On January 1,2009,Jason Company issued $5 million of 10-year bonds at a 10% stated interest rate to be paid annually.The following present value factors have been provided: \[\begin{array}{ll } \begin{array} { ll } \text { Time Period } & \text { Interest } \\ 10 & 10 \% \\ 10 & 8 \% \\ 10 & 12 \% \end{array} \begin{array} { l l } \text { PV of } \$ & \text { PV of an } \text { Annuity } \\ .386 & 6.145 \\ .463 & 6.710 \\ .322 & 5.650 \end{array} \end{array}\] Calculate the issuance price if the market rate of interest is 12%.

A) $4,427,500 B) $4,477,500 C) $4,435,000 D) $5,000,000 A) $4,427,500 B) $4,477,500 C) $4,435,000 D) $5,000,000

On January 1,2009,Jason Company issued $5 million of 10-year bonds at a 10% stated interest rate to be paid annually.The following present value factors have been provided: \[\begin{array}{lccl } \begin{array} { lccl } \text { Time Period } & \text { Interest } \\ 10 & 10 \% \\ 10 & 8 \% \\ 10 & 12 \% \end{array} \begin{array} { lcc l } \text { PV of } \$ & \text { PV of an } \text { Annuity } \\ .386 & 6.145 \\ .463 & 6.710 \\ .322 & 5.650 \end{array} \end{array}\] Calculate the issuance price if the market rate of interest was 10%.

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

Exam 10: Reporting and Interpreting Bonds

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?

(Multiple Choice)

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Question 21

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 their par value results in which of the following?

(Multiple Choice)

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Question 22

On July 1,2011,immediately after recording interest payments,Salsa,Inc.retired one fifth of its $500,000 of bonds payable for $97,500.The bonds were originally issued at par value in 2006.Which of the following statements is correct?

(Multiple Choice)

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Question 23

On January 1,2010,a corporation issued a $400,000,12% bond.The interest is payable semi-annually on June 30 and December 31.The issue price was $413,153 based on a 10% effective (market)interest rate.Assuming the effective-interest method of amortization is used,what is the book value of the bond liability on December 31,2010 (to the nearest dollar)?

(Multiple Choice)

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Question 24

The cash payment for interest on a bond payable is reported as a cash flow from financing activities on the statement of cash flows.

(True/False)

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Question 25

Which of the following statements incorrectly describes the accounting for bonds that were issued at a premium?

(Multiple Choice)

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Question 26

Which of the following statements is incorrect?

(Multiple Choice)

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Question 27

Straight-line amortization of a premium related to a bond issuance would result in which of the following?

(Multiple Choice)

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Question 28

During 2010,Patty's Pizza reported net income of $4,212 million,interest expense of $167 million and income tax expense of $1,372 million.During 2009,they reported net income of $3,568 million,interest expense of $163 million and income tax expense of $1,424 million.What was the times interest earned ratio for 2010 and 2009 respectively?

(Multiple Choice)

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Question 29

A bond will sell at its par value when the market rate of interest equals the stated rate of interest.

(True/False)

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Question 30

On July 1,2010,Garden Works,Inc.issued $300,000 of ten-year,7% bonds for $303,000.The bonds were dated July 1,2010,and semi-annual interest will be paid each December 31 and June 30.Garden Works Inc.uses the straight-line method of amortization.How much is the semi-annual interest expense?

(Multiple Choice)

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Question 31

On January 1,2009,Jason Company issued $5 million of 10-year bonds at a 10% stated interest rate to be paid annually.The following present value factors have been provided: Time Period Interest 10 10\% 10 8\% 10 12\% PV of \ PV of an Annuity .386 6.145 .463 6.710 .322 5.650 Calculate the issuance price if the market rate of interest is 12%.

(Multiple Choice)

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Question 32

On January 1,2010,Broker Corp.issued $3,000,000 par value 12%,10 year bonds which pay interest each December 31.If the market rate of interest was 14%,what was the issue price of the bonds? (The present value factor for $1 in 10 periods at 12% is .3220 and at 14% is .2697.The present value of an annuity of $1 factor for 10 periods at 12% is 5.6502 and at 14% is 5.2161.)

(Multiple Choice)

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Question 33

Which of the following bonds does not have specific assets pledged to guarantee repayment?

(Multiple Choice)

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Question 34

On January 1,2009,Jason Company issued $5 million of 10-year bonds at a 10% stated interest rate to be paid annually.The following present value factors have been provided: Time Period Interest 10 10\% 10 8\% 10 12\% PV of \ PV of an Annuity .386 6.145 .463 6.710 .322 5.650 Calculate the issuance price if the market rate of interest was 10%.

