Question 1

Using the debt to equity ratio,which of the following franchises would be assessed as having the riskiest financing structure?

Accepted Answer

A) Franchise A 
B) Franchise B 
C) Franchise C 
D) Franchise D 
E) Franchise E 
A) Franchise A 
B) Franchise B 
C) Franchise C 
D) Franchise D 
E) Franchise E

Question 2

The carrying value of a long-term note payable:

Accepted Answer

A) Is computed as the future value of all remaining future payments,using the market rate as interest. 
B) Is the face value of the long-term note less the total of all future interest payments. 
C) Is computed as the present value of all remaining future payments,discounted using the market rate of interest at the time of issuance. 
D) Is computed as the present value of all remaining interest payments,discounted using the note's rate of interest. 
E) Decreases each time period the discount on the note is amortized. 
A) Is computed as the future value of all remaining future payments,using the market rate as interest. 
B) Is the face value of the long-term note less the total of all future interest payments. 
C) Is computed as the present value of all remaining future payments,discounted using the market rate of interest at the time of issuance. 
D) Is computed as the present value of all remaining interest payments,discounted using the note's rate of interest. 
E) Decreases each time period the discount on the note is amortized.

Question 3

Bonds that give the issuer an option of retiring them prior to the date of maturity are:

Accepted Answer

A) Debentures 
B) Serial bonds 
C) Sinking fund bonds 
D) Registered bonds 
E) Callable bonds 
A) Debentures 
B) Serial bonds 
C) Sinking fund bonds 
D) Registered bonds 
E) Callable bonds

Question 4

On January 1,2013,Jacob issues $800,000 of 9%,13-year bonds at a price of 96½.Six years later,on January 1,2019,Jacob retires 20% of these bonds by buying them on the open market at 105½.All semiannual interest is accounted for and paid through December 31,2018,the day before the purchase.The straight-line method is used to amortize any bond discount or premium.What is the journal entry to record the retirement of 20% of the bonds on January 1,2019?

Accepted Answer

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

Question 5

On January 1,2013,$1,200,000,5-year,bonds with a stated rate of 10% payable annually were issued for cash of $1,295,844 when the market rate of interest was 8%.The first annual cash interest payment was $120,000 while that period's interest expense was calculated as $103,666.How would the company record the journal entry to record this first annual interest payment?

Accepted Answer

A) Debit Interest Expense for $103,666,debit Premium on Bonds Payable for $16,334,and credit Cash for $120,000. 
B) Debit Interest Expense for $120,000 and credit Cash for $120,000. 
C) Debit Interest Expense for $16,334 and credit Cash for $16,334. 
D) Debit Interest Expense for $120,000,credit Discount on Bonds Payable for $16,334,and credit Cash for $103,666. 
E) Debit Cash for $1,295,844,credit Premium on Bonds Payable for $1,200,000,and credit Premium on Bonds Payable for $95,844. 
A) Debit Interest Expense for $103,666,debit Premium on Bonds Payable for $16,334,and credit Cash for $120,000. 
B) Debit Interest Expense for $120,000 and credit Cash for $120,000. 
C) Debit Interest Expense for $16,334 and credit Cash for $16,334. 
D) Debit Interest Expense for $120,000,credit Discount on Bonds Payable for $16,334,and credit Cash for $103,666. 
E) Debit Cash for $1,295,844,credit Premium on Bonds Payable for $1,200,000,and credit Premium on Bonds Payable for $95,844.

Question 6

An ________________________________ is an obligation requiring a series of payments to the lender.

Accepted Answer

The answer of An ________________________________ is an obligation requiring a...

Question 7

A company issues bonds at par on April 1.These 9% bonds have a par value of $100,000 and pay interest annually.April 1 is four months after the most recent interest payment date.How much total cash interest is received on April 1 by the bond issuer?

Accepted Answer

A) $750 
B) $5,250 
C) $1,500 
D) $3,000 
E) $6,000 
A) $750 
B) $5,250 
C) $1,500 
D) $3,000 
E) $6,000

Question 8

Shin Company has a loan agreement that provides it with cash today.The company must repay this loan in four years with $25,000.Shin agrees to a 6% interest rate.The present value factor for four periods,6%,is 0.7921.What is the amount of cash that Shin Company receives today?

Accepted Answer

$25,000 x

Question 9

If an issuer sells a bond at any other date than the interest payment date:

Accepted Answer

A) This means the bond sells at a premium. 
B) This means the bond sells at a discount. 
C) The issuing company will report a loss on the sale of the bond. 
D) The issuing company will report a gain on the sale of the bond. 
E) The buyer normally pays the issuer the purchase price plus any interest accrued since the last interest payment date. 
A) This means the bond sells at a premium. 
B) This means the bond sells at a discount. 
C) The issuing company will report a loss on the sale of the bond. 
D) The issuing company will report a gain on the sale of the bond. 
E) The buyer normally pays the issuer the purchase price plus any interest accrued since the last interest payment date.

