1. On November 1, 2017, Archangel Services issued $313,000 of eight-year bonds with a stated rate of 12% at par. Interest payment occurs each April 30 and October 31. On December 31, 2017, Archangel made an adjusting entry to accrue interest at year end. What is the amount of interest expense that will be recorded on December 31, 2017 (Points: 2)

a. $37,560

b. $6,260

c. $18,780

d. $783

2. On January 1, 2017, Citywide Sales issued $25,000 in bonds for $29,800. There are eight-year bonds with a stated rate of 15% and pay semiannual interest. Citywide Sales uses the straight-line method to amortize the bond premium. On June 30, 2017, when Citywide makes the first payment to bondholders, what is the amount that will be reported as interest expense? (Points : 2)

a. $1,575

b. $1,875

c. $3,225

d. $1,225

3. On July 1, 2017, Adams Company has bonds with balances as shown below:

Bonds Payable $71,000 (cr)

Premium on Bonds Payable $3,800 (cr)

If the company retires the bonds for $74,150. What will be the effect on the income statement (Point : 2)

a. Gain on retirement of $6,950

b. Loss on retirement of $6,950

c. Gain on retirement of $650

d. Loss on retirement of $650

Answer rating: 100% (QA)

1 b 6260 Interest made accrued on Dec 31 2017 313000 12 212 6260 2 a 1575 S... View the full answer