Question 1

If the straight-line method of amortization is used, the amount of unamortized premium on bonds payable will decrease as the bonds approach maturity.

Accepted Answer

A) True 
 B)False

Question 2

A $150,000 bond with a quoted priced of 102 ¼ is sold for $153,375.

Accepted Answer

A) True 
 B)False

Question 3

The journal entry to record the issuance of bonds at a discount will include a

Accepted Answer

A)  debit to Cash for the face amount of the bonds. 
B)  debit to Cash for the face amount of the bonds plus the amount of the discount. 
C)  debit to Cash for the face amount of the bonds minus the amount of the discount. 
D)  credit to Cash for the face amount of the bonds. 
A)  debit to Cash for the face amount of the bonds. 
B)  debit to Cash for the face amount of the bonds plus the amount of the discount. 
C)  debit to Cash for the face amount of the bonds minus the amount of the discount. 
D)  credit to Cash for the face amount of the bonds.

Question 4

Bonds may be redeemed (retired) before maturity by the issuing corporation. Explain why a company would decide to retire bonds before maturity and the necessary steps to record the redemption.

Accepted Answer

A company may decide to retire bonds bef

Question 5

Morgan Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $25,440. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes?

Accepted Answer

A)  $1,527 
B)  $1,440 
C)  $1,435 
D)  It cannot be determined. 
A)  $1,527 
B)  $1,440 
C)  $1,435 
D)  It cannot be determined.

Question 6

Norlan Company does not ring up sales taxes separately on the cash register. Total receipts for October amounted to $29,400. If the sales tax rate is 5%, what amount must be remitted to the state for October's sales taxes?

Accepted Answer

A)  $1,400 
B)  $1,470 
C)  $70 
D)  It cannot be determined. 
A)  $1,400 
B)  $1,470 
C)  $70 
D)  It cannot be determined.

Question 7

The following totals for the month of April were taken from the payroll records of Metz Company.   The entry to record the payment of net payroll would include a

Accepted Answer

A)  debit to Salaries and Wages Payable for $18,165. 
B)  debit to Salaries and Wages Payable for $19,905. 
C)  debit to Salaries and Wages Payable for $18,405. 
D)  credit to Cash for $18,405. 
A)  debit to Salaries and Wages Payable for $18,165. 
B)  debit to Salaries and Wages Payable for $19,905. 
C)  debit to Salaries and Wages Payable for $18,405. 
D)  credit to Cash for $18,405.

Question 8

Total interest cost for a bond issued at a premium equals the total of the periodic interest payments minus the premium.

Accepted Answer

A) True 
 B)False

Question 9

The contractual interest rate on a bond is often referred to as the

Accepted Answer

A)  callable rate. 
B)  the maturity rate. 
C)  market rate. 
D)  stated rate. 
A)  callable rate. 
B)  the maturity rate. 
C)  market rate. 
D)  stated rate.

Question 10

The carrying value of a bond is equal to the market price on the date of sale.

Accepted Answer

A) True 
 B)False

Question 11

A corporation issues $200,000, 8%, 5-year bonds on January 1, 2014, for $208,400. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond premium, the amount of bond interest expense to be recognized in December 31, 2014's adjusting entry is

Accepted Answer

A)  $14,320. 
B)  $16,000. 
C)  $17,680. 
D)  $1,680. 
A)  $14,320. 
B)  $16,000. 
C)  $17,680. 
D)  $1,680.

Question 12

A $750,000 bond was retired at 103 when the carrying value of the bond was $777,500. The entry to record the retirement would include a

Accepted Answer

A)  gain on bond redemption of $22,500. 
B)  loss on bond redemption of $5,000. 
C)  loss on bond redemption of $22,500. 
D)  gain on bond redemption of $5,000. 
A)  gain on bond redemption of $22,500. 
B)  loss on bond redemption of $5,000. 
C)  loss on bond redemption of $22,500. 
D)  gain on bond redemption of $5,000.

Question 13

If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at

Accepted Answer

A)  a premium. 
B)  a discount. 
C)  par. 
D)  either a discount or premium. 
A)  a premium. 
B)  a discount. 
C)  par. 
D)  either a discount or premium.

Question 14

Thayer Company purchased a building on January 2 by signing a long-term $2,520,000 mortgage with monthly payments of $23,100. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a

Accepted Answer

A)  debit to the Cash account for $23,100. 
B)  credit to the Cash account for $21,000. 
C)  debit to the Interest Expense account for $21,000. 
D)  credit to the Mortgage Payable account for $23,100. 
A)  debit to the Cash account for $23,100. 
B)  credit to the Cash account for $21,000. 
C)  debit to the Interest Expense account for $21,000. 
D)  credit to the Mortgage Payable account for $23,100.

Question 15

The following totals for the month of March were taken from the payroll records of Kern Company.   The entry to record the accrual of federal unemployment tax would include a

Accepted Answer

A)  credit to Federal Unemployment Taxes Payable for $432. 
B)  debit to Federal Unemployment Taxes Expense for $432. 
C)  credit to Payroll Tax Expense for $432. 
D)  debit to Federal Unemployment Taxes Payable for $432. 
A)  credit to Federal Unemployment Taxes Payable for $432. 
B)  debit to Federal Unemployment Taxes Expense for $432. 
C)  credit to Payroll Tax Expense for $432. 
D)  debit to Federal Unemployment Taxes Payable for $432.

