71. A company issued 10%, five-year bonds with a par value of $400,000. The market rate when the bonds were issued was 8%. The company received $432,458 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is:
A. $16,000.00
B. $20,000.00
C. $4,324.58
D. $17,298.32
E. $16,754.20
72. The market value of a bond is equal to:
A. The present value of all future cash payments provided by a bond.
B. The present value of all future interest payments provided by a bond.
C. The present value of the principal for an interest-bearing bond.
D. The future value of all future cash payments provided by a bond.
E. The future value of all future interest payments provided by a bond.
73. The Premium on Bonds Payable account is a(n):
A. Revenue account.
B. Adjunct or accretion liability account.
C. Contra revenue account.
D. Asset account.
E. Contra expense account.
74. Adidas issued 10-year, 8% bonds with a par value of $200,000, where interest is paid semiannually. The market rate on the issue date was 7.5%. Adidas received $206,948 in cash proceeds. Which of the following statements is true?
A. Adidas must pay $200,000 at maturity and no interest payments.
B. Adidas must pay $206,948 at maturity and no interest payments.
C. Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each.
D. Adidas must pay $206,948 at maturity plus 20 interest payments of $8,000 each.
E. Adidas must pay $200,000 at maturity plus 20 interest payments of $7,500 each.
75. A company received cash proceeds of $206,948 on a bond issue with a par value of $200,000. The difference between par value and issue price for this bond is recorded as a:
A. Credit to Interest Income.
B. Credit to Premium on Bonds Payable.
C. Credit to Discount on Bonds Payable.
D. Debit to Premium on Bonds Payable.
E. Debit to Discount on Bonds Payable.
76. A company issued five-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $101,137 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:
A. $3,386.30
B. $3,500.00
C. $3,613.70
D. $6,633.70
E. $7,000.00
77. A company issued seven-year, 8% bonds with a par value of $200,000. The market rate when the bonds were issued was 5.5%. The company received $203,010 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:
A. $8,000
B. $8,215
C. $7,785
D. $16,000
E. $4,990
78. A company issued 25-year, 8% bonds with a par value of $900,000. The company received $1,000,000 cash for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is:
A. $36,000
B. $34,000
C. $38,000
D. $40,000
E. $32,000
79. A company issued 18-year, 6% bonds with a par value of $750,000. The company received $761,736 cash for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is:
A. $22,174
B. $22,826
C. $22,500
D. $23,152
E. $21,848
80. A company issued five-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $101,137 cash for the bonds. Using the effective interest method, the amount of recorded interest expense for the first semiannual interest period is:
A. $3,500.00
B. $7,000.00
C. $3,286.95
D. $6,573.90
E. $1,750.00