1 Which of the following is used to determine the #727

1. Which of the following is used to determine the amount of interest a company issuing a bond
must pay the investor?a. Stated Interest Rateb. Face Valuec. Market Interest Rated. Both a and
b2. On January 1, Doroh Enterprises issues $200,000, 10-year, 6% bonds at par value with
interest payable on July 1 and January 1. The entry on July 1 to record payment of bond
interest will include a:a. debit to Interest Expense, $6,000.b. debit to Interest Expense,
$12,000.c. credit to Cash, $12,000.d. credit to Interest Payable, $6,000.3. Camp Corporation
issues bonds with a stated interest rate of 8%. The current market rate of interest is 10%. These
bonds likely sold at:a. par value.b. a discount.c. a premium.d. none of the above.4. If bonds with
a face value of $400,000 are issued at 102, how much cash is received by the borrowing
company?a. $402,000b. $404,000c. $408,000d. $392,0005. If bonds with a face value of
$100,000 are sold for $96,000, how must this $4,000 difference be accounted for?a. It must be
depreciatedb. It must be amortized over the life of the bondc. It must be recorded as a loss on
issuanced. It must be ignored6. What does it mean when bonds are issued at a premium?a.
The market interest rate exceeds the stated interest rateb. The market interest rate and the
stated rate are the samec. The stated interest rate exceeds the market interest rated. None of
the above7. Freeman Incorporated issues 5-year bonds with a face value of $300,000 for
$288,000. Using the straight-line method of amortization, how much of this discount will be
amortized each payment if interest is paid semiannually?a. $2,400b. $1,200c. $1,000d. $6008.
If bonds with a face value of $200,000 are issued at 102, what amount is recorded in the Bonds
Payable account?a. $204,000b. $202,000c. $196,000d. $200,0009. The carrying value of a
bond issued at a discount is equal to:a. the face value less the unamortized discount.b. the face
value plus the unamortized discount.c. the face value.d. None of the above.View Solution:
1 Which of the following is used to determine the

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