8.On January 1, 2009, Pacific Corporation issued a 3-year, 8%, $5,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The market rate of interest on January 1, 2009 is 10%. The bond was issued at $4,750. Calculate the total interest expense over the 3-year life of the bond independent of the particular accounting method used to recognize interest expense each year.
9.On January 1, 2009, Mango Corporation issued a 3-year, 4%, $3,000 bond payable. Beginning in 2010, interest is payable every year on January 1 over the life of the bond. The market rate of interest on January 1, 2009 is 6%. What are the proceeds received by Mercer from the issue of this bond on January 1, 2009?
10.On January 1, 2009, Sheena Corporation issued a 3-year, 7%, $4,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The bonds were issued at 104¼. Calculate the issue price.
11.On January 1, 2009, Enron Corporation issued a 4-year, 7%, $9,000 bond payable. Beginning in 2010, interest is payable annually every January 1. The market rate of interest at issuance is 9%. How much are the interest payments by Enron? Why is the amount of interest expense different than the cash payments?
12.On January 1, 2009, Precision Corporation issued a 3-year, 7%, $2,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The market rate of interest on January 1, 2009 is 10%. If Precision uses the effective interest method, what is the balance sheet value of the bond payable on January 1, 2009?
13.On January 1, 2009, Edison Corporation issued a 4-year, 8%, $5,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The market rate of interest on January 1, 2009 is 10%.
A.Calculate the contracted cash interest payments by Edison as specified by this bond.
B.Will the total interest expense over the life of the bond be less than or greater than the total cash payments for interest? Explain.
14.On January 1, 2009, Lundell Corporation issued a 5-year, 4%, $2,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The bonds were issued at 105 3/4. How much cash did Lundell receive from issuing the bonds on January 1, 2009?