Question 10

On January 1,2013,Jacob issues $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.What is the journal entry to record the first interest semi-annual interest payment on June 30,2013?

Accepted Answer

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

Question 11

Carrington Industries converts $200,000 of par value bonds,with a carrying value of $100,000,into 50,000 shares of $1 par value common stock..How would the company record this transaction?

Accepted Answer

A) Debit Bonds Payable for $200,000 and credit Cash for $100,000. 
B) Debit Bonds Payable for $200,000,credit Common Stock for $50,000,and credit Paid-In Capital in Excess of Par Value for $150,000. 
C) Debit Bonds Payable for $200,000 and credit Common Stock for $200,000. 
D) Debit Common Stock for $50,000,credit Paid-In Capital in Excess of Par Value for $150,000,and credit Bonds Payable for $200,000. 
E) Debit Bonds Payable for $50,000 and credit Common Stock for $50,000. 
A) Debit Bonds Payable for $200,000 and credit Cash for $100,000. 
B) Debit Bonds Payable for $200,000,credit Common Stock for $50,000,and credit Paid-In Capital in Excess of Par Value for $150,000. 
C) Debit Bonds Payable for $200,000 and credit Common Stock for $200,000. 
D) Debit Common Stock for $50,000,credit Paid-In Capital in Excess of Par Value for $150,000,and credit Bonds Payable for $200,000. 
E) Debit Bonds Payable for $50,000 and credit Common Stock for $50,000.

Question 12

A company issued 10-year,9% bonds with a par value of $500,000 when the market rate was 9.5%.The company received $484,087 in cash proceeds.Using the straight-line method,prepare the issuer's journal entry to record the first annual interest payment and the amortization of any bond discount or premium.

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 13

Martin Corporation issued $3,000,000 of 8%,20-year bonds payable at par value on January 1,2013.Interest is payable each June 30 and December 31.
(a) Prepare the general journal entry to record the issuance of the bonds on January 1,2013.
(b) Prepare the general journal entry to record the first interest payment on June 30,2013.

Accepted Answer

(a) @#IMG-DLM&_TB6947_00_TB6947_00_TB694

Question 14

____________________ leases are long-term or noncancelable leases by which the lessor transfers substantially all risks and rewards of ownership to the lessee.

Accepted Answer

The answer of ____________________ leases are long-term or noncancelable leases...

Question 15

Operating leases differ from capital leases in that

Accepted Answer

A) For a capital lease,the lessee records the lease payments as rent expense,but for an operating lease,the lessee reports the lease payments as depreciation expense. 
B) For an operating lease,the lessee depreciates the asset acquired under lease,but for the capital lease,the lessee does not. 
C) Operating leases create a long-term liability on the balance sheet,but capital leases do not. 
D) Operating leases do not transfer ownership of the asset under the lease,but capital leases often do. 
E) Operating lease payments are generally greater than capital lease payments. 
A) For a capital lease,the lessee records the lease payments as rent expense,but for an operating lease,the lessee reports the lease payments as depreciation expense. 
B) For an operating lease,the lessee depreciates the asset acquired under lease,but for the capital lease,the lessee does not. 
C) Operating leases create a long-term liability on the balance sheet,but capital leases do not. 
D) Operating leases do not transfer ownership of the asset under the lease,but capital leases often do. 
E) Operating lease payments are generally greater than capital lease payments.

Question 16

An annuity is a series of equal payments made at equal time intervals.

Accepted Answer

A) True 
 B)False

Question 17

A company has bonds outstanding with a par value of $100,000.The unamortized discount on these bonds is $4,500.The company retired these bonds by buying them on the open market at 97.What is the gain or loss on this retirement?

Accepted Answer

A) $0 gain or loss 
B) $1,500 gain 
C) $1,500 loss 
D) $3,000 gain 
E) $3,000 loss 
A) $0 gain or loss 
B) $1,500 gain 
C) $1,500 loss 
D) $3,000 gain 
E) $3,000 loss

Question 18

On January 1,2013,the Plimpton Corporation leased some equipment for two years,paying $15,000 per year each December 31.The lease is considered to be an operating lease.Prepare the general journal entry to record the first lease payment on December 31,2013.

