215.A corporation issues $500,000, 10%, 5-year bonds on January 1, 2011, for $479,000. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2011’s adjusting entry is
a.$54,200.
b.$50,000.
c.$45,800.
d.$4,200.
a
216.Roman Company issued $600,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming straight-line amortization, what is the total interest cost of the bonds?
a.$180,000
b.$192,000
c.$168,000
d.$174,000
a
217.Sunwood Company issued $800,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year?
a.$784,000
b.$785,600
c.$787,200
d.$790,400
a
218.Terrance Company issued $500,000 of 8%, 5-year bonds at 106. Assuming straight-line amortization and annual interest payments, how much bond interest expense is recorded on the next interest date?
a.$40,000
b.$46,000
c.$34,000
d.$6,000
a
219.Garcia Company issued $600,000 of 8%, 5-year bonds at 106, with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year?
a.$636,000
b.$632,400
c.$628,800
d.$639,600
a220.On January 1, 2011, $3,000,000, 5-year, 10% bonds, were issued for $2,910,000. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is
a.$17,424.
b.$18,000.
c.$1,452.
d.$1,500.
a
221.A corporation issues $500,000, 10%, 5-year bonds on January 1, 2011 for $479,000. Interest is paid semiannually on January 1 and July 1. If the corporation uses the straight- line method of amortization of bond discount, the amount of bond interest expense to be recognized on July 1, 2011 is
a.$52,100.
b.$25,000.
c.$27,100.
d.$22,900.
a
222.Over the term of the bonds, the balance in the Discount on Bonds Payable account will
a.fluctuate up and down if the market is volatile.
b.decrease.
c.increase.
d.be unaffected until the bonds mature.
a
223.Bond discount should be amortized to comply with
a.the historical cost principle.
b.the matching principle.
c.the revenue recognition principle.
d.conservatism.
a
224.If bonds have been issued at a discount, over the life of the bonds, the
a.carrying value of the bonds will decrease.
b.carrying value of the bonds will increase.
c.interest expense will increase, if the discount is being amortized on a straight-line basis.
d.unamortized discount will increase.