Exam 6: Bonds and Long-Term Notes Payable

On October 1,2019,when the market rate was 5%,H&M Corp issued $200,000,5%,10-year bonds.The bonds were dated June 30,2019 and were issued at par plus accrued interest.Interest is payable semiannually on December 31 and June 30.Calculate the total cash received by H&M Corp on October 1,2019. Principal \ 200,000 Accrued Interest* 5,000 Total \ 205,000

Terms and descriptions commonly associated with bonds are below.Match the term with the description by placing the appropriate letter in the space provided next to the number in the description table. TERMS A. Bond F. Early debt retirement B. Bond Indenture G. Secured bond C. Stated rate H. Market rate D. Convertible bond T. Coupon payment E. Debenture T. Face value

Bonds that have interest coupons attached to their certificates,which the bondholders detach when they mature and present to a bank for collection,are called

Bondholders can exchange convertible bonds for a fixed number of the issuing corporation's preferred shares.

Discuss the issues in accounting for notes payable.

Interest paid on bonds is not tax-deductible.

The issue price of a bond is equal to the present value of all future cash payments to be received from the bond.

Which of the following conditions qualifies a lease as a finance lease?

Arcelor Corp issues $400,000,6%,10-year bonds.The market rate at the date of issue is 5.5%.The total amount of interest to be paid to the bondholders for the semiannual interest payments,assuming the effective interest method is used,is

Oberlo Corporation has $50,000 in bonds outstanding.The unamortized discount on these bonds is $2,500.If the corporation redeems these bonds at 97,what is the gain (loss)on retirement?

Which of the following is the debt-to-equity ratio calculation?

On January 1,2019,Rabo Corporation issued $1,400,000,7%,10-year bonds,and received $1,217,889 in cash proceeds.The market rate at the date of issuance was 9%.The bonds pay interest semiannually on June 30^th and December 31st.Rabo Corporation uses the effective interest method for amortization of bond premium or discount.Prepare the general journal entry to record interest expense and the cash payment of interest on June 30th,2019.

Chello Inc issued $200,000,6%,10-year bonds,with interest payable semiannually.The market rate on the issue date was 5.5%.Chello received $207,614 in proceeds.Which statement best describes Chello' responsibility to the bondholders?

Discuss the accounting of a lease by a lessee assuming the lease does not qualify as a low cost/operating lease.

Debentures are

A finance lease arrangement is a type of lease agreement in which the lessee receives ownership of the asset at the end of the lease,the lease duration uses up a major part of the asset's life and the value of the lease contract is close to the fair value of the leased asset.

On January 1, 2021, Blue Hat Company issues a bond with a maturity on December 31, 2021. The market rate is 7%. Coupon rate is 6%. Interest is paid each June 30 and December 31. Assume at Dec 31, year end. Blue Hat Company's accounting staff properly prepared a bond amortization schedule below. -Assume that at Dec 31,2020,the bonds are retired for cash $1,500,000 by the issuer,after interest is paid.Prepare the journal entry and make sure to record either a gain or loss on bond redemption.

In recording a finance lease,the lessee debits Lease Liability and credits Lease Payable.

Amortization of a bond discount

On January 1,2020,Korvette Ltd signs a $10,000 three-year note payable bearing 7% annual interest.The original principal and all interest is paid on December 31,2022.Interest is compounded annually.How much interest is allocated to year 2021?