issue involves:   

A.Recognition of interest expense of $1,000,000.

 

B.Recognition of interest expense of $500,000.

 

C.A credit to Interest Payable of $2,000,000.

 

D.A credit to Cash of $500,000.

$20,000,000 × 10% × 3/12 = $500,000

 

 

 

116.Refer to the information above. In Year 2, Greenway’s income statement will report interest expense arising from this bond issue of:   

A.$1,000,000.

 

B.$2,000,000.

 

C.$500,000.

 

D.$1,500,000.

$20,000,000 × 10% = $2,000,000

 

 

 

117.Refer to the information above. On April 1, Year 1, the journal entry to record issuance of the bonds will include:   

A.A credit to Interest Payable of $1,000,000.

 

B.A debit to Cash of $20,000,000.

 

C.A credit to Bonds Payable of $2,100,000.

 

D.A debit to Cash of $21,000,000.

 

 

 

 

118.Refer to the information above. With respect to this bond issue, Greenway’s balance sheet at December 31, Year 1, will include:   

A.Bonds payable of $20,500,000.

 

B.Bonds payable of $19,500,000.

 

C.Bonds payable of $20 million, as well as interest payable of $1,500,000.

 

D.Bonds payable of $20 million, as well as interest payable of $500,000.

 

 

 

 

Austin Corporation issues $6,000,000 of 10%, 10-year bonds, dated December 31, Year 1. The bonds are issued on April 30, Year 2, at 100 plus accrued interest. Interest on the bonds is payable semiannually each June 30 and December 31.

 

119.Refer to the information above. The total amount of cash received by Austin Corporation upon issuance of the bonds on April 30, Year 2, is:   

A.$6,000,000.

 

B.$6,200,000.

 

C.$6,150,000.

 

D.$6,300,000.

$6,000,000 + ($6,000,000 × 10% × 4/12) = $6,200,000

 

 

 

120.Refer to the information above. The entry to record the issuance of bonds payable on April 30, Year 2, includes:   

A.A credit to Premium on Bonds Payable of $200,000.

 

B.A debit to Cash of $150,000.

 

C.A debit to Bond Interest Expense of $200,000.

 

D.A credit to Bond Interest Payable of $200,000.