Question : 111. A company issues at par 9% bonds with a par : 1225299

111. A company issues at par 9% bonds with a par value of $100,000 on April 1. The bonds pay interest semi-annually on January 1 and July 1. The cash received on July 1 by the bond holder(s) is: 

A. $1,500.

B. $3,000.

C. $4,500.

D. $6,000.

E. $7,500.

112. A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $101,137 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is: 

A. $3,386.30.

B. $3,500.00.

C. $3,613,70.

D. $6,633.70.

E. $7,000.00.

113. A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $101,137 cash for the bonds. Using the effective interest method, the amount of recorded interest expense for the first semiannual interest period is: 

A. $3,500.00.

B. $7,000.00.

C. $3,286.95.

D. $6,573.90.

E. $1,750.00.

114. A company may retire bonds by: 

A. Exercising a call option.

B. The holders converting them to stock.

C. Purchasing the bonds on the open market.

D. Paying them off at maturity.

E. All of these.

115. Bonds that give the issuer an option of retiring them before they mature are: 

A. Debentures.

B. Serial bonds.

C. Sinking fund bonds.

D. Registered bonds.

E. Callable bonds.

116. A company has bonds outstanding with a par value of $100,000. The unamortized discount on these bonds is $4,500. The company retired these bonds by buying them on the open market at 97. What is the gain or loss on this retirement? 

A. $0 gain or loss.

B. $1,500 gain.

C. $1,500 loss.

D. $3,000 gain.

E. $3,000 loss.

117. A company has bonds outstanding with a par value of $100,000. The unamortized premium on these bonds is $2,700. If the company retired these bonds at a call price of 99, the gain or loss on this retirement is: 

A. $1,000 gain.

B. $1,000 loss.

C. $2,700 loss.

D. $2,700 gain.

E. $3,700 gain.

118. A company retires its bonds at 105. The face value is $100,000 and the carrying value of the bonds at the retirement date is $103,745. The issuer’s journal entry to record the retirement will include a: 

A. Debit to Premium on Bonds.

B. Credit to Premium on Bonds.

C. Debit to Discount on Bonds.

D. Credit to Gain on Bond Retirement.

E. Credit to Bonds Payable.

119. A corporation issued 8% bonds with a par value of $1,000,000, receiving a $20,000 premium. On the interest date 5 years later, after the bond interest was paid and after 40% of the premium had been amortized, the corporation purchased the entire issue on the open market at 99 and retired it. The gain or loss on this retirement is: 

A. $0.

B. $10,000 gain.

C. $10,000 loss.

D. $22,000 gain.

E. $22,000 loss.

120. On October 1, a $30,000, 6%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest be paid at the end of each year on September 30. The present value of an annuity factor for 3 years at 6% is 2.6730. The payment will be: 

A. $10,000.00.

B. $11,223.34.

C. $10,800.00.

D. $10,400.00.

E. $1,223.34.