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Bonds with a face value of $1,000 were issued for $1,080. Which ONE of the following would be recorded in the books of the issuer of the bonds? O Discount on Bonds Payable of $1,000 Premium on Bonds Payable of $80 O Discount on Bonds Payable of $920 O Premium on Bonds Payable of $1,000 O Premium on Bonds Payable of $920 O Discount on Bonds Payable of $80

Bonds with a face value of $1,000 were issued for $1,080. Which ONE of the following would be recorded in the books of the issuer of the bonds? O Discount on Bonds Payable of $1,000 Premium on Bonds Payable of $80 O Discount on Bonds Payable of $920 O Premium on Bonds Payable of $1,000 O Premium on Bonds Payable of $920 O Discount on Bonds Payable of $80

FINANCIAL ACCOUNTING
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 18:** Bonds with a face value of $1,000 were issued for $1,080. Which ONE of the following would be recorded in the books of the issuer of the bonds? - [ ] Discount on Bonds Payable of $1,000 - [ ] Premium on Bonds Payable of $80 - [ ] Discount on Bonds Payable of $920 - [ ] Premium on Bonds Payable of $1,000 - [ ] Premium on Bonds Payable of $920 - [ ] Discount on Bonds Payable of $80 **Question 19:** On January 1, the company issued 15-year bonds with a face value of $100,000. The bonds carry a coupon rate of 8 percent, and interest is paid semi-annually. On the issue date, the market interest rate for bonds issued by companies with similar riskiness was 10 percent compounded semi-annually. The issuance price of the bonds was $84,628. How much INTEREST EXPENSE should be reported for the *first six months* when the bond issuer makes the *FIRST* interest payment on June 30 of Year 1? - [ ] $4,859.40 - [ ] $859.40 - [ ] $4,000.00 - [ ] $231.40 - [ ] $4,231.40 **Question 20:** Tarazi Company issued bonds with a coupon rate of 10% and a face amount of $200,000. The bonds mature in 15 years. The market interest rate for bonds with the same degree of riskiness is 8% compounded annually. These bonds were issued on January 1 of Year 1 at a price of $234,238. Coupon payments are made annually on December 31, so the first coupon payment was made on December 31 of Year 1. How much INTEREST EXPENSE should be reported for *Year 2*? - [ ] $18,739 - [ ] $1,362 - [ ] $20,000 - [ ] $18,638 - [ ] $1,261
Transcribed Image Text:**Question 18:** Bonds with a face value of $1,000 were issued for $1,080. Which ONE of the following would be recorded in the books of the issuer of the bonds? - [ ] Discount on Bonds Payable of $1,000 - [ ] Premium on Bonds Payable of $80 - [ ] Discount on Bonds Payable of $920 - [ ] Premium on Bonds Payable of $1,000 - [ ] Premium on Bonds Payable of $920 - [ ] Discount on Bonds Payable of $80 **Question 19:** On January 1, the company issued 15-year bonds with a face value of $100,000. The bonds carry a coupon rate of 8 percent, and interest is paid semi-annually. On the issue date, the market interest rate for bonds issued by companies with similar riskiness was 10 percent compounded semi-annually. The issuance price of the bonds was $84,628. How much INTEREST EXPENSE should be reported for the *first six months* when the bond issuer makes the *FIRST* interest payment on June 30 of Year 1? - [ ] $4,859.40 - [ ] $859.40 - [ ] $4,000.00 - [ ] $231.40 - [ ] $4,231.40 **Question 20:** Tarazi Company issued bonds with a coupon rate of 10% and a face amount of $200,000. The bonds mature in 15 years. The market interest rate for bonds with the same degree of riskiness is 8% compounded annually. These bonds were issued on January 1 of Year 1 at a price of $234,238. Coupon payments are made annually on December 31, so the first coupon payment was made on December 31 of Year 1. How much INTEREST EXPENSE should be reported for *Year 2*? - [ ] $18,739 - [ ] $1,362 - [ ] $20,000 - [ ] $18,638 - [ ] $1,261
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