Question 1

Bonds with a face amount $1,000,000 are sold at 98.The entry to record the issuance is

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 2

A bond is simply a form of an interest-bearing note.

Accepted Answer

A) True 
 B)False

Question 3

Discount on Bonds Payable is a contra liability account.

Accepted Answer

A) True 
 B)False

Question 4

Brubeck Co. issued $10,000,000 of 30-year, 8% bonds on May 1 of the current year, with interest payable on May 1 and November 1.  The fiscal year of the company is the calendar year.  Journalize the entries to record the following selected transactions for the current year:

May    1	Issued the bonds for cash at their face amount. Nov.   1	Paid the interest on the bonds.
Dec. 31	Recorded accrued interest for two months.

Accepted Answer

The answer of Brubeck Co. issued $10,000,000 of 30-year, 8%...

Question 5

Bonds that are subject to retirement prior to maturity at the option of the issuer are called

Accepted Answer

A) debentures 
B) callable bonds 
C) early retirement bonds 
D) options 
A) debentures 
B) callable bonds 
C) early retirement bonds 
D) options

Question 6

If bonds of $1,000,000 with unamortized discount of $10,000 are redeemed at 98,the gain on redemption of bonds is $10,000.

Accepted Answer

A) True 
 B)False

Question 7

Dylan Corporation issues for cash $2,000,000 of 8%,15-year bonds,interest payable annually,at a time when the market rate of interest is 9%.The straight-line method is adopted for the amortization of bond discount or premium.Which of the following statements is true?

Accepted Answer

A) The amount of annual interest paid to bondholders remains the same over the life of the bonds. 
B) The amount of annual interest expense decreases as the bonds approach maturity. 
C) The amount of annual interest paid to bondholders increases over the 15-year life of the bonds. 
D) The carrying amount decreases from its amount at issuance date to $2,000,000 at maturity. 
A) The amount of annual interest paid to bondholders remains the same over the life of the bonds. 
B) The amount of annual interest expense decreases as the bonds approach maturity. 
C) The amount of annual interest paid to bondholders increases over the 15-year life of the bonds. 
D) The carrying amount decreases from its amount at issuance date to $2,000,000 at maturity.

Question 8

When the corporation issuing the bonds has the right to redeem the bonds prior to the maturity,the bonds are

Accepted Answer

A) convertible bonds 
B) unsecured bonds 
C) debenture bonds 
D) callable bonds 
A) convertible bonds 
B) unsecured bonds 
C) debenture bonds 
D) callable bonds

Question 9

When the bonds are sold for more than their face value,the carrying value of the bonds is equal to

Accepted Answer

A) face value 
B) face value plus the unamortized discount 
C) face value minus the unamortized premium 
D) face value plus the unamortized premium 
A) face value 
B) face value plus the unamortized discount 
C) face value minus the unamortized premium 
D) face value plus the unamortized premium

Question 10

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000.Journalize the redemption of the bonds.

Accepted Answer

None

Question 11

If bonds payable are not callable,the issuing corporation

Accepted Answer

A) can exchange them for common stock 
B) can repurchase them in the open market 
C) must get special permission from the SEC to repurchase them 
D) is more likely to repurchase them if the interest rates increase 
A) can exchange them for common stock 
B) can repurchase them in the open market 
C) must get special permission from the SEC to repurchase them 
D) is more likely to repurchase them if the interest rates increase

Question 12

The concept of present value is that an amount of cash to be received at some date in the future is the equivalent of the same amount of cash held at an earlier date.

Accepted Answer

A) True 
 B)False

Question 13

Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $10,000.If the issuing corporation redeems the bonds at 97.5,what is the amount of gain or loss on redemption?

Accepted Answer

A) $10,000 loss 
B) $25,000 loss 
C) $25,000 gain 
D) $15,000 gain 
A) $10,000 loss 
B) $25,000 loss 
C) $25,000 gain 
D) $15,000 gain

Question 14

On the first day of the fiscal year,a company issues a $1,000,000,7%,5-year bond that pays semiannual interest of $35,000 $1,000,000 × 7% × 1/2,receiving cash of $884,171.Journalize the first interest payment and the amortization of the related bond discount using the straight-line method.Round answers to the nearest dollar.

Accepted Answer

None

Question 15

The interest expense recorded on an interest payment date is increased

Accepted Answer

A) only if the market rate of interest is less than the stated rate of interest on that date 
B) by the amortization of premium on bonds payable 
C) by the amortization of discount on bonds payable 
D) only if the bonds were sold at face value 
A) only if the market rate of interest is less than the stated rate of interest on that date 
B) by the amortization of premium on bonds payable 
C) by the amortization of discount on bonds payable 
D) only if the bonds were sold at face value

Question 16

A bond is usually divided into a number of individual bonds of $500 each.

Accepted Answer

A) True 
 B)False

Bonds with a face amount $1,000,000 are sold at 98.The entry to record the issuance is

A bond is simply a form of an interest-bearing note.

Discount on Bonds Payable is a contra liability account.

Bonds that are subject to retirement prior to maturity at the option of the issuer are called

If bonds of $1,000,000 with unamortized discount of $10,000 are redeemed at 98,the gain on redemption of bonds is $10,000.

Dylan Corporation issues for cash $2,000,000 of 8%,15-year bonds,interest payable annually,at a time when the market rate of interest is 9%.The straight-line method is adopted for the amortization of bond discount or premium.Which of the following statements is true?

When the corporation issuing the bonds has the right to redeem the bonds prior to the maturity,the bonds are

When the bonds are sold for more than their face value,the carrying value of the bonds is equal to

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000.Journalize the redemption of the bonds.

If bonds payable are not callable,the issuing corporation

The concept of present value is that an amount of cash to be received at some date in the future is the equivalent of the same amount of cash held at an earlier date.

Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $10,000.If the issuing corporation redeems the bonds at 97.5,what is the amount of gain or loss on redemption?

The interest expense recorded on an interest payment date is increased

A bond is usually divided into a number of individual bonds of $500 each.

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

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Exam 12: Long-Term Liabilities: Bonds and Notes

Bonds with a face amount $1,000,000 are sold at 98.The entry to record the issuance is

A bond is simply a form of an interest-bearing note.

Discount on Bonds Payable is a contra liability account.

Bonds that are subject to retirement prior to maturity at the option of the issuer are called

If bonds of $1,000,000 with unamortized discount of $10,000 are redeemed at 98,the gain on redemption of bonds is $10,000.

Dylan Corporation issues for cash $2,000,000 of 8%,15-year bonds,interest payable annually,at a time when the market rate of interest is 9%.The straight-line method is adopted for the amortization of bond discount or premium.Which of the following statements is true?

When the corporation issuing the bonds has the right to redeem the bonds prior to the maturity,the bonds are

When the bonds are sold for more than their face value,the carrying value of the bonds is equal to

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000.Journalize the redemption of the bonds.

If bonds payable are not callable,the issuing corporation

The concept of present value is that an amount of cash to be received at some date in the future is the equivalent of the same amount of cash held at an earlier date.

Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $10,000.If the issuing corporation redeems the bonds at 97.5,what is the amount of gain or loss on redemption?

The interest expense recorded on an interest payment date is increased

A bond is usually divided into a number of individual bonds of $500 each.

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