Exam 10: Reporting and Analyzing Long-Term Liabilities

A company issued 8%,15-year bonds with a par value of $550,000.The current market rate is 8%.The journal entry to record each semiannual interest payment is:

Which of the following statements is true? For the issuer:

Amortizing a bond discount:

Assume that a company has a loan agreement that provides it with cash today and that the company must pay $25,000 one year from today,$15,000 two years from today,and $5,000 three years from today.The company agrees to pay 10% interest.The following factors are from the present value of $1 table: What is the amount of cash the company receives today?

A discount on bonds payable occurs when a company issues bonds at a price less than par value.

A company issued 10-year,9% bonds,with a par value of $500,000 when the market rate was 9.5%.The issuer received $484,087 in cash proceeds.Prepare the issuer's journal entry to record the issuance of the bonds.

A bond listed at 103 on a stock exchange is selling at 103% of its par value.

On October 1 of the current year a corporation sold,at par plus accrued interest,$1,000,000 of its 12% bonds,which were dated July 1 of this year.What amount of bond interest expense should the company report on its current year income statement?

A company can reserve the right to retire bonds before their maturity date by issuing _______________ bonds.

A company issues bonds with a par value of $900,000 on their stated issue date.The bonds mature in 10 years and pays 10% annual interest in semiannual payments.On the issue date,the annual market rate for the bonds is 12%.What is the selling price of the bond?

Adidas issued 10-year,8% bonds with a par value of $200,000,where interest is paid semiannually.The market rate on the issue date was 7.5%.Adidas received $206,948 in cash proceeds.Which of the following statements is true?

On January 1,2013,Jacob issues $600,000 of 11%,15-year bonds at a price of 102½.What is the journal entry to record the issuance of these bonds?

A discount on bonds payable:

A corporation borrowed $125,000 cash by signing a five-year,9% installment note requiring annual payments each December 31 of accrued interest plus equal amounts of principal.What journal entry would the issuer record for the first payment?

Explain the accounting procedures when a bond's interest period does not coincide with the issuer's accounting period.

A common payment pattern for installment notes is to pay the accrued interest periodically and to pay the principle amount on the maturity date.

A company borrowed $300,000 cash from the bank by signing a five-year,8% installment note.The present value factor for an annuity at 8% for five years is 3.9927.Each annuity payment equals $75,137.How much cash did the company receive from the bank on the day they borrowed this money?

A company has $200,000 par value,10% bonds outstanding.Prepare the company's journal entry to retire the bonds at the date of maturity.

On January 1,2013,Jacob issued $600,000 of 11%,15-year bonds at a price of 102½.The straight-line method is used to amortize any bond discount or premium and interest is paid semiannually.All interest has been accounted for (and paid) through December 31,2018.The company retires 30% of these bonds by buying them on the open market at 98½. What is the journal entry to record the retirement of 30% of the bonds on January 1,2019?

A _______________________ is a contractual agreement between an employer and its employees for the employer to provide benefits (payments) to employees after they retire.