3.Excelsior Corp. sold $1,500,000 of five-year, 12% bonds on August 1, 2010. The effective interest rate is 10% and the interest payment dates are July 31st and January 31st of each year. Excelsior has a December 31st year end and the company uses the effective interest rate method to amortize the bond discount/premium. On July 31, 2015, the maturity date, the value of Cash in the journal entry of Excelsior Corp. would be:
None of the other alternatives are correct
$ 920,850
$ 694,953
$ 1,615,803
$ 1,500,000
4.Which method gives higher interest expense in the first year when the bonds are issued at a premium?
None of the other alternatives are correct
declining balance method of accounting for interest expense on bonds
straight-line method of accounting for interest expense on bonds
All the three statements about bonds are correct
effective interest method of accounting for interest expense on bonds
7.The allowance method for uncollectible accounts receivable is similar to the allowance method for estimated warranty costs because
Estimates of future events are made and the cost to the business is charged to income in the period of sale
None of the other alternatives are correct
The expense is debited directly to Retained Earnings and does not appear on the income statement
All the three statements about allowances are correct
Both the Allowance for Uncollectible Accounts and the Allowance for Warranties are liability accounts
8.On January 1, 2015, Kramer International Inc. issued $400,000, 9%, 5-year bonds for $384,556. The bonds were sold to yield an effective interest rate of 10%. Interest is paid semi-annually on June 30 and December 31. The company uses the effective-interest method of amortization. How much interest expense will be accounted for in 2015?
$19,227.80
$38,517.00
None of the other alternatives are correct
$19,289.20
$38,455.60
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