Question 1

A bond issued at a premium will pay periodic cash interest in excess of the amount of interest expense recognized for accounting purposes.

Accepted Answer

A) True 
 B)False

Question 2

On January 1,2019,Jason Company issued $5 million of 10-year bonds at a 10% coupon interest rate to be paid annually.The following present value factors have been provided:  
- Calculate the issuance price if the market rate of interest was 10%.

Accepted Answer

A) $5,427,000. 
B) $4,477,000. 
C) $4,435,000. 
D) $5,000,000. 
A) $5,427,000. 
B) $4,477,000. 
C) $4,435,000. 
D) $5,000,000.

Question 3

On March 1,2019,Halbur Company,issued $500,000 of 6%,five-year bonds at par.The bonds were dated March 1,2019,and the first annual interest payment will be on February 28,2020.The accounting period ends December 31.Assume no adjusting entries have been made during the year.
Complete the journal entry grid for each of the following dates:

Accepted Answer

@#IMG-DLM& (a)Issued at par,$500,000
(b)

Question 4

For bonds issued at par,the payment of bond interest on the interest payment date reduces both the bond liability and assets,assuming that interest expense is recorded at the time of the cash payment.

Accepted Answer

A) True 
 B)False

Question 5

Assuming no adjusting journal entries have been made,the journal entry to record the cash interest payment on the due date for bonds issued at a discount results in which of the following?

Accepted Answer

A) An increase in expenses and a decrease in liabilities. 
B) An increase in expenses and an increase in liabilities. 
C) A decrease in both liabilities and stockholders' equity. 
D) A decrease in both assets and liabilities. 
A) An increase in expenses and a decrease in liabilities. 
B) An increase in expenses and an increase in liabilities. 
C) A decrease in both liabilities and stockholders' equity. 
D) A decrease in both assets and liabilities.

Question 6

The issuing company and the trustee determine the selling price of a bond.

Accepted Answer

A) True 
 B)False

Question 7

When a company purchases and retires its outstanding bonds payable for an amount less than their book value,a decrease in stockholders' equity results.

Accepted Answer

A) True 
 B)False

Question 8

When a bond payable is issued at a discount,which of the following would not occur as the bond is amortized each year?

Accepted Answer

A) Interest expense would increase. 
B) The book value of the bonds would increase. 
C) When the effective-interest method is used,the discount amortization for each year the bond approaches maturity would increase. 
D) The amount of amortization would be subtracted from net income to arrive at cash flows from operating activities. 
A) Interest expense would increase. 
B) The book value of the bonds would increase. 
C) When the effective-interest method is used,the discount amortization for each year the bond approaches maturity would increase. 
D) The amount of amortization would be subtracted from net income to arrive at cash flows from operating activities.

A bond issued at a premium will pay periodic cash interest in excess of the amount of interest expense recognized for accounting purposes.

On January 1,2019,Jason Company issued $5 million of 10-year bonds at a 10% coupon interest rate to be paid annually.The following present value factors have been provided: - Calculate the issuance price if the market rate of interest was 10%.

For bonds issued at par,the payment of bond interest on the interest payment date reduces both the bond liability and assets,assuming that interest expense is recorded at the time of the cash payment.

Assuming no adjusting journal entries have been made,the journal entry to record the cash interest payment on the due date for bonds issued at a discount results in which of the following?

The issuing company and the trustee determine the selling price of a bond.

When a company purchases and retires its outstanding bonds payable for an amount less than their book value,a decrease in stockholders' equity results.

When a bond payable is issued at a discount,which of the following would not occur as the bond is amortized each year?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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Exam 10: Reporting and Interpreting Bond Securities

A bond issued at a premium will pay periodic cash interest in excess of the amount of interest expense recognized for accounting purposes.

On January 1,2019,Jason Company issued $5 million of 10-year bonds at a 10% coupon interest rate to be paid annually.The following present value factors have been provided: - Calculate the issuance price if the market rate of interest was 10%.

For bonds issued at par,the payment of bond interest on the interest payment date reduces both the bond liability and assets,assuming that interest expense is recorded at the time of the cash payment.

Assuming no adjusting journal entries have been made,the journal entry to record the cash interest payment on the due date for bonds issued at a discount results in which of the following?

The issuing company and the trustee determine the selling price of a bond.

When a company purchases and retires its outstanding bonds payable for an amount less than their book value,a decrease in stockholders' equity results.

When a bond payable is issued at a discount,which of the following would not occur as the bond is amortized each year?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters