3. On April 30, one year before maturity, Romo Company retired $300,000 of its 8% bonds payable at the current market price of 102 (102% of the bond face amount, or $300,000 x 1.02 = $306,000). The bond book value on April 30 is $296,100, reflecting an unamortized discount of $3,900. Bond interest is currently fully paid and recorded up to the date of retirement. What is the gain or loss on retirement of these bonds? a. $6,000 gain b. $9,900 loss c. $3,900 loss d. $3,900 gain
3. On April 30, one year before maturity, Romo Company retired $300,000 of its 8% bonds payable at the current market price of 102 (102% of the bond face amount, or $300,000 x 1.02 = $306,000). The bond book value on April 30 is $296,100, reflecting an unamortized discount of $3,900. Bond
interest is currently fully paid and recorded up to the date of retirement.
What is the gain or loss on retirement of these bonds?
a. $6,000 gain
b. $9,900 loss
c. $3,900 loss
d. $3,900 gain
4. Which of the following liability-related accounts is not a balance sheet account?
a. Gain on Bond Retirement
b. Discount on Bonds Payable
c. Mortgage Notes Payable
d. Bonds Payable
6. Bushman, Inc., issues $400,000 of 8% bonds that pay interest semiannually and mature in 8 years.
Compute the
compounded semiannually.
a. $356,648
b. $400,000
c. $381,293
d. $436,172
7. Bushman, Inc., issues $400,000 of zero coupon bonds that mature in 8 years. Compute the bond
issue price assuming that the bonds’ market rate is 8% per year compounded semiannually.
a. $400,000
b. $228,195
c. $213,564
d. $317,462
8. Cizmar Company sells a television that carries a 90-day unconditional warranty against product failure. From prior years’ experience, Cizmar estimates that 4% of units sold each period will require repair at an average cost of $150 per unit. During the current period, Cizmar sold 22,000 units and repaired 200 units. How much warranty expense must Cizmar report in its current period income statement?
a. $138,000
b. $132,000
c. $102,000
d. $ 30,000
9. Crazy Corporation issued $300,000 of 10%, 20-year bonds at 106 on January 1, 2012. Interest is payable semiannually on June 30 and December 31. Through January 1, 2017, Crazy amortized $3,000 of the bond premium. On January 1, 2017, Crazy retires the bonds at 102. What is the gain on bond retirement at January 1, 2017?
a. $ 9,000
b. $18,000
c. $12,000
d. $ 3,000
10. Schwer, Inc. issued $500,000 of 10%, 15-year bonds at 95 on July 1, 2012. Interest is payable semiannually on December 31 and June 30. Through June 30, 2017, Schwer amortized $6,000 of the bond discount. On July 1, 2017, Schwer retired the bonds at 102. Calculate the loss on bond retirement at July 1, 2017.
a. $29,000
b. $25,000
c. $ 6,000
d. $19,000
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
