Question

On January 1, Elias Corporation issued 6% bonds with a face value of $94,000. The bonds are sold for $91,180. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is a. $470 b. $2,820 c. $5,640 d. $5,922

Bonds Payable has a balance of $946,000 and Premium on Bonds Payable has a balance of $10,406. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption?

a.$17,974 loss

b.$10,406 gain

c.$10,406 loss

d.$974,380 gain

On the first day of the fiscal year, a company issues an $689,000, 9%, five-year bond that pays semiannual interest of $31,005 ($689,000 x 9% x 1/2), receiving cash of $647,700. Journalize the entry to record the first interest payment and the amortization of the related bond discount using the straight-line method.

If an amount box does not require an entry, leave it blank.

Answer 1

1. Calculation of bond interest expense:

​​Interest expense=$94000*6%=$5640

Amortization expense=($94000-$91180)/10=$282

Total interest expense=$5922

Correct option is D.

* First question has been answered as per Chegg's policy.