Reference no: EM13575194

1) On January 1, 2013, Legion Company sold $230,000 of 4% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $144,011, priced to yield 10%. Legion records interest at the effective rate. Legion should report bond interest expense for the six months ended June 30, 2013, in the amount of (Round your answer to the nearest dollar amount):

A) $4,600

B) $7,201

C) $18.400

D)  $11,500

2) On January 1, 2013, Solo Inc. issued 2,000 of its 7%, $1,000 bonds at 98. Interest is payable semiannually on January 1 and July 1. The bonds mature on January 1, 2023. Solo paid $60,000 in bond issue costs. Solo uses straight-line amortization. The amount of interest expense for the year is:

A) $154,000

B) $140,000

C) $144,000

D) $150,000

3) On January 31, 2013, B Corp. issued $850,000 face value, 11% bonds for $850,000 cash. The bonds are dated December 31, 2012, and mature on December 31, 2022. Interest will be paid semiannually on June 30 and December 31. What amount of accrued interest payable should B report in its September 30, 2013, balance sheet? (Do not round your intermediate calculation.)

A) $23,375

B) $46,750.

C) $70,125.                    

D) $62,333

4) Auerbach Inc. issued 8% bonds on October 1, 2013. The bonds have a maturity date of September 30, 2023 and a face value of $475 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2014. The effective interest rate established by the market was 10%. How much cash interest does Auerbach pay on March 31, 2014? (Round your answer in millions to two decimal places.)

A) $19.00 million

B) $38.00 million

C) $47.50 million

D) $23.75 million

5) Cramer Company sold 5-year, 6% bonds on October 1, 2013. The face amount of the bonds was $180,000, while the issue price was $190,000. Interest is payable on April 1 of each year. The fiscal year of Cramer Company ends on December 31. How much interest expense will Cramer Company report in its December 31, 2013, income statement (assume straight-line amortization)? (Do not round your intermediate calculation.)

A) $2,200

B) $2,850

C) $2,700

D) $1,700

6) Nickel Inc. bought $600,000 of 3-year, 7% bonds as an investment on December 31, 2012 for $642,000. Nickel uses straight-line amortization. On May 1, 2013, $120,000 of the bonds were redeemed at 112. How much, and what type of gain or loss, most likely results from this redemption? (Do not round your intermediate calculation.)

A) $6,933 ordinary gain.

B) $6,933 ordinary loss

C) $6,933 extraordinary gain

D) $6,933 extraordinary loss

7) MSG Corporation issued $100,000 of 3-year, 6% bonds outstanding on December 31, 2012 for $106,000. MSG uses straight-line amortization. On May 1, 2013, $10,000 of the bonds were retired at 112. How much, and what type of gain or loss, most likely results from this retirement?

A) $667 ordinary loss.

B) $667 extraordinary loss.

C) $667 ordinary gain

D) $667 extraordinary gain