33) McDonald Sales prepared a bond issue of $20,000 dated January 1, 2013. The bonds have a stated rate of 3% and a term of 6 years. The bond issue was delayed, and the bonds were finally sold on March 1, 2013 at par. On June 30, 2013, the first semiannual interest payment is made. How much will be paid out to bondholders on June 30, 2013?
A) $100
B) $200
C) $300
D) $600
34) McDonald Sales prepared a bond issue of $20,000 dated January 1, 2013. The bonds have a stated rate of 3% and a term of 6 years. The bond issue was delayed, and the bonds were finally sold on March 1, 2013 at par. On June 30, 2013, the first semiannual interest payment is made. How much is the total amount of interest expense McDonalds will record for the first half of 2013?
A) $600
B) $200
C) $300
D) $350
35) McDonald Sales prepared a bond issue of $20,000 dated January 1, 2013. The bonds have a stated rate of 3% and a term of 6 years. The bond issue was delayed, and the bonds were finally sold on March 1, 2013 at par. On June 30, 2013, the first semiannual interest payment is made. The journal entry to record that interest payment will include which of the following line items?
A) Credit Cash for $200
B) Debit Cash for $300
C) Credit Interest payable for $100
D) Debit Interest expense for $200
36) Blanding Company issues $1,000,000 of 8%, 10-year bonds at 98 on February 28, 2013. The bond pays interest on February 28 and August 31. The market rate of interest on the issuance date was 10%. The journal entry to record the issuance would include a:
A) debit to Cash for $1,000,000.
B) credit to Bonds payable for $980,000.
C) credit to Discount on bonds payable for $20,000.
D) debit to Cash for $980,000.
37) Blanding Company issues $1,000,000 of 8%, 10-year bonds at 98 on February 28, 2013. The bond pays interest on February 28 and August 31. The market rate of interest on the issuance date was 10%. Assume Blanding uses the straight-line method for amortization. The journal entry to record the first interest payment on August 31, 2013 will be a:
A) debit to Cash for $40,000.
B) debit to Interest expense for $41,000.
C) debit to Interest expense for $39,000.
D) debit to Discount on bonds payable for $1,000.
38) Blanding Company issues $1,000,000 of 8%, 10-year bonds at 98 on February 28, 2013. The bond pays interest on February 28 and August 31. The market rate of interest on the issuance date was 10%. Assume Blanding uses the straight-line method for amortization. What net balance will be reported for the bonds on the balance sheet on August 31, 2013?
A) $981,000
B) $1,000,000
C) $979,000
D) $980,000
39) Blanding Company issues $1,000,000 of 8%, 10-year bonds at 98 on February 28, 2013. The bond pays interest on February 28 and August 31. The market rate of interest on the issuance date was 10%. Assume Blanding uses the straight-line method for amortization. The interest accrual entry at December 31, 2013 would include:
A) a debit to Interest expense $26,667.
B) a credit to Interest payable of $26,667.
C) a credit to Cash of $26,667.
D) no entry at December 31, 2013.
40) The Amazing Widget Company issues $500,000 of 6%, 10-year bonds at 103 on March 31, 2014. The bond pays interest on March 31 and September 30. The market rate of interest on the issuance date was 4%. Assume the company uses the straight-line method for amortization. The journal entry to record the issuance would include a:
A) debit to Cash for $500,000.
B) credit to Bonds payable for $515,000.
C) credit to Discount on bonds payable for $15,000.
D) debit to Cash for $515,000.
41) The Amazing Widget Company issues $500,000 of 6%, 10-year bonds at 103 on March 31, 2014. The bond pays interest on March 31 and September 30. The market rate of interest on the issuance date was 4%. Assume the company uses the straight-line method for amortization. The journal entry to record the first interest payment on September 30, 2014 would be a:
A) debit to Cash for $15,000.
B) debit to Interest expense for $15,750.
C) debit to Interest expense for $14,250.
D) credit to Premium on bonds payable for $750.
42) The Amazing Widget Company issues $500,000 of 6%, 10-year bonds at 103 on March 31, 2014. The bond pays interest on March 31 and September 30. The market rate of interest on the issuance date was 4%. Assume the company uses the straight-line method for amortization. What net balance will be reported for the bonds on the balance sheet on September 30, 2014?
A) $500,000
B) $515,000
C) $514.250
D) $515,250