Question 1

Premium on Bonds Payable is an increase to the liability account.

Accepted Answer

A) True 
 B)False

Question 2

A company with liabilities of $2,816,000 and equity of $826,000 has a debt to equity ratio equal to 29.33%

Accepted Answer

A) True 
 B)False

Question 3

The Discount on Bonds Payable account is:

Accepted Answer

A) A liability 
B) A contra liability 
C) An expense 
D) A contra expense 
E) A contra equity 
A) A liability 
B) A contra liability 
C) An expense 
D) A contra expense 
E) A contra equity

Question 4

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:

Accepted Answer

A) 
$\begin{array}{|c|r|r|}
\hline\text { Bond Interest Expense } & 22,000 & \
\hline \text { Cash } & & 22,000\
\hline
\end{array}$ 
B) 
$$\begin{array} { | l | c | c | } 
\hline \text { Bond Interest Expense } & 44,000 & \
\hline \text { Cash } & & 44,000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | l | c | c | } 
\hline \text { Bond Interest Expense } & 555,000 & \
\hline \text { Cash } & & 555,000 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | l| c | c | } 
\hline \text { Bond Interest Expense } & 660,000 & \
\hline \text { Bond Payable } & & 660,000 \
\hline
\end{array}$$ 
E) No entry is needed,since no interest is paid until the bond is due 
A) 
$\begin{array}{|c|r|r|}
\hline\text { Bond Interest Expense } & 22,000 & \
\hline \text { Cash } & & 22,000\
\hline
\end{array}$ 
B) 
$$\begin{array} { | l | c | c | } 
\hline \text { Bond Interest Expense } & 44,000 & \
\hline \text { Cash } & & 44,000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | l | c | c | } 
\hline \text { Bond Interest Expense } & 555,000 & \
\hline \text { Cash } & & 555,000 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | l| c | c | } 
\hline \text { Bond Interest Expense } & 660,000 & \
\hline \text { Bond Payable } & & 660,000 \
\hline
\end{array}$$ 
E) No entry is needed,since no interest is paid until the bond is due

Question 5

____________________ leases are long-term or non-cancelable 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 non-cancelable leases...

Question 6

A company has bonds outstanding with a par value of $400,000.The unamortized premium on these bonds is $2,000.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) $10,000 gain 
C) $10,000 loss 
D) $14,000 gain 
E) $14,000 loss 
A) $0 gain or loss 
B) $10,000 gain 
C) $10,000 loss 
D) $14,000 gain 
E) $14,000 loss

Question 7

What is an annuity?

Accepted Answer

An annuity is a seri

Question 8

A company issues at 9% bonds at par with a par value of $100,000 on April 1,which is 4 months after the most recent interest 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 9

The carrying value of a long-term note is computed as the present value of all remaining future payments,discounted using the market rate at the time of issuance.

Accepted Answer

A) True 
 B)False

Question 10

Bonds owned by investors whose names and addresses are recorded by the issuing company and for which interest payments are made with checks to the bondholders,are called:

Accepted Answer

A) Callable bonds 
B) Serial bonds 
C) Registered bonds 
D) Coupon bonds 
E) Bearer bonds 
A) Callable bonds 
B) Serial bonds 
C) Registered bonds 
D) Coupon bonds 
E) Bearer bonds

Question 11

There are two common payment patterns for installment notes: (1)accrued interest plus equal principal payments and (2)equal payments.

Accepted Answer

A) True 
 B)False

Question 12

A pension plan is a contractual agreement between an employer and its employees in which the employer provides benefits to employees after they retire.

Accepted Answer

A) True 
 B)False

Question 13

The par value of a bond is also known as its ________________________.

Accepted Answer

Face amoun

Question 14

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 15

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 16

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

Accepted Answer

If the bond's interest period does not c

Question 17

_________________________ leases are short-term or cancelable leases in which the lessor retains the risks and rewards of ownership.

Accepted Answer

The answer of _________________________ leases are short-term or cancelable leases...

Question 18

A company issued 9%,10-year bonds with a par value of $1,000,000 on September 1,2010 when the market rate was 9%.The bonds were dated June 30,2010.The bond issue price included accrued interest.Interest is paid semiannually on December 31 and June 30.
(a)Prepare the issuer's journal entry to record the issuance of the bonds.
(b)Prepare the issuer's journal entry to record the semiannual interest payment on December 31,2010.

Accepted Answer

(a)
 @#IMG-DLM&
 (b)
 @#IMG-DLM&
 Intere

Question 19

A company issued 10%,5-year bonds with a par value of $2,000,000,on January 1,2010.Interest is to be paid semiannually each June 30 and December 31.The bonds were sold at $2,162,290 to yield the buyers an 8% annual return.The company uses the effective interest method of amortization.
(1)Prepare an amortization table for the first two semiannual payment periods using the format shown below.
 $\begin{array}{|c|c|c|c|c|c|}
\hline \text { Semiannual } & \text { Cash Interest } & \text { Bond Interest } & \text { Premium } & \text { Unamortized } & \text { Carrying } \
\text { Interest } & \text { Paid } & \text { Expense } & \text { Amortization } & \text { Premium } & \text { Value } \
\text { Period } & & & &\
\hline
\end{array}$ 
(2)Prepare the general journal entry to record the first semiannual interest payment.

Accepted Answer

(1)
   6/30/10
Cash payment: $2,000,000

Question 20

On January 1,2010,Jacob issues $800,000 of 9%,13-year bonds at a price of 96½.Six years later,on January 1,2016,Jacob retires 20% of these bonds by buying them on the open market at 105½.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 first interest payment on June 30,2010?

Accepted Answer

A) 
$\begin{array}{|c|c|c|}
\hline \text { Interest Expense } & 36,000 & \
\hline \text { Cash } & & 36,000 \
\hline
\end{array}$ 
B) 
$\begin{array}{|c|r|r|}
\hline \text { Cash } & 36,000 & \
\hline \text { Interest Expense } & & 36,000 \
\hline
\end{array}$ 
C) 
$$\begin{array} { | l | r | r | } 
\hline \text { Interest Expense } & 36,000 & \
\hline \text { Discount on Bonds Payable } & 1,077 & \
\hline \text { Cash } & & 37,077 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | l | r | r | } 
\hline \text { Interest Expense } & 36,000 & \
\hline \text { Premium on Bonds Payable } & 1,077 & \
\hline \text { Cash } & & 37,077 \
\hline
\end{array}$$ 
E) 
$$\begin{array} { | l | r | r | } 
\hline \text { Interest Expense } & 37,077 & \
\hline \text { Discount on Bonds Payable } & & 1,077 \
\hline \text { Cash } & & 36,000 \
\hline
\end{array}$$ 
A) 
$\begin{array}{|c|c|c|}
\hline \text { Interest Expense } & 36,000 & \
\hline \text { Cash } & & 36,000 \
\hline
\end{array}$ 
B) 
$\begin{array}{|c|r|r|}
\hline \text { Cash } & 36,000 & \
\hline \text { Interest Expense } & & 36,000 \
\hline
\end{array}$ 
C) 
$$\begin{array} { | l | r | r | } 
\hline \text { Interest Expense } & 36,000 & \
\hline \text { Discount on Bonds Payable } & 1,077 & \
\hline \text { Cash } & & 37,077 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | l | r | r | } 
\hline \text { Interest Expense } & 36,000 & \
\hline \text { Premium on Bonds Payable } & 1,077 & \
\hline \text { Cash } & & 37,077 \
\hline
\end{array}$$ 
E) 
$$\begin{array} { | l | r | r | } 
\hline \text { Interest Expense } & 37,077 & \
\hline \text { Discount on Bonds Payable } & & 1,077 \
\hline \text { Cash } & & 36,000 \
\hline
\end{array}$$

Premium on Bonds Payable is an increase to the liability account.

A company with liabilities of $2,816,000 and equity of $826,000 has a debt to equity ratio equal to 29.33%

The Discount on Bonds Payable account is:

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:

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

A company has bonds outstanding with a par value of $400,000.The unamortized premium on these bonds is $2,000.The company retired these bonds by buying them on the open market at 97.What is the gain or loss on this retirement?

What is an annuity?

A company issues at 9% bonds at par with a par value of $100,000 on April 1,which is 4 months after the most recent interest date.How much total cash interest is received on April 1 by the bond issuer?

The carrying value of a long-term note is computed as the present value of all remaining future payments,discounted using the market rate at the time of issuance.

Bonds owned by investors whose names and addresses are recorded by the issuing company and for which interest payments are made with checks to the bondholders,are called:

There are two common payment patterns for installment notes: (1)accrued interest plus equal principal payments and (2)equal payments.

A pension plan is a contractual agreement between an employer and its employees in which the employer provides benefits to employees after they retire.

The par value of a bond is also known as its ________________________.

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

The carrying value of a long-term note payable:

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

_________________________ leases are short-term or cancelable leases in which the lessor retains the risks and rewards of ownership.

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

Filters

Exam 10: Reporting and Analyzing Long-Term Liabilities

Premium on Bonds Payable is an increase to the liability account.

A company with liabilities of $2,816,000 and equity of $826,000 has a debt to equity ratio equal to 29.33%

The Discount on Bonds Payable account is:

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:

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

A company has bonds outstanding with a par value of $400,000.The unamortized premium on these bonds is $2,000.The company retired these bonds by buying them on the open market at 97.What is the gain or loss on this retirement?

What is an annuity?

A company issues at 9% bonds at par with a par value of $100,000 on April 1,which is 4 months after the most recent interest date.How much total cash interest is received on April 1 by the bond issuer?

The carrying value of a long-term note is computed as the present value of all remaining future payments,discounted using the market rate at the time of issuance.

Bonds owned by investors whose names and addresses are recorded by the issuing company and for which interest payments are made with checks to the bondholders,are called:

There are two common payment patterns for installment notes: (1)accrued interest plus equal principal payments and (2)equal payments.

A pension plan is a contractual agreement between an employer and its employees in which the employer provides benefits to employees after they retire.

The par value of a bond is also known as its ________________________.

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

The carrying value of a long-term note payable:

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

_________________________ leases are short-term or cancelable leases in which the lessor retains the risks and rewards of ownership.

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

Filters