Question 1

Installment notes payable that require payments of accrued interest to date plus equal amounts of principal

Accepted Answer

A) Result in periodic payments that gradually decrease in amount. 
B) Result in equal periodic payments 
C) Result in periodic payments that gradually increase in amount 
D) Result in increasing amounts of interest each period 
E) Are not legal 
A) Result in periodic payments that gradually decrease in amount. 
B) Result in equal periodic payments 
C) Result in periodic payments that gradually increase in amount 
D) Result in increasing amounts of interest each period 
E) Are not legal

Question 2

A bond issue with a $100,000 par value,an 8% annual contract rate,with interest payable semiannually and a 10-year life means that the issuer must repay $100,000 at the end of 10 years plus make 20 payments of $4,000.

Accepted Answer

A) True 
 B)False

Question 3

Any discount is added to the par value of bonds to produce the carrying value of bonds payable.

Accepted Answer

A) True 
 B)False

Question 4

On March 31,2019,when the market rate was 7%,Haier Inc issued $950,000,7%,10-year bonds.The bonds were dated December 31,2018 and were issued at par plus accrued interest.Interest is payable semiannually on June 30 and December 31.Prepare the journal entries to record the issuance of the bonds and the first semiannual interest payment.

Accepted Answer

The answer of On March 31,2019,when the market rate was...

Question 5

When convertible bonds are converted to common shares,the carrying value of the bonds is transferred to contributed capital.

Accepted Answer

A) True 
 B)False

Question 6

Explain what a bond is and discuss the different types of bonds.

Accepted Answer

A bond is a written promise to pay an am

Question 7

Shopify Corporation has $200,000 in bonds outstanding.The unamortized premium on these bonds is $3,000.If the corporation redeems these bonds at 99,what is the gain (loss)on retirement?

Accepted Answer

A) $1,000 
B) $(1,000) 
C) $(2,700) 
D) $2,700 
E) $5,000 
A) $1,000 
B) $(1,000) 
C) $(2,700) 
D) $2,700 
E) $5,000

Question 8

Put the appropriate graph letter or letters in the space associated with each statement below: ____ (1)The bond was issued at a discount.____ (2)The bond was issued at a premium.
A)
B)

Accepted Answer

(1)A (2)B

Question 9

If Cee Ltd borrows $50,000 by issuing a 6%,three-year note,the total interest to be paid will be $9,000.

Accepted Answer

A) True 
 B)False

Question 10

Wolfram Company has the following debt to equity ratios for each of the following years:
   Comment on what the ratios tell you about Wolfram's financial situation.Comment on how you think lenders might react to the ratios.

Accepted Answer

The debt to equity ratio tells you that

Question 11

The effective interest rate method

Accepted Answer

A) Allocates bond interest expense using a changing interest rate 
B) Allocates interest expense using the contract rate 
C) Allocates a decreasing amount of interest expense over the life of a bond originally sold at a discount 
D) Allocates bond interest expense using a constant interest rate 
E) Allocates interest expense based on a constant carrying value 
A) Allocates bond interest expense using a changing interest rate 
B) Allocates interest expense using the contract rate 
C) Allocates a decreasing amount of interest expense over the life of a bond originally sold at a discount 
D) Allocates bond interest expense using a constant interest rate 
E) Allocates interest expense based on a constant carrying value

Question 12

You graphed periodic interest expense and cash interest paid over the life of a bond.You noticed that the periodic interest expense line is increasing and greater than the cash interest paid line.Identify the statement below that is best described by the graph you drew.

Accepted Answer

A) The bond was issued at a premium 
B) Discounted interest amortization is used 
C) The bond was issued at a discount 
D) The bond premium or discount is not being amortized 
E) The bond was issued at par 
A) The bond was issued at a premium 
B) Discounted interest amortization is used 
C) The bond was issued at a discount 
D) The bond premium or discount is not being amortized 
E) The bond was issued at par

Question 13

Explain the conditions required for a lease to qualify as a low-cost lease or operating lease.

Accepted Answer

On unique occasions a lessee can recogni

Question 14

IFRS recommendations require that corporations use the effective interest method for amortization of bond discounts.

Accepted Answer

A) True 
 B)False

Question 15

Lesney Inc issued $900,000,7%,10-year bonds on December 31,2021,for $731,760 cash.The current market rate is 10%.The corporation uses the effective interest amortization method.Interest is payable semiannually on June 30 and December 31.Prepare an amortization schedule for the first five payment periods using the format shown below:
 $\begin{array}{|r|r|r|r|r|r|}
\hline \text { Period } & \text { Cash Interest } & \text { Period Interest } &\text { Discount } & \text { Unamortized } & \text { Carrying } \
\text { Ending } & \text { paid } & \text { Expense } &\text { Amortized } & \text { Discount } & \text { Value } \\hline 12 / 31 / 2021 \
\hline 6 / 30 / 2022 \
\hline 12 / 31 / 2022 \
\hline 6 / 30 / 2023 \\hline 12 / 31 / 2023 \
\hline 6 / 30 / 2024 \
\hline 12 / 31 / 2024 \
\hline 6 / 30 / 2025 \
\hline 12 / 31 / 2025 \
\hline
\end{array}$

Accepted Answer

The answer of Lesney Inc issued $900,000,7%,10-year bonds on December...

Question 16

On December 31,2019,Repsol Corp issued $1,400,000,9%,5-year bonds.Interest is payable semiannually on June 30 and December 31.The corporation uses the effective interest method of amortizing bond premium or discount.Using a financial calculator or excel,estimate the issue price of the bonds under the following three assumptions: (1)Market Rate is 9% (2)Market Rate is 8% (3)Market Rate is 7%

Accepted Answer

The answer of On December 31,2019,Repsol Corp issued $1,400,000,9%,5-year bonds.Interest...

Question 17

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.
 
-Prepare the journal entry on Blue Hat Company's books at issue date

Accepted Answer

The answer of On January 1, 2021, Blue Hat Company...

Question 18

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 Blue Hat Company has a year end of March 31.Make the entry to accrue interest at Mar 31,2020

Accepted Answer

The answer of On January 1, 2021, Blue Hat Company...

Question 19

Two common ways for the issuing corporation to retire bonds before maturity are to (1)exercise a convertible option or (2)purchase them on the open market.

Accepted Answer

A) True 
 B)False

Question 20

Bonds must be issued on an interest payment date.

Accepted Answer

A) True 
 B)False

Installment notes payable that require payments of accrued interest to date plus equal amounts of principal

A bond issue with a $100,000 par value,an 8% annual contract rate,with interest payable semiannually and a 10-year life means that the issuer must repay $100,000 at the end of 10 years plus make 20 payments of $4,000.

Any discount is added to the par value of bonds to produce the carrying value of bonds payable.

When convertible bonds are converted to common shares,the carrying value of the bonds is transferred to contributed capital.

Explain what a bond is and discuss the different types of bonds.

Shopify Corporation has $200,000 in bonds outstanding.The unamortized premium on these bonds is $3,000.If the corporation redeems these bonds at 99,what is the gain (loss)on retirement?

Put the appropriate graph letter or letters in the space associated with each statement below: (1)The bond was issued at a discount. (2)The bond was issued at a premium. A) B)

If Cee Ltd borrows $50,000 by issuing a 6%,three-year note,the total interest to be paid will be $9,000.

Wolfram Company has the following debt to equity ratios for each of the following years: Comment on what the ratios tell you about Wolfram's financial situation.Comment on how you think lenders might react to the ratios.

The effective interest rate method

You graphed periodic interest expense and cash interest paid over the life of a bond.You noticed that the periodic interest expense line is increasing and greater than the cash interest paid line.Identify the statement below that is best described by the graph you drew.

Explain the conditions required for a lease to qualify as a low-cost lease or operating lease.

IFRS recommendations require that corporations use the effective interest method for amortization of bond discounts.

Two common ways for the issuing corporation to retire bonds before maturity are to (1)exercise a convertible option or (2)purchase them on the open market.

Bonds must be issued on an interest payment date.

Property, plant and Equipment Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Income, earnings Per Share, and Retained Earnings

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters

Exam 6: Bonds and Long-Term Notes Payable

Installment notes payable that require payments of accrued interest to date plus equal amounts of principal

A bond issue with a $100,000 par value,an 8% annual contract rate,with interest payable semiannually and a 10-year life means that the issuer must repay $100,000 at the end of 10 years plus make 20 payments of $4,000.

Any discount is added to the par value of bonds to produce the carrying value of bonds payable.

When convertible bonds are converted to common shares,the carrying value of the bonds is transferred to contributed capital.

Explain what a bond is and discuss the different types of bonds.

Shopify Corporation has $200,000 in bonds outstanding.The unamortized premium on these bonds is $3,000.If the corporation redeems these bonds at 99,what is the gain (loss)on retirement?

Put the appropriate graph letter or letters in the space associated with each statement below: ____ (1)The bond was issued at a discount.____ (2)The bond was issued at a premium. A) B)

If Cee Ltd borrows $50,000 by issuing a 6%,three-year note,the total interest to be paid will be $9,000.

Wolfram Company has the following debt to equity ratios for each of the following years: Comment on what the ratios tell you about Wolfram's financial situation.Comment on how you think lenders might react to the ratios.

The effective interest rate method

You graphed periodic interest expense and cash interest paid over the life of a bond.You noticed that the periodic interest expense line is increasing and greater than the cash interest paid line.Identify the statement below that is best described by the graph you drew.

Explain the conditions required for a lease to qualify as a low-cost lease or operating lease.

IFRS recommendations require that corporations use the effective interest method for amortization of bond discounts.

Two common ways for the issuing corporation to retire bonds before maturity are to (1)exercise a convertible option or (2)purchase them on the open market.

Bonds must be issued on an interest payment date.

Property, plant and Equipment Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Income, earnings Per Share, and Retained Earnings

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters

Put the appropriate graph letter or letters in the space associated with each statement below: (1)The bond was issued at a discount. (2)The bond was issued at a premium. A) B)