Question 1

Gains and losses on the redemption of bonds are reported as other income or other expense on the income statement.

Accepted Answer

A) True 
 B)False

Question 2

If the market rate of interest is greater than the contractual rate of interest,bonds will sell

Accepted Answer

A) at a premium 
B) at face value 
C) at a discount 
D) only after the stated rate of interest is increased 
A) at a premium 
B) at face value 
C) at a discount 
D) only after the stated rate of interest is increased

Question 3

On the first day of the fiscal year,a company issues a $500,000,8%,10-year bond that pays semiannual interest of $20,000 $500,000 × 8% × 1/2,receiving cash of $437,740.Journalize the entry to record the issuance of the bonds.

Accepted Answer

None

Question 4

The Glenn Corporation issues 1,000,10-year,8%,$2,000 bonds dated January 1 at 96.The journal entry to record the issuance will show a

Accepted Answer

A) debit to Discount on Bonds Payable for $80,000 
B) debit to Cash of $2,000,000 
C) credit to Bonds Payable for $1,920,000 
D) credit to Cash for $1,920,000 
A) debit to Discount on Bonds Payable for $80,000 
B) debit to Cash of $2,000,000 
C) credit to Bonds Payable for $1,920,000 
D) credit to Cash for $1,920,000

Question 5

If the amount of a bond premium on an issued 11%,4-year,$100,000 bond is $12,928,the annual interest expense is $5,500.

Accepted Answer

A) True 
 B)False

Question 6

Bonds payable should be reported on the balance sheet at face value plus or minus any unamortized premium or discount.

Accepted Answer

A) True 
 B)False

Question 7

Interest payments on 12% bonds with a face value of $20,000 and interest paid semiannually would be $2,400 every 6 months.

Accepted Answer

A) True 
 B)False

Question 8

A $375,000 bond issue on which there is an unamortized discount of $40,000 is redeemed for $320,000.Journalize the redemption of the bonds.

Accepted Answer

None

Question 9

The interest portion of an installment note payment is computed by multiplying the interest rate by the carrying amount of the note at the end of the period.

Accepted Answer

A) True 
 B)False

Question 10

The effective interest rate method of amortizing a bond discount or premium is the preferred method.

Accepted Answer

A) True 
 B)False

Question 11

The price of a bond is equal to the sum of the interest payments and the face amount of the bonds.

Accepted Answer

A) True 
 B)False

Question 12

The balance in Premium on Bonds Payable should be reported as a deduction from Bonds Payable on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

Eddie Industries issues $1,500,000 of 8% bonds at 105,the amount of cash received from the sale is

Accepted Answer

A) $1,425,000 
B) $1,080,000 
C) $1,000,000 
D) $1,575,000 
A) $1,425,000 
B) $1,080,000 
C) $1,000,000 
D) $1,575,000

Question 14

When the effective interest rate method of amortization is used,the amount of interest expense for a given period is calculated by multiplying the face rate of interest by the bond's carrying value at the beginning of the given period.

Accepted Answer

A) True 
 B)False

Question 15

Bondholders are creditors of the issuing corporation.

Accepted Answer

A) True 
 B)False

Question 16

The present value of $60,000 to be received in one year,at 6% compounded annually,is rounded to nearest dollar

Accepted Answer

A) $56,604 
B) $63,396 
C) $60,000 
D) $3,396 
A) $56,604 
B) $63,396 
C) $60,000 
D) $3,396

Question 17

An equal stream of periodic payments is called an annuity.

Accepted Answer

A) True 
 B)False

Question 18

On June 30,Jamison Company issued $2,500,000 of 10-year,8% bonds,dated June 30,for $2,580,000.Present entries to record the following transactions.
1- Issuance of bonds.
2- Payment of first semiannual interest on December 31 record separate entry from premium amortization.
3- Amortization by straight-line method of bond premium on December 31.

Accepted Answer

The answer of On June 30,Jamison Company issued $2,500,000 of...

Question 19

On January 1,Year 1,Zero Company obtained a $52,000,4-year,6.5% installment note from Regional Bank.The note requires annual payments of $15,179,beginning on December 31,Year 1.The December 31,Year 2 carrying amount in the amortization table for this installment note will be equal to

Accepted Answer

A) $26,000. 
B) $27,635 
C) $21,642 
D) $28,402 
A) $26,000. 
B) $27,635 
C) $21,642 
D) $28,402

Question 20

If the market rate of interest is 8% and a corporation's bonds bear interest at 7%,the bonds will sell at a premium.

