I. On January 1, 2018, Chestnut Hill Corporation issued $5,000,000, 5 year bonds with a 6% coupon rate. The bonds pay interest on June 30 and December 31 of each year. The issue price was $4,853,800.
a. Was the market interest rate on January 1, 2018 higher, lower, or the same as the coupon rate on the bonds. Explain your answer. (do not compute the market rate, only explain the theory.
b. Prepare the journal entry to issue the bonds.
Date Description Debit Credit

II. O’Brian Corporation issued $300,000, 6% coupon 15 year bonds on January 1, 2018. The bonds pay interest semiannually and the market rate at the time of issuance was 8%.
a. Calculate the issuance price of the bonds.(Show your work)
b. What is the amount of interest paid to the bondholders each period?
c. Assuming the straight line method of amortization prepare the journal entry to record the interest payment on June 30, 2018.
Date Description Debit Credit

a. What is the carrying value on June 30, 2018?
b. Assuming the effective interest method of amortization (used since the bonds were first issued) what is the amount of interest expense December 31, 2018? (this is the second interest payment)
c. What is the carrying value after the second interest payment using the effective interest method?

III. Springfield Company issues $6,000,000 face value of bonds at 95 on January 1, 2014. The bonds are dated January 1, 2013, pay interest semiannually at 8% on June 30 and December 31, and mature in 10 years. Straight-line amortization is used for discounts and premiums. On December 31, 2017, (after the interest payment) the bonds are called at 102. What gain or loss would be recognized on the called bonds on December 31, 2017?

IV. Agler Corporation's balance sheet reported the following:
Capital stock outstanding, 5,000 shares, par $30 per share $150,000
Paid-in capital in excess of par 80,000
Retained earnings 100,000
The following transactions occurred this year:
(a) Purchased 200 shares of capital stock to be held as treasury stock, paying $60 per share.
(b) Sold 150 of the shares of treasury stock at $65 per share.
(c) Sold the remaining shares of treasury stock at $50 per share.
Instructions
Prepare the journal entry for these transactions under the cost method of accounting for treasury stock.
Date Description Debit Credit

V. The stockholders' equity of Howell Company at July 31, 2017 is presented below:
Common stock, par value $20, authorized 400,000 shares;
issued and outstanding 160,000 shares $3,200,000
Paid-in capital in excess of par 160,000
Retained earnings 650,000
$4,010,000
On August 1, 2017, the board of directors of Howell declared a 10% stock dividend on common stock, to be distributed on September 15th. The market price of Howell's common stock was $70 on August 1, 2017, and $76 on September 15, 2017. What is the impact of the stock dividend to retained earnings?

I. On January 1, 2018, Chestnut Hill Corporation issued $5,000,000,...