78.On January 1, 2013, KMR Co. issued bonds with a face value of $100,000, a term of ten years, and a stated interest rate of 6%. The bonds were issued at 105, and interest is payable each December 31. KMR uses the straight-line method to amortize the bond discount. The carrying value of the bonds that would be reported on the December 31, 2016 balance sheet is:
A. $102,000.
B. $103,000.
C. $102,500.
D. $100,000.
79.Jansen Company issued bonds with $150,000 face value on January 1, 2013. The bonds were issued at 102 and carried a 5-year term to maturity. They had a 9% stated rate of interest that was payable in cash on December 31st of each year. Jansen uses the straight-line method of amortization. Based on this information alone, the recognition of interest expense on December 31, 2013 would act to:
A. Decrease both assets and equity by $13,500.
B. Decrease equity by $12,900, decrease liabilities by $600, and decrease assets by $13,500.
C. Decrease both assets and equity by $12,900.
D. Increase liabilities by $600, decrease assets by $12,900, and decrease equity by $13,500.
80.A discount or premium on bonds payable can be defined by which of the following statements?
A. The difference between the market price of the bond on the issue date and the face value of the bond.
B. The difference between the call price of the bond and the face value of the bond.
C. The market rate of interest on the date of the bond issue.
D. The difference between the interest rate and the market price of the bond.
Vantage Company issued bonds with a $500,000 face value and a 6% stated rate of interest on January 1, 2013. The bonds carried a 5-year term and sold for 95. Vantage uses the straight-line method of amortization. Interest is payable on December 31 of each year.
81.The carrying value of the bond liability on the December 31, 2015 balance sheet was:
A. $490,000.
B. $485,000.
C. $495,000.
D. $482,000.
82.The amount of interest expense appearing on the December 31, 2015 income statement would be:
A. $30,000.
B. $35,000.
C. $28,500.
D. $25,000.
83.The amount of cash flow from operating activities on the December 31, 2015 statement of cash flows would be:
A. $30,000.
B. $35,000.
C. $28,500.
D. $25,000.
84.If Winfield issued the bonds for 96,
A. the market rate of interest was equal to the stated rate of interest.
B. the market rate of interest was higher than the stated interest rate.
C. themarket rate of interest was lower than the stated rate of interest.
D. the bonds carried a variable or floating rate that changed in response to market conditions.
85.Assuming Winfield issued the bonds for 105, the carrying value of the bonds on the 12/31/13 balance sheet would be:
A. $603,000.
B. $627,000.
C. $633,000.
D. $664,800.
86.Assuming Winfield issued the bond for 105, the amount of interest expense appearing on the 2013 income statement would be:
A. $75,000.
B. $72,000.
C. $69,000.
D. $30,000.
87.Straight-line interest amortization of a premium or discount on bonds payable:
A. assigns variable amounts of interest over the term of the liability.
B. uses compound interest principles.
C. assigns the same amount of interest to each interest period over the term of the liability.
D. is required for U.S. income tax reporting.