Problem C-1-Multiple Choice (20 points) Circle the one best answer. 1. The amortization of premium on bonds payable a. will increase bond interest expense. b. should take place over a period not to exceed 40 years. c. will decrease bond interest expense. d. will increase bond interest revenue. A corporation issued $900,000 of 6%, 5-year bonds on January 1, at 102, Interest is paid semiannually on January 1 and July 1. If the corporation uses the straight-line method of amortization, the amount of bond a. $54,000. 2, interest expense to be recognized on July 1 ls b. $27,000 c. $28,800. d. $25,200. 3. A $900,000, 5%, 20-year bond was issued at 99. The proceeds received from the bond issuance are a. $900,000. b. $891,000. c. $918,000. d. $882,000. A prior period adjustment a. appears on the income statement as an extraordinary item. b. is a correction of an error, made directly to retained earnings. c. is made when preferred dividends in arrears are finally paid d. is made to reverse an adjusting entry. 4. Dixon Company purchases 1,000 shares of its common stock for $20,000. The $20,000 amount should be debited to a. an asset account b. Treasury Stock. c. Common Stock. 5. d. Retained Earnings. 6. The X Company has the following stock outstanding: S600.000 $800,000 7% Preferred stock, $100 par value, cumulative Common stock, $50 par value Preferred stock dividends are in arrears for 2013 and 2014. If the company declares and pays $150,000 in dividends in 2015, the amount received by the preferred stockholders would be a. $84,000 b. $42,000 c. $126,000 d. $150,000