Question 1

If debentures with a face value of $100 000 are sold at par,the amount of cash proceeds is:

Accepted Answer

A) $108 800. 
B) $100 000. 
C) $99 912. 
D) $88 000. 
A) $108 800. 
B) $100 000. 
C) $99 912. 
D) $88 000.

Question 2

The time value of money is based on the concept that money earns interest over time.

Accepted Answer

A) True 
 B)False

Question 3

The Amazing Widget Company issues $515,000 of 12%,10-year debentures at 105 on 30 April 2017.The debentures pay interest on 30 April and 31 October.Assume that the company uses the straight-line method for amortisation.What is the journal entry to record the first interest payment on 31 October 2017? (Round to the nearest dollar. )

Accepted Answer

A) credit to Premium on bonds payable for $1288. 
B) debit to Interest expense for $32,188. 
C) debit to Interest expense for $29,612. 
D) debit to Cash for $30,900. 
A) credit to Premium on bonds payable for $1288. 
B) debit to Interest expense for $32,188. 
C) debit to Interest expense for $29,612. 
D) debit to Cash for $30,900.

Question 4

Balances for debentures payable on the balance sheet will show the balances minus any discount or plus any premium.

Accepted Answer

A) True 
 B)False

Question 5

On 15 October 2016,Rural Sales has a debenture with balances as shown below. $\begin{array}{c|r}
{\text { Debentures payable }} \
\hline & 80000
\end{array}\quad\quad$$\begin{array}{l}
\text { Premium on debentures }\
\begin{array}{lll|l}
\hline 4600&&&&&& \

\end{array}
\end{array}$ If Rural Sales wishes to redeem the debentures for $82 000,what will be the effect on the income statement?

Accepted Answer

A) Loss on redemption of $2 600 
B) Loss on redemption of $2 000 
C) Gain on redemption of $2 600 
D) Gain on redemption of $2 000 
A) Loss on redemption of $2 600 
B) Loss on redemption of $2 000 
C) Gain on redemption of $2 600 
D) Gain on redemption of $2 000

Question 6

On 1 January 2017,Carter Sales issued $23,000 in debentures for $18,700.They were six year debentures with a stated rate of 10% and pay semiannual interest.Carter Sales uses the straight-line method to amortise the Debentures discount.Immediately after issue of the debentures,the ledger balances appeared as follows: $\begin{array}{l}
\text { Debentures payable }\
\begin{array}{lll|l}
\hline &&&&\$23,000&& \

\end{array}
\end{array}$ $$\begin{array} { | l | l |} 
\hline  { \text { Discount on debentures payable } } \
\hline 4300 &\quad\quad\quad \
\hline
\end{array}$$ After the first interest payment on 30 June 2017,what will be the balance in the Discount account?

Accepted Answer

A) Debit of $4658 
B) Debit of $3942 
C) Debit of $4300 
D) Credit of $358 
A) Debit of $4658 
B) Debit of $3942 
C) Debit of $4300 
D) Credit of $358

If debentures with a face value of $100 000 are sold at par,the amount of cash proceeds is:

The time value of money is based on the concept that money earns interest over time.

Balances for debentures payable on the balance sheet will show the balances minus any discount or plus any premium.

On 15 October 2016,Rural Sales has a debenture with balances as shown below. Debentures payable 80000 Premium on debentures 4600 If Rural Sales wishes to redeem the debentures for $82 000,what will be the effect on the income statement?

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

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Exam 12: Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

If debentures with a face value of $100 000 are sold at par,the amount of cash proceeds is:

The time value of money is based on the concept that money earns interest over time.

Balances for debentures payable on the balance sheet will show the balances minus any discount or plus any premium.

On 15 October 2016,Rural Sales has a debenture with balances as shown below. Debentures payable 80000 Premium on debentures 4600 If Rural Sales wishes to redeem the debentures for $82 000,what will be the effect on the income statement?

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Filters