Answered: 9. Bonds usually sell at a premium a.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

29.

Bonds usually sell at a premium

a.	when the market rate of interest is greater than the stated rate of interest on the bonds.
b.	when the stated rate of interest on the bonds is greater than the market rate of interest.
c.	when the price of the bonds is greater than their maturity value.
d.	in none of the above cases.

30.

On October 1, 2002, Westridge Inc. issued, at 101 plus accrued interest, 800 of its 10 percent, $1,000 bonds. The bonds are dated July 1, 2002, and mature on July 1, 2012. Interest is payable semiannually on January 1 and July 1. At the time of issuance, Westridge would receive cash of

a.	$800,000.
b.	$808,000.
c.	$820,000.
d.	$828,000.

31.

On January 1, 2002, Matlock Inc. issued its 10 percent bonds in the face amount of $1,500,000. They mature on January 1, 2012. The bonds were issued for $1,329,000 to yield 12 percent, resulting in bond discount of $171,000. Matlock uses the effective-interest method of amortizing bond discount. Interest is payable July 1 and January 1. For the six months ended June 30, 2002, Matlock should report bond interest expense of