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DEVRY ACCT 553 Midterm Exam.pdf


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11.

(TCO D) If bonds are initially sold at a discount and the straight-line method of
amortization is used, interest expense in the earlier years will (Points: 5)
exceed what it would have been had the effective-interest method of amortization
been used.
be less than what it would have been had the effective-interest method of
amortization been used.
be the same as it would have been had the effective-interest method of amortiza-tion
been used.
be less than the stated (nominal) rate of interest.

12.

13.

(TCO D)When the interest payment dates of a bond are May 1 and November
1, and a bond issue is sold on June 1, the amount of cash received by the issuer will
be (Points: 5)
decreased by accrued interest from June 1 to November 1.
decreased by accrued interest from May 1 to June 1.
increased by accrued interest from June 1 to November 1.
increased by accrued interest from May 1 to June 1.
(TCO D) Feller Company issues $20,000,000 of ten-year, 9% bonds on March 1,
2010 at 97 plus accrued interest. The bonds are dated January 1, 2010, and pay
interest on June 30 and December 31. What is the total cash received on the issue
date? (Points: 5)
$19,400,000
$20,450,000
$19,700,000
$19,100,000

14.
(TCO D) 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. What is interest expense for 2011, using straight-line
amortization? (Points: 5)
$1,540,207
$1,560,000
$1,569,192
$1,579,793
15.
(TCO D) On January 1, Patterson Inc. issued $5,000,000, 9% bonds for
$4,695,000. The market rate of interest for these bonds is 10%. Interest is payable
annually on December 31. Patterson uses the effective-interest method of amortizing
bond discount. At the end of the first year, Patterson should report unamortized
bond discount of (Points: 5)
$274,500.