1. On October 1, 2014, Southpark Inc. issued, at 101 plus accrued interest, 800 of its 10 percent, $1,000 bonds. The bonds are dated July 1, 2014, and mature on July 1, 2021. Interest is payable semiannually on January 1 and July 1. At the time of issuance, Southpark would receive cash of
2. Moreland Corporation issued $200,000 of 10-year bonds on January 1. The bonds pay interest on January 1 and July 1 and have a stated rate of 10 percent. If the market rate of interest at the time the bonds are sold is 12 percent, what will be the issuance price of the bonds?
3. On January 1, 2014, Yearly Corporation issued $500,000 of 10 percent, 10-year bonds at 88.5. Interest is payable on December 31. If the market rate of interest was 12 percent at the time the bonds were issued, how much cash was paid for interest in 2014?
4. On January 1, 2014, Gustavo Hospital issued a $250,000, 10 percent, 5-year bond for $231,601. Interest is payable on June 30 and December 31. Gustavo uses the effective-interest method to amortize all premiums and discounts. Assuming an effective interest rate of 12 percent, how much interest expense should be recorded on June 30, 2014?
5. A $50,000 bond with a carrying value of $52,000 was called at 103 and retired. In recording the retirement, the issuing company should record the answer is a $500 gain.