Question 16

On January 1, Thompson Corporation issued $3,000,000, 14%, 5-year bonds with interest payable on December 31. The bonds sold for $3,216,288. The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for

Accepted Answer

A)  $360,000. 
B)  $376,743. 
C)  $385,955. 
D)  $420,000. 
A)  $360,000. 
B)  $376,743. 
C)  $385,955. 
D)  $420,000.

Question 17

The effective-interest method produces a constant dollar amount of interest expense to be reported each interest period.

Accepted Answer

A) True 
 B)False

Question 18

A company receives $176, of which $16 is for sales tax. The journal entry to record the sale would include a

Accepted Answer

A)  debit to Sales Taxes Expense for $16. 
B)  credit to Sales Taxes Payable for $16. 
C)  debit to Sales Revenue for $176. 
D)  debit to Cash for $160. 
A)  debit to Sales Taxes Expense for $16. 
B)  credit to Sales Taxes Payable for $16. 
C)  debit to Sales Revenue for $176. 
D)  debit to Cash for $160.

Question 19

Yanik Corporation issues 4,000, 10-year, 8%, $1,000 bonds dated January 1, 2014, at 97. The journal entry to record the issuance will show a

Accepted Answer

A)  debit to Cash of $4,000,000. 
B)  debit to Discount on Bonds Payable for $120,000. 
C)  credit to Bonds Payable for $3,880,000. 
D)  credit to Cash for $3,880,000. 
A)  debit to Cash of $4,000,000. 
B)  debit to Discount on Bonds Payable for $120,000. 
C)  credit to Bonds Payable for $3,880,000. 
D)  credit to Cash for $3,880,000.

Question 20

If bonds sell at a premium, the interest expense recognized each year will be greater than the bond interest paid.

Accepted Answer

A) True 
 B)False

If the straight-line method of amortization is used, the amount of unamortized premium on bonds payable will decrease as the bonds approach maturity.

A $150,000 bond with a quoted priced of 102 ¼ is sold for $153,375.

The journal entry to record the issuance of bonds at a discount will include a

Bonds may be redeemed (retired) before maturity by the issuing corporation. Explain why a company would decide to retire bonds before maturity and the necessary steps to record the redemption.

Morgan Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $25,440. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes?

Norlan Company does not ring up sales taxes separately on the cash register. Total receipts for October amounted to $29,400. If the sales tax rate is 5%, what amount must be remitted to the state for October's sales taxes?

The following totals for the month of April were taken from the payroll records of Metz Company. The entry to record the payment of net payroll would include a

Total interest cost for a bond issued at a premium equals the total of the periodic interest payments minus the premium.

The contractual interest rate on a bond is often referred to as the

The carrying value of a bond is equal to the market price on the date of sale.

A corporation issues $200,000, 8%, 5-year bonds on January 1, 2014, for $208,400. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond premium, the amount of bond interest expense to be recognized in December 31, 2014's adjusting entry is

A $750,000 bond was retired at 103 when the carrying value of the bond was $777,500. The entry to record the retirement would include a

If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at

Thayer Company purchased a building on January 2 by signing a long-term $2,520,000 mortgage with monthly payments of $23,100. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a

The following totals for the month of March were taken from the payroll records of Kern Company. The entry to record the accrual of federal unemployment tax would include a

The effective-interest method produces a constant dollar amount of interest expense to be reported each interest period.

A company receives $176, of which $16 is for sales tax. The journal entry to record the sale would include a

Yanik Corporation issues 4,000, 10-year, 8%, $1,000 bonds dated January 1, 2014, at 97. The journal entry to record the issuance will show a

If bonds sell at a premium, the interest expense recognized each year will be greater than the bond interest paid.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Time Value of Money

Filters

Exam 10: Reporting and Analyzing Liabilities

If the straight-line method of amortization is used, the amount of unamortized premium on bonds payable will decrease as the bonds approach maturity.

A $150,000 bond with a quoted priced of 102 ¼ is sold for $153,375.

The journal entry to record the issuance of bonds at a discount will include a

Bonds may be redeemed (retired) before maturity by the issuing corporation. Explain why a company would decide to retire bonds before maturity and the necessary steps to record the redemption.

Morgan Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $25,440. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes?

Norlan Company does not ring up sales taxes separately on the cash register. Total receipts for October amounted to $29,400. If the sales tax rate is 5%, what amount must be remitted to the state for October's sales taxes?

The following totals for the month of April were taken from the payroll records of Metz Company. The entry to record the payment of net payroll would include a

Total interest cost for a bond issued at a premium equals the total of the periodic interest payments minus the premium.

The contractual interest rate on a bond is often referred to as the

The carrying value of a bond is equal to the market price on the date of sale.

A corporation issues $200,000, 8%, 5-year bonds on January 1, 2014, for $208,400. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond premium, the amount of bond interest expense to be recognized in December 31, 2014's adjusting entry is

A $750,000 bond was retired at 103 when the carrying value of the bond was $777,500. The entry to record the retirement would include a

If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at

Thayer Company purchased a building on January 2 by signing a long-term $2,520,000 mortgage with monthly payments of $23,100. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a

The following totals for the month of March were taken from the payroll records of Kern Company. The entry to record the accrual of federal unemployment tax would include a

The effective-interest method produces a constant dollar amount of interest expense to be reported each interest period.

A company receives $176, of which $16 is for sales tax. The journal entry to record the sale would include a

Yanik Corporation issues 4,000, 10-year, 8%, $1,000 bonds dated January 1, 2014, at 97. The journal entry to record the issuance will show a

If bonds sell at a premium, the interest expense recognized each year will be greater than the bond interest paid.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Time Value of Money

Filters