10. A company issued 8%, 15-year bonds with a par value of $550,000 that pay...
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10. A company issued 8%, 15-year bonds with a par value of $550,000 that pay interest semiannually. The market rate on the date of issuance was 8%. The journal entry to record each semiannual interest payment is: Multiple Choice Debit Bond Interest Expense $22,000; credit Cash $22,000. Debit Bond Interest Expense $44,000; credit Cash $44,000. Debit Bond Interest Payable $22,000; credit Cash $22,000. Debit Bond Interest Expense $550,000; credit Cash $550,000. No entry is needed, since no interest is paid until the bond is due.
11. A bondholder that owns a $1,000, 10%, 10-year bond has:
Multiple Choice
Ownership rights in the issuing company.
The right to receive $10 semiannually until maturity.
The right to receive $1,000 at maturity.
12. A company issued 10-year, 7% bonds with a par value of $100,000. The company received $96,526 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is:
Multiple Choice
$3,326.00.
$3,500.00.
$3,673.70.
$7,000.00.
$7,347.40.
The right to receive $10,000 at maturity.
The right to receive dividends of $1,000 per year.
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