Bonds

Hamilton Company issues \$10,000,000, 6%, 5-year bonds dated January 1, 2012 on January 1, 2012. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue?

2.5%

3.0%

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5.0%

6.0%

Present value of a single sum for 5 periods

.88385

.86261

.78353

.74726

Present value of a single sum for 10 periods

.78120

.74409

.61391

.55839

Present value of an annuity for 5 periods

4.64583

4.57971

4.32948

4.21236

Present value of an annuity for 10 periods

8.75206

8.53020

7.72173

7.36009

A.      10,437,618

B.      10,434,616

C.      10,000,000

D.      10,432, 988

Bangor Company issues \$5,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2012. Interest is paid on June 30 and December 31. The proceeds from the bonds are \$4,901,036. Bangor uses effective-interest amortization. What amount of interest expense will Bangor record for the June 30 payment?

A.    392,082

B.     196,041

C.     195,000

D.    200,000

On January 1, 2012, Blanco Inc. issued \$5,000,000, 9% bonds for \$4,695,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Blanco uses the effective-interest method of amortizing bond discount. At December 31, 2012, Blanco should report unamortized bond discount of

A.    274,500

B.     285,500

C.     258,050

D.    255,000

 On June 30, 2012, Rosen Co. had outstanding 8%, \$3,000,000 face amount, 15-year bonds maturing on June 30, 2022. Interest is payable on June 30 and December 31. The unamortized balances in the bond discount and deferred bond issue costs accounts on June 30, 2012 were \$105,000 and \$30,000, respectively. On June 30, 2012, Rosen acquired all of these bonds at 94 and retired them. What net carrying amount should be used in computing gain or loss on this early extinguishment of debt? A.    2,870,000 B.     2,865,000 C.     2,895,000 D.    2,970,000   On January 1, 2012, Gise loaned \$90,156 to Carter in exchange for a 3 year, zero-interest-bearing note with a face amount, \$120,000. The prevailing rate of interest for a loan of this type is 10%. The adjusting journal entry made by Carter at December 31, 2012 with regard to the note will include A.    A debt to interest expense for \$12,000 B.     A debt to interest expense for \$2,985 C.     A credit to interest payable for \$6,000 D.    A credit to discount on notes payable for \$9,016