104. The THA bonds have a life of:
a.2 years.
b.3 years.
c.6 years.
d.Cannot be determined from the given information.
105. What is the annual stated interest rate on the bonds? (Hint: Be sure to provide the annual rate rather than the six month rate.)
a.3%.
b.3.5%.
c.6%.
d.7%.
106. What is the annual market interest rate on the bonds? (Hint: Be sure to provide the annual rate rather than the six month rate.)
a.4%.
b.3.5%.
c.7%.
d.8%.
107. THA buys back the bonds for $196,000 immediately after the interest payment on 12/31/2015 and retires them. What gain or loss, if any, would THA record on this date?
a.No gain or loss.
b.$370 gain.
c.$4,000 gain.
d.$1,242 loss.
Use the following information to answer the next 6 questions:
X2 issued callable bonds on January 1, 2015. The bonds pay interest annually on December 31 each year. X2's accountant has projected the following amortization schedule from issuance until maturity:
Date
|
Cash
Paid
|
Interest
Expense
|
Decrease in Carrying Value
|
Carrying Value
|
1/1/2015
|
|
|
|
$104,212
|
12/31/2015
|
$7,000
|
$6,253
|
$747
|
103,465
|
12/31/2016
|
7,000
|
6,208
|
792
|
102,673
|
12/31/2017
|
7,000
|
6,160
|
840
|
101,833
|
12/31/2018
|
7,000
|
6,110
|
890
|
100,943
|
12/31/2019
|
7,000
|
6,057
|
943
|
100,000
|
108. X2 issued the bonds:
a.At par.
b.At a premium.
c.At a discount.
d.Cannot be determined from the given information.
109. X2 issued the bonds for:
a.$100,000.
b.$107,000.
c.$104,212.
d.Cannot be determined from the given information.
110. The X2 bonds have a life of:
a.3 years.
b.4 years.
c.5 years.
d.Cannot be determined from the given information.
111.What is the annual stated interest rate on the bonds?
a.3%.
b.3.5%.
c.6%.
d.7%.
112. What is the annual market interest rate on the bonds?
a.3%.
b.3.5%.
c.6%.
d.7%.
113. X2 buys back the bonds for $103,000 immediately after the interest payment on 12/31/2016 and retires them. What gain or loss, if any, would X2 record on this date?
a.No gain or loss.
b.$3,000 gain.
c.$1,202 loss.
d.$327 loss.