Accepted Answer

A) True 
 B)False

Gains and losses on the redemption of bonds are reported as other income or other expense on the income statement.

If the market rate of interest is greater than the contractual rate of interest,bonds will sell

On the first day of the fiscal year,a company issues a $500,000,8%,10-year bond that pays semiannual interest of $20,000 $500,000 × 8% × 1/2,receiving cash of $437,740.Journalize the entry to record the issuance of the bonds.

The Glenn Corporation issues 1,000,10-year,8%,$2,000 bonds dated January 1 at 96.The journal entry to record the issuance will show a

If the amount of a bond premium on an issued 11%,4-year,$100,000 bond is $12,928,the annual interest expense is $5,500.

Bonds payable should be reported on the balance sheet at face value plus or minus any unamortized premium or discount.

Interest payments on 12% bonds with a face value of $20,000 and interest paid semiannually would be $2,400 every 6 months.

A $375,000 bond issue on which there is an unamortized discount of $40,000 is redeemed for $320,000.Journalize the redemption of the bonds.

The interest portion of an installment note payment is computed by multiplying the interest rate by the carrying amount of the note at the end of the period.

The effective interest rate method of amortizing a bond discount or premium is the preferred method.

The price of a bond is equal to the sum of the interest payments and the face amount of the bonds.

The balance in Premium on Bonds Payable should be reported as a deduction from Bonds Payable on the balance sheet.

Eddie Industries issues $1,500,000 of 8% bonds at 105,the amount of cash received from the sale is

When the effective interest rate method of amortization is used,the amount of interest expense for a given period is calculated by multiplying the face rate of interest by the bond's carrying value at the beginning of the given period.

Bondholders are creditors of the issuing corporation.

The present value of $60,000 to be received in one year,at 6% compounded annually,is rounded to nearest dollar

An equal stream of periodic payments is called an annuity.

On January 1,Year 1,Zero Company obtained a $52,000,4-year,6.5% installment note from Regional Bank.The note requires annual payments of $15,179,beginning on December 31,Year 1.The December 31,Year 2 carrying amount in the amortization table for this installment note will be equal to

If the market rate of interest is 8% and a corporation's bonds bear interest at 7%,the bonds will sell at a premium.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley,internal Control,and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization,stock Transactions,and Dividends

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 12: Long-Term Liabilities: Bonds and Notes

Gains and losses on the redemption of bonds are reported as other income or other expense on the income statement.

If the market rate of interest is greater than the contractual rate of interest,bonds will sell

On the first day of the fiscal year,a company issues a $500,000,8%,10-year bond that pays semiannual interest of $20,000 $500,000 × 8% × 1/2,receiving cash of $437,740.Journalize the entry to record the issuance of the bonds.

The Glenn Corporation issues 1,000,10-year,8%,$2,000 bonds dated January 1 at 96.The journal entry to record the issuance will show a

If the amount of a bond premium on an issued 11%,4-year,$100,000 bond is $12,928,the annual interest expense is $5,500.

Bonds payable should be reported on the balance sheet at face value plus or minus any unamortized premium or discount.

Interest payments on 12% bonds with a face value of $20,000 and interest paid semiannually would be $2,400 every 6 months.

A $375,000 bond issue on which there is an unamortized discount of $40,000 is redeemed for $320,000.Journalize the redemption of the bonds.

The interest portion of an installment note payment is computed by multiplying the interest rate by the carrying amount of the note at the end of the period.

The effective interest rate method of amortizing a bond discount or premium is the preferred method.

The price of a bond is equal to the sum of the interest payments and the face amount of the bonds.

The balance in Premium on Bonds Payable should be reported as a deduction from Bonds Payable on the balance sheet.

Eddie Industries issues $1,500,000 of 8% bonds at 105,the amount of cash received from the sale is

When the effective interest rate method of amortization is used,the amount of interest expense for a given period is calculated by multiplying the face rate of interest by the bond's carrying value at the beginning of the given period.

Bondholders are creditors of the issuing corporation.

The present value of $60,000 to be received in one year,at 6% compounded annually,is rounded to nearest dollar

An equal stream of periodic payments is called an annuity.

On January 1,Year 1,Zero Company obtained a $52,000,4-year,6.5% installment note from Regional Bank.The note requires annual payments of $15,179,beginning on December 31,Year 1.The December 31,Year 2 carrying amount in the amortization table for this installment note will be equal to

If the market rate of interest is 8% and a corporation's bonds bear interest at 7%,the bonds will sell at a premium.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley,internal Control,and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization,stock Transactions,and Dividends

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters