A) Are also referred to as debentures B) Have specific assets of the issuing company pledged as collateral C) Are backed by the issuer's bank D) Are subordinated to those of other unsecured liabilities E) Are the same as sinking fund bonds A) Are also referred to as debentures B) Have specific assets of the issuing company pledged as collateral C) Are backed by the issuer's bank D) Are subordinated to those of other unsecured liabilities E) Are the same as sinking fund bonds

Exam 10: Reporting and Analyzing Long-Term Liabilities

A company issued 10%,5-year bonds with a par value of $400,000.The market rate when the bonds were issued was 8%.The company received $432,458 cash for the bonds.Using the effective interest method,the amount of interest expense for the first semiannual interest period is:

(Multiple Choice)

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Question 181

GAAP criteria for identifying a lease as a capital lease are more general than the criteria under IFRS.

(True/False)

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Question 182

Most mortgage contracts grant the lender the right to _______________ on the property if the borrower fails to pay in accordance with the terms of the debt agreement.

(Short Answer)

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Question 183

On January 1,2010,Jacob issues $600,000 of 11%,15-year bonds at a price of 102½.Six years later,on January 1,2016,Jacob retires 30% of these bonds by buying them on the open market at 98½. All interest is accounted for and paid through December 31,2015,the day before the purchase.The straight-line method is used to amortize any bond discount.What is the journal entry to record the retirement of 30% of the bonds on January 1,2016?

(Multiple Choice)

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Question 184

Target Company issues bonds with a par value of $900,000 on their stated issue date.The bonds mature in 10 years and pay 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?

(Short Answer)

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Question 185

A company borrowed $300,000 cash from the bank by signing a 5-year,8% installment note.The present value factor for an annuity at 8% for 5 years is 3.9927.Each annuity payment equals $75,137.The present value of the note is:

(Multiple Choice)

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Question 186

Match each of the following terms with the appropriate definitions 1 through 10.

Unsecured bonds

An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest

Serial bonds

The contract between the bond issuer and the bondholders; it identifies the rights and obligations of the parties

Bearer bonds

Bonds that are scheduled for payment on one specified date

Correct Answer:

Verified

Unsecured bonds

Serial bonds

Bearer bonds

Installment note

Term bonds

Effective interest rate method

Bond indenture

Convertible bonds

Coupon bonds

Market rate

(Matching)

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Question 187

Secured bonds:

(Multiple Choice)

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Question 188

Bonds that have interest coupons attached to their certificates,which the bondholders detach during each interest period and present to a bank for collection,are called:

(Multiple Choice)

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Question 189

A company has bonds outstanding with a par value of $600,000.The unamortized discount on these bonds is $3,000.The company retired these bonds by buying them on the open market at 98.What is the gain or loss on this retirement?

(Multiple Choice)

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Question 190

On January 1,2010,Jacob issues $600,000 of 11%,15-year bonds at a price of 102½.Six years later,on January 1,2016,Jacob retires 30% of these bonds by buying them on the open market at 98½.All interest is accounted for and paid through December 31,2015,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 issuance of the bonds on January 1,2010?

(Multiple Choice)

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Question 191

Match each definition with its term

Bonds that are made payable to whoever holds them; also called unregistered bonds

Installment note

Bonds that mature at more than one date and are usually paid over a number of periods

Bearer bonds

An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest

Unsecured bonds

Correct Answer:

Verified

Bonds that are made payable to whoever holds them; also called unregistered bonds

Bonds that mature at more than one date and are usually paid over a number of periods

An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest

An obligation requiring a series of periodic payments to the lender

The interest rate that borrowers are willing to pay and that lenders are willing to accept for a particular bond at its risk level

Bonds that are backed by the issuer's credit standing

Bonds that can be exchanged by the bondholders for a fixed number shares of the issuing corporation's common stock

Bonds with interest coupons attached to their certificates; the bondholders detach the coupons when they mature and present them to a bank or broker for collection

Bonds that are scheduled for payment on one specified date

The contract between the bond issuer and the bondholders; it identifies the rights and obligations of the parties

(Matching)

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Question 192

A company issued 10%,5-year bonds with a par value of $400,000.The market rate when the bonds were issued was 8%.The company received $432,458 cash for the bonds.Using the effective interest method,the amount of interest expense for the first semiannual interest period is:

GAAP criteria for identifying a lease as a capital lease are more general than the criteria under IFRS.

Most mortgage contracts grant the lender the right to _______________ on the property if the borrower fails to pay in accordance with the terms of the debt agreement.

Target Company issues bonds with a par value of $900,000 on their stated issue date.The bonds mature in 10 years and pay 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?

A company borrowed $300,000 cash from the bank by signing a 5-year,8% installment note.The present value factor for an annuity at 8% for 5 years is 3.9927.Each annuity payment equals $75,137.The present value of the note is:

Secured bonds:

Bonds that have interest coupons attached to their certificates,which the bondholders detach during each interest period and present to a bank for collection,are called:

A company has bonds outstanding with a par value of $600,000.The unamortized discount on these bonds is $3,000.The company retired these bonds by buying them on the open market at 98.What is the gain or loss on this retirement?

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing 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

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

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