61) Lisle Corporation issued $200,000 of 10% bonds on January 1, 2014. The bonds pay interest semiannually on January 1 and July 1. The company has a fiscal year end of May 31. On May 31, 2014, the Lisle Corporation will:
A) make a journal entry to accrue interest expense from July 1 through December 31.
B) make a journal entry to accrue interest expense from January 1 through July 1
C) make a journal entry to accrue interest expense from January 1 through May 31.
D) make a journal entry to record cash interest paid on May 31.
62) Schmid Corporation issues $500,000, 10%, 5-year bonds on January 1, 2014 for $479,000. Interest is paid semiannually on January 1 and July 1. If Schmid uses the straight-line method of amortization of bond discount, the amount of bond interest expense on July 1, 2014 is:
A) $22,900.
B) $25,000.
C) $27,100.
D) $52,100.
63) On July 1, 2014, Brownlee Corporation issues $1,500,000 of 10-year, 7% bonds dated July 1, 2014 at 90. Brownlee uses the straight-line method of amortization. Interest is paid each July 1 and January 1. Brownlee Corporation's fiscal year end is June 30. The interest expense recognized for the first semiannual interest payment on January 1, 2015 is:
A) $45,000.
B) $52,500.
C) $60,000.
D) $105,000.
64) On January 1, 2014, Always Corporation issues $3,000,000, 5-year, 10% bonds for $2,910,000. Interest is paid semiannually on January 1 and July 1. Always Corporation uses the straight-line method of amortization. The company's fiscal year ends on December 31. The amount of discount amortized on July 1, 2014 is:
A) $4,500.
B) $9,000.
C) $18,000.
D) $90,000.
65) When a company retires bonds early, the gain or loss on the retirement is the difference between the cash paid and the:
A) face value of the bonds.
B) original selling price of the bonds.
C) maturity value of the bonds.
D) carrying value of the bonds.
66) Godwin Corporation retires its bonds at 106 on January 1, after the payment of interest. The face value of the bonds is $600,000. The carrying value of the bonds at retirement is $619,500. The entry to record the retirement will include a:
A) debit of $36,000 to Premium on Bonds Payable.
B) debit of $19,500 to Premium on Bonds Payable.
C) credit of $16,500 to Gain on Retirement of Bonds.
D) credit of $16,500 to Loss on Retirement of Bonds.
67) Bonds that the issuer may pay off at a prearranged price whenever the issuer chooses before the maturity date are:
A) serial bonds.
B) callable bonds.
C) convertible bonds.
D) debenture bonds.
68) Miller Corporation has $2,000,000 of bonds outstanding. The unamortized premium is $57,000. If the company retired the bonds at 101, what would be the gain or loss on the retirement? Ignore any interest due.
A) $20,000 gain
B) $20,000 loss
C) $37,000 gain
D) $57,000 gain
69) The journal entry to record the conversion of bonds payable into common stock will include a:
A) debit to Bonds Payable and a credit to Common Stock.
B) debit to Bonds Payable and a credit to Cash.
C) debit to Cash and a credit to Common Stock.
D) debit to Cash and a credit to Paid-in Capital in Excess of Par.
70) If bonds with a face value of $200,000 are converted into common stock when the carrying value of the bonds is $155,000, the entry to record the conversion would include a debit to:
A) Bonds Payable for $155,000.
B) Bonds Payable for $200,000.
C) Discount on Bonds Payable for $45,000.
D) Cash for $45,000.