Exam 11: Reporting and Interpreting Stockholders Equity

A bond discount is recorded as a contra liability when the bond is sold and is amortized over the life of the bond as an adjustment to interest payable.

If there is a loss on bonds redeemed early,it is

Kristen's grandmother promises to give her $1,000 at the end of each of the next five years.How much is the money worth today,assuming Kristen could invest the money and earn a 6% annual rate of return? (Round to the nearest dollar).

You have been asked to compute the cash equivalent price of a machine assuming the cost (including principal and interest)is to be paid in two equal payments after the acquisition date.What is the interest concept that best describes this application? A.Present value of a single amount. B.Present value of an annuity. C.Future value of a single amount. D.Future value of an annuity.

Which of the following is true?

Consider the following statement: "Issuing bonds at a discount is bad for the issuing corporation." Required: Discuss the statement above and comment on its validity.

Amortization of a premