Exam 14: Financing Liabilities: Bonds and Long-Term Notes Payable

The carrying value of a bond issue is the face value of the bonds plus the unamortized discount.

Exhibit 14-13 Yoho Corp. issued $500,000 of its ten-year 6% bonds at 104. Each $1,000 bond carries ten warrants. Each warrant allows the holder to purchase one share of $10 par common stock for $50. Following the sale, relevant market values were: -Refer to Exhibit 14-13. The entry to record the sale of the bonds would include a

Exhibit 14-1 A $300,000, ten-year, 8% bond issue was sold to yield 9% interest payable annually. Actuarial information for 10 periods is as follows: -Refer to Exhibit 14-1. At date of issuance cash received would be

Exhibit 14-10 Hawk issued $500,000 of its ten-year 5% bonds for $463,197 on October 1, 2016 so as to yield an effective rate of 6%. Interest is paid each October 1 and April 1 -Refer to Exhibit 14-9. Assuming Hawk uses the effective interest method and reversing entries, the entry to record the payment of interest on April 1, 2017,would include

A company looking to issue debt instead of equity may want to consider debt due to favorable tax benefits.

Which of the following is true for accounting for a troubled debt restructuring by a modification of terms by the debtor?

Stock warrants allow bond holders to exchange bonds for common equity shares.

The bond interest expense reflected on the income statement should reflect an amount based on the

On January 1, 2014, New Country issued $200,000 of ten-year 8% bonds at 98. These bonds were callable at 102 at any time after three years. Straight-line amortization was used. On January 1, 2018, a new bond issue was sold and the old bonds were called. What was the loss on bond retirement?

On the maturity date after the last interest payment is recorded, any premium or discount on bonds payable is always fully amortized.

On July 1, 2016, Rio Corporation issued bonds with a face value of $100,000 and 12% interest payable semiannually. The bonds mature on June 30, 2021. The market rate of interest at the time of issuance was 14%, so the bonds were issued at a discount of $7,054. Using the effective interest method, the amount of discount that should be amortized by Rio on December 31, 2016, is

Bond interest expense is the interest cash payment minus the amount of bond premium amortization.

On January 1, 2016, Medley Corporation sold $200,000 of its 14%, five-year bonds dated January 1, 2016, for $206,000 total cash. The bonds sold at

On January 1, 2016, the Q-Ball Company issued $200,000 bonds with an 8% stated interest rate. Each $1,000 bonds pay interest on June 30 and December 31. The bonds mature on December 31, 2025. Required: a. Assume the bonds were sold for $175,075.58 to yield 10%. Prepare a bond amortization schedule for the first year of the bond life using the effective interest method. Round all calculations to the nearest dollar. b. Prepare the journal entry for paying the interest on December 31, 2016. c. Why did these bonds originally sell at a discount?

What type of account is Premium on Bonds Payable?

Exhibit 14-5 Joseph Company had underwriters prepare a bond issue for $100,000 9%, ten-year bonds dated January 1, 2014 The bonds were issued on March 1, 2014 at 102 plus accrued interest on. Expenses connected with the issue totaled $5,000 and were deducted in arriving at the net proceeds. Joseph amortizes premiums and discounts using the straight-line method. -Refer to Exhibit 14-5. The entry to record the issue would include a debit to Cash for

When stock warrants are attached to bonds, they generally result in greater proceeds from the bond issue

Exhibit 14-3 A $700,000, ten-year, 9% bond issue was sold to yield 10% interest payable annually. Actuarial information for 10 periods is as follows: -Refer to Exhibit 14-3. The discount or premium at the date of bond issuance would be

Which of the following is true for accounting for a troubled debt restructuring by a modification of terms by the creditor?

For bonds, yield rate is another term for nominal rate