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: On January 1, 2010, the Queen Corporation issued 8% bonds with a face value of $91,000. The bonds are sold for $88,270. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 2014. Queen records straight-line amortization of the bond discount. Determine the bond interest expense for the year ended December 31, 2010.

a. $7,280
b. $7,826
c. $2,730
d. $607

2. On the first day of the fiscal year, a company issues a $900,000, 10%, five-year bond that pays semi-annual interest of $45,000, receiving cash of $884,173. Journalize the entry to record the issuance of the bonds. Each section (1,2,3,) need 3 answers. first section (1.Bonds payable, cash, interest payable, notes payable, premium on bonds payable 2-debit or credit 3-amount), second section (1. Bonds payable, interest expense, interest revenue, notes payable, discount on bonds payable 2.debit or credit and 3. amount), Third section (Bonds payable, cash, interest payable, premium on bonds payable or discount on bonds payable 2. debit or credit 3. amount)

3. If the straight-line method of amortization of bond premium or discount is used, which of the following statements is true?
a.Annual interest expense will increase over the life of the bonds with the amortization of bond discount.
b.Annual interest expense will remain the same over the life of the bonds with the amortization of bond discount.
c.Annual interest expense will increase over the life of the bonds with the amortization of bond premium.
d.Annual interest expense will decrease over the life of the bonds with the amortization of bond discount.

4.On January 1, 2011, Citrus Retail Co. issued a $500,000, 5 year, 8% installment note payable with payments of $100,000 principal plus interest due on January 1 of each year for the next 5 years.
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A. Prepare the adjusting journal entry at December 31, 2011 to accrue interest for the year.
Account:? Debit amount:$
Account:? Credit amount:$
B. Show the account and amount and where it will appear on a multi-step income statement prepared on December 31, 2011.
Account:?
Where:debit or credit?
Amount:$
C. Show the account(s) and amount(s) and where they will appear on a classified balance sheet prepared on December 31, 2011.
Current Liabilities:
Account:? Amount:$
Account:? Amount:$
Long-Term Liabilities:
Account:? Amount:$



5. A $525,000 bond issue on which there is an unamortized discount of $38,000 is redeemed for $474,000. Journalize the redemption of the bonds.
Account: Debit or credit? Amount:$
Account: Debit or Credit? Amount:$
Account: Debit or Credit? Amount:$
Account: Debit or Credit? Amount:$

6. When the market rate of interest was 11%, Munson Corporation issued $1,000,000, 12%, 8-year bonds that pay interest semiannually. The selling price of this bond issue was
a.$720,495
b.$1,000,000
c.$1,052,310
d.$1,154,387

7. If a company borrows money from a bank as an installment note, the interest portion of each annual payment will:
a. increase over the term of the note.
b. equal the interest rate on the note times the face amount.
c. remain constant over the term of the note.
d. equal the interest rate on the note times the carrying amount of the note at the beginning of the period.
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