(Multiple Choice)

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Question 35

Which of the following statements regarding the effective-interest method of amortization is incorrect?

(Multiple Choice)

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Question 36

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

(True/False)

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Question 37

On November 1,2009,Davis Company issued $30,000,ten-year,7% bonds for $29,100.The bonds were dated November 1,2009,and interest is payable each November 1 and May 1.Which of the following is incorrect assuming the straight-line method of amortization is utilized?

(Multiple Choice)

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Question 38

A company has a December 31 fiscal year-end.If the interest is paid annually on December 31,the bond interest expense on the income statement is the amount of the interest cash payment when the bond initially sells at par value.

(True/False)

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Question 39

A company prepared the following journal entry: Cash Discount on bonds payable $\quad$ $\quad$ Bonds payable Which of the following statements incorrectly describes the effect of this journal entry on the financial statements?

(Multiple Choice)

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Question 40

Showing 21 - 40 of 101

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?

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 their par value results in which of the following?

On July 1,2011,immediately after recording interest payments,Salsa,Inc.retired one fifth of its $500,000 of bonds payable for $97,500.The bonds were originally issued at par value in 2006.Which of the following statements is correct?

The cash payment for interest on a bond payable is reported as a cash flow from financing activities on the statement of cash flows.

Which of the following statements incorrectly describes the accounting for bonds that were issued at a premium?

Which of the following statements is incorrect?

Straight-line amortization of a premium related to a bond issuance would result in which of the following?

A bond will sell at its par value when the market rate of interest equals the stated rate of interest.

On July 1,2010,Garden Works,Inc.issued $300,000 of ten-year,7% bonds for $303,000.The bonds were dated July 1,2010,and semi-annual interest will be paid each December 31 and June 30.Garden Works Inc.uses the straight-line method of amortization.How much is the semi-annual interest expense?

Which of the following bonds does not have specific assets pledged to guarantee repayment?

Which of the following statements regarding the effective-interest method of amortization is incorrect?

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

On November 1,2009,Davis Company issued $30,000,ten-year,7% bonds for $29,100.The bonds were dated November 1,2009,and interest is payable each November 1 and May 1.Which of the following is incorrect assuming the straight-line method of amortization is utilized?

A company has a December 31 fiscal year-end.If the interest is paid annually on December 31,the bond interest expense on the income statement is the amount of the interest cash payment when the bond initially sells at par value.

A company prepared the following journal entry: Cash Discount on bonds payable $\quad$ $\quad$ Bonds payable Which of the following statements incorrectly describes the effect of this journal entry on the financial statements?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Balance Sheet

Operating Decisions and the Income Statement

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; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

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Exam 10: Reporting and Interpreting Bonds

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?

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 their par value results in which of the following?

On July 1,2011,immediately after recording interest payments,Salsa,Inc.retired one fifth of its $500,000 of bonds payable for $97,500.The bonds were originally issued at par value in 2006.Which of the following statements is correct?

The cash payment for interest on a bond payable is reported as a cash flow from financing activities on the statement of cash flows.

Which of the following statements incorrectly describes the accounting for bonds that were issued at a premium?

Which of the following statements is incorrect?

Straight-line amortization of a premium related to a bond issuance would result in which of the following?

A bond will sell at its par value when the market rate of interest equals the stated rate of interest.

On July 1,2010,Garden Works,Inc.issued $300,000 of ten-year,7% bonds for $303,000.The bonds were dated July 1,2010,and semi-annual interest will be paid each December 31 and June 30.Garden Works Inc.uses the straight-line method of amortization.How much is the semi-annual interest expense?

Which of the following bonds does not have specific assets pledged to guarantee repayment?

Which of the following statements regarding the effective-interest method of amortization is incorrect?

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

On November 1,2009,Davis Company issued $30,000,ten-year,7% bonds for $29,100.The bonds were dated November 1,2009,and interest is payable each November 1 and May 1.Which of the following is incorrect assuming the straight-line method of amortization is utilized?

A company has a December 31 fiscal year-end.If the interest is paid annually on December 31,the bond interest expense on the income statement is the amount of the interest cash payment when the bond initially sells at par value.

A company prepared the following journal entry: Cash Discount on bonds payable \quad \quad Bonds payable Which of the following statements incorrectly describes the effect of this journal entry on the financial statements?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Balance Sheet

Operating Decisions and the Income Statement

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; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

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A company prepared the following journal entry: Cash Discount on bonds payable $\quad$ $\quad$ Bonds payable Which of the following statements incorrectly describes the effect of this journal entry on the financial statements?