# 31 the amazing widget company issues 500 000 of 6 10 year bonds at 103 on march 31 2 4306654

31) The Amazing Widget Company issues \$500,000 of 6%, 10-year bonds at 103 on March 31, 2014. The bonds pay interest on March 31 and September 30. Assume that the company uses the straight-line method for amortization. The journal entry to record the issuance would include a ________.

A) debit to Cash for \$500,000

B) credit to Bonds Payable for \$515,000

C) debit to Premium on Bonds Payable for \$15,000

D) debit to Cash for \$515,000

32) The Amazing Widget Company issues \$500,000 of 6%, 10-year bonds at 103 on March 31, 2014. The bond pays interest on March 31 and September 30. Assume that the company uses the straight-line method for amortization. The journal entry to record the first interest payment on September 30, 2014 is a ________.

A) debit to Cash for \$15,000

B) debit to Interest Expense for \$15,750

C) debit to Interest Expense for \$14,250

D) credit to Premium on Bonds Payable for \$750

33) The Amazing Widget Company issues \$500,000 of 6%, 10-year bonds at 103 on March 31, 2014. The bond pays interest on March 31 and September 30. Assume that the company uses the straight-line method for amortization. Calculate the net balance that will be reported for the bonds on the balance sheet on September 30, 2014.

A) \$500,000

B) \$515,000

C) \$514,250

D) \$515,250

34) Case Wines Company issues \$800,000 of 7%, 10-year bonds on March 31, 2013. The bond pays interest on March 31 and September 30. Which of the following statements is true?

A) If the market rate of interest is 8%, the bonds will issue at a premium.

B) If the market rate of interest is 8%, the bonds will issue at a discount.

C) If the market rate of interest is 8%, the bonds will issue at par.

D) If the market rate of interest is 8%, the bonds will issue above par.

35) Blandings Glassware Company issues \$1,000,000 of 8%, 10-year bonds at 98 on February 28, 2015. The bond pays interest on February 28 and August 31. On August 31, 2015, how much cash did Blandings pay out to bondholders?

A) \$41,000

B) \$40,000

C) \$80,000

D) \$39,000

36) The Amazing Widget Company issues \$500,000 of 6%, 10-year bonds at 103 on March 31, 2013. The bond pays interest on March 31 and September 30. On September 30, 2013, how much cash did the company pay out to bondholders?

A) \$14,250

B) \$30,000

C) \$15,000

D) \$7,500

37) On January 1, 2013, Davie Services issued \$20,000 of 8% bonds that mature in five years. They were issued at par. Provide the journal entry to issue bonds.

38) On January 1, 2013, Davie Services issued \$20,000 of 8% bonds that mature in five years. They were sold for a total of \$19,000. Provide the journal entry to issue bonds.

39) On January 1, 2013, Davie Services issued \$20,000 of 8% bonds that mature in five years. They were sold at a premium, for a total of \$20,750. Provide the journal entry to issue bonds.

40) On January 1, 2013, Davie Services issued \$20,000 of 8% bonds that mature in five years. They were sold at par. The bonds pay semiannual interest payments on June 30 and December 31 of each year. Provide the journal entry for the payment made on June 30, 2013.

41) On January 2, 2014, Mahoney Sales issued \$10,000 in bonds for \$9,400. They were 5-year bonds with a stated rate of 4%, and pay semiannual interest. Mahoney Sales uses the straight-line method to amortize bond discount. Provide the journal entry for the first interest payment on June 30, 2014.

42) On January 2, 2014, Mahoney Sales issued \$10,000 in bonds for \$10,900. They were 5-year bonds with a stated rate of 4%, and pay semiannual interest. Mahoney Sales uses the straight-line method to amortize bond premium. Provide the journal entry for the first interest payment to be made on June 30, 2014.