91.Franklin Corporation issues $50,000, 10%, 5-year bonds on January 1, for $52,100. Interest is paid semiannually onJanuary 1 and July 1. If Franklin uses the straight-line method of amortization of bond premium, the amount of bondinterest expense to be recognized on July 1 is
a. $10,290
b. $2,710
c. $2,500
d. $2,290
92.If bonds are issued at a premium, the stated interest rate is
a.higher than the market rate of interest
b.lower than the market rate of interest
c.too low to attract investors
d.adjusted to a higher rate of interest
93.The Freeman Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1 at 96. The journal entry torecord the issuance will show a
a.debit to Cash of $2,000,000
b.credit to Discount on Bonds Payable for $80,000
c.credit to Bonds Payable for $1,920,000
d.debit to Cash for $1,920,000
94.The Glenn Corporation issues 1,000, 10-year, 8%, $2,000 bonds dated January 1 at 96. The journal entry to recordthe issuance will show a
a.debit to Discount on Bonds Payable for $80,000
b.debit to Cash of $2,000,000
c.credit to Bonds Payable for $1,920,000
d.credit to Cash for $1,920,000
95.The Hayden Corporation issues 1,000, 10-year, 8%, $2,000 bonds dated January 1 at 92. The journal entry to recordthe issuance will show a
a.credit to Discount on Bonds Payable for $160,000
b.debit to Cash of $2,000,000
c.credit to Bonds Payable for $2,000,000
d.credit to Cash for $1,840,000
96.Bonds with a face amount $1,000,000 are sold at 106. The journal entry to record the issuance is
a. Cash
|
1,000,000
|
|
Premium on Bonds PayableBonds Payable
|
60,000
|
1,060,000
|
b. Cash
Premium on Bonds Payable
|
1,060,000
|
60,000
|
Bonds Payable
|
|
1,000,000
|
c. Cash
Discount on Bonds Payable
|
1,060,000
|
60,000
|
Bonds Payable
|
|
1,000,000
|
d. Cash
Bonds Payable
|
1,060,000
|
1,060,000
|
97.Bonds with a face amount $1,000,000 are sold at 98. The entry to record the issuance is
a. Cash
Premium on Bonds Payable
|
1,000,000
|
20,000
|
Bonds Payable
|
|
980,000
|
b. Cash
|
980,000
|
|
Premium on Bonds Payable
|
20,000
|
|
Bonds Payable
|
|
1,000,000
|
c. Cash
|
980,000
|
|
Discount on Bonds PayableBonds Payable
|
20,000
|
1,000,000
|
d. Cash
Bonds Payable
|
980,000
|
980,000
|
98.If bonds payable are
notcallable, the issuing corporation
a.can exchange them for common stock
b.can repurchase them in the open market
c.must get special permission from the SEC to repurchase them
d.is more likely to repurchase them if the interest rates increase
99.When callable bonds are redeemed below carrying value
a.gain on redemption of bonds is credited
b.loss on redemption of bonds is debited
c.retained earnings is credited
d.retained earnings is debited
100.Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $10,000. If theissuing corporation redeems the bonds at 97.5, what is the amount of gain or loss on redemption?
a. $10,000 loss
b. $25,000 loss
c. $25,000 gain
d. $15,000 gain