Data Analyst/ Qa Analyst

At December 31, 2010 the following balances existed on the books of Rentro Corporation:

Bonds Payable $1,500,000

Unamortized discount on Bonds Payable 120,000

Interest Payable 37,000

Unamortized Bond Issue Costs 90,000

If the bonds are retired on January 1, 2011, at 102, what will Rentro report as a loss on redemption?

a. $150,000

b. $202,500

c. $240,000

d. $277,500

Ans:

Reacquisition Price (1500, 000.00 * 102%) = 1,530,000.00

Less: Net Carrying amount of bond redeemed

Par Value = 1,500,000.00

Unamortized discount = (120,000.00)

Unamortized Bond Issue Costs = (90,000.00) ( 1,290,000.00)

Ans: 240,000.00

4/6. Downing Company issues $5,000,000, 6%, 5-year bonds dated January 1, 2010 on January 1, 2010. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue?

2.5% 3.0% 5.0% 6.0%

Present value of a single sum for 5 periods .88385 .86261 .78353 .74726

Present value of a single sum for 10 periods .78120 .74409 .61391 .55839

Present value of an annuity for 5 periods 4.64583 4.57971 4.32948 4.21236

Present value of an annuity for 10 periods 8.75206 8.53020 7.72173 7.36009

a. $5,000,000

b. $5,216,494

c. $5,218,809

d. $5,217,308

7/9. A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2010. Interest is paid on June 30 and December 31. The proceeds from the bonds are $19,604,145. Using effective-interest amortization, how much interest expense will be recognized in 2010?

a. $780,000

b. $1,560,000

c. $1,568,498

d. $1,568,332

Answer: 19604145 * 8% = 1568331.60

10/12. On October 1, 2010 Macklin Corporation issued 5%,