Question1: Amstop Company issues $20,000,000 of 10-year, 9% bonds on March 1, 2007 at 97 plus accrued interest. The bonds are dated January 1, 2007, & pay interest on June 30 & December 31. Calculate the total cash received on the issue date?
[A] $19,700,000
[B] $19,100,000
[C] $19,400,000
[D] $20,450,000
Question2: The 10% bonds payable of Klein Company had a net carrying amount of $570,000 on December 31, 2006. The bonds, which had a face value of $600,000, were issued at a discount to yield 12%. The amortization of the bond discount was recorded under the effective-interest method. Interest was paid on January 1 & July 1 of each year. On July 2, 2007, several years before their maturity, Klein retired the bonds at 102. The interest payment on July 1, 2007 was made as scheduled. Determine the loss that Klein should record on the early retirement of the bonds on July 2, 2007? Ignore taxes.
[A] $33,600
[B] $42,000
[C] $12,000
[D] $37,800
Question3: On January 1, 2007, Gomez Co. issued its 10% bonds in the face amount of $3,000,000, which mature on January 1, 2017. The bonds were issued for $3,405,000 to yield 8 percent, resulting in bond premium of $405,000. Gomez uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. At December 31, 2007, Gomez’s adjusted unamortized bond premium should be
[A] $364,500
[B] $304,500
[C] $405,000
[D] $377,400
Question4: Long-term debt that matures within one year & is to be converted into stock should be reported
[A] as noncurrent.
[B] As noncurrent & accompanied with a note explaining the method to be used in its liquidation.
[C] as a current liability.
[D] in a special section between liabilities & stockholders’ equity.
Question5: On January 1, 2007, Ann Rosen loaned $45,078 to Joe Grant. A zero-interest-bearing note (face amount, $60,000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2009. The prevailing rate of interest for a loan of this type is 10 percent. The present value of $60,000 at 10% for three years is $45,078. Determine the amount of interest income should Ms. Rosen recognize in 2007?
[A] $18,000
[B] $13,524
[C] $4,508
[D] $6,000