32.

Use the information below for the next three questions:

On January 1, 2019, Muller Company issued $200,000 of 10-year bonds for cash proceeds with a coupon rate of 12%. Interest is paid semi-annually on June 30 and December 31 of each year. The effective yield is determined to be 14%. Muller uses the effective interest method to amortize discount/premium.

PV Factor
		3%	4%	6%	7%	12%	14%
Single Sum	5 periods	0.86261	0.82193	0.74726	0.71300	0.56743	0.51940
	10 periods	0.74409	0.67556	0.55839	0.50835	0.32197	0.26974
	20 periods	0.55368	0.45639	0.31180	0.25842	0.10367	0.07276
Ordinary Annuity	5 periods	4.57971	4.45182	4.21236	4.10020	3.60478	3.43310
	10 periods	8.53020	8.11090	7.36009	7.02358	5.65022	5.21612
	20 periods	14.87747	13.59033	11.46992	10.59401	7.46944	6.62313

The journal entry made by Muller on December 31, 2019 to record the coupon payment:

Date	Cash Payment	Interest	Premium Amortization	Premium	Bonds Payable (Carrying Value)

Account Title	Debit	Credit

(1) reduces taxable income by $31,383

(2) reduces total assets by $31,292

(3) reduces total liabilities by $1,292

(4) reduces total liabilities by $1,383

(5) reduces total assets by $31,383

33.

Assuming that Muller's fiscal year end is December 31,how much interest expense should Muller recognize for the fiscal year 2020?

(1) $61,292 (2) $62,675 (3) $62,862 (4) $63,062

34.

Donovan Company issues $380,000 in bonds on 1/1/2019. The bonds mature in 5 years and make annual payments on 12/31 of each year. The coupon rate and the effective yield for the bonds are 8 percent and 6 percent, respectively. Due to the change in the interest rate environment, Donovan redeems the bonds at 112 on 1/1/2021. How much loss should Donovan recognize from the bond redemption?

Date	Cash Payment	Interest	Premium Amortization	Premium	Bonds Payable (Carrying Value)

(1) $21,346 (2) $24,346 (3) $25,284 (4) $26,425