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 19

To provide security to creditors and to reduce interest costs,bonds and notes payable can be secured by:

Accepted Answer

A) Safe deposit boxes 
B) Mortgages 
C) Equity 
D) The FASB 
E) Debentures 
A) Safe deposit boxes 
B) Mortgages 
C) Equity 
D) The FASB 
E) Debentures

Question 20

A company issues bonds at par on June 1.These 7% bonds have a par value of $500,000 and pay interest annually.June 1 is five months after the most recent interest payment date.How much total cash interest is received on June 1 by the bond issuer?

Accepted Answer

A) $0 
B) $2,916.66 
C) $100,000.00 
D) $14,583.33 
E) $35,000.00 
A) $0 
B) $2,916.66 
C) $100,000.00 
D) $14,583.33 
E) $35,000.00

Using the debt to equity ratio,which of the following franchises would be assessed as having the riskiest financing structure?

The carrying value of a long-term note payable:

Bonds that give the issuer an option of retiring them prior to the date of maturity are:

An ________________________________ is an obligation requiring a series of payments to the lender.

A company issues bonds at par on April 1.These 9% bonds have a par value of $100,000 and pay interest annually.April 1 is four months after the most recent interest payment date.How much total cash interest is received on April 1 by the bond issuer?

Shin Company has a loan agreement that provides it with cash today.The company must repay this loan in four years with $25,000.Shin agrees to a 6% interest rate.The present value factor for four periods,6%,is 0.7921.What is the amount of cash that Shin Company receives today?

If an issuer sells a bond at any other date than the interest payment date:

On January 1,2013,Jacob issues $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.What is the journal entry to record the first interest semi-annual interest payment on June 30,2013?

Carrington Industries converts $200,000 of par value bonds,with a carrying value of $100,000,into 50,000 shares of $1 par value common stock..How would the company record this transaction?

____________________ leases are long-term or noncancelable leases by which the lessor transfers substantially all risks and rewards of ownership to the lessee.

Operating leases differ from capital leases in that

An annuity is a series of equal payments made at equal time intervals.

A company has bonds outstanding with a par value of $100,000.The unamortized discount on these bonds is $4,500.The company retired these bonds by buying them on the open market at 97.What is the gain or loss on this retirement?

On January 1,2013,the Plimpton Corporation leased some equipment for two years,paying $15,000 per year each December 31.The lease is considered to be an operating lease.Prepare the general journal entry to record the first lease payment on December 31,2013.

To provide security to creditors and to reduce interest costs,bonds and notes payable can be secured by:

A company issues bonds at par on June 1.These 7% bonds have a par value of $500,000 and pay interest annually.June 1 is five months after the most recent interest payment date.How much total cash interest is received on June 1 by the bond issuer?

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters

Exam 10: Reporting and Analyzing Long-Term Liabilities

Using the debt to equity ratio,which of the following franchises would be assessed as having the riskiest financing structure?

The carrying value of a long-term note payable:

Bonds that give the issuer an option of retiring them prior to the date of maturity are:

An ________________________________ is an obligation requiring a series of payments to the lender.

A company issues bonds at par on April 1.These 9% bonds have a par value of $100,000 and pay interest annually.April 1 is four months after the most recent interest payment date.How much total cash interest is received on April 1 by the bond issuer?

Shin Company has a loan agreement that provides it with cash today.The company must repay this loan in four years with $25,000.Shin agrees to a 6% interest rate.The present value factor for four periods,6%,is 0.7921.What is the amount of cash that Shin Company receives today?

If an issuer sells a bond at any other date than the interest payment date:

On January 1,2013,Jacob issues $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.What is the journal entry to record the first interest semi-annual interest payment on June 30,2013?

Carrington Industries converts $200,000 of par value bonds,with a carrying value of $100,000,into 50,000 shares of $1 par value common stock..How would the company record this transaction?

____________________ leases are long-term or noncancelable leases by which the lessor transfers substantially all risks and rewards of ownership to the lessee.

Operating leases differ from capital leases in that

An annuity is a series of equal payments made at equal time intervals.

A company has bonds outstanding with a par value of $100,000.The unamortized discount on these bonds is $4,500.The company retired these bonds by buying them on the open market at 97.What is the gain or loss on this retirement?

On January 1,2013,the Plimpton Corporation leased some equipment for two years,paying $15,000 per year each December 31.The lease is considered to be an operating lease.Prepare the general journal entry to record the first lease payment on December 31,2013.

To provide security to creditors and to reduce interest costs,bonds and notes payable can be secured by:

A company issues bonds at par on June 1.These 7% bonds have a par value of $500,000 and pay interest annually.June 1 is five months after the most recent interest payment date.How much total cash interest is received on June 1 by the bond issuer?

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters