15.On January 1, 2009Frank Corporation issued a 3-year, 9%, $5,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The market rate of interest on January 1, 2009 is 6% when the bonds were issued at 108. Calculate the total interest expense over the 3-year life of the bond independent of the particular accounting method used to recognize interest expense each year.
16.On January 1, 2009, Field Corporation issued a 3-year, 9%, $5,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The market rate of interest on January 1, 2009 is 6%. What is the impact of the debt/equity ratio as a result of the issuance?
17.On December 31, 2009, Creative Corporation issued a 3-year, 9%, $1,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The market rate of interest on December 31, 2009 is 5%. If Creative uses the effective interest method, show how the bonds will appear on Creative’s balance sheet at December 31, 2009.
18.On January 1, 2009, Luna Corporation issued a 5-year, 7%, $5,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The market rate of interest on January 1, 2009 is 7%. Luna uses the effective interest method. Calculate the balance sheet value of the bond payable on January 1, 2010.
19.On January 1, 2009, Richardson Company leased equipment under a 3-year lease with payments of $8,000 on January 1, 2010, 2011, and 2012. The present value of the lease payments at a discount rate of 7% is $20,992. RIchardson uses straight-line depreciation with no salvage value. The lease is considered a capital lease. Calculate depreciation expense and interest expense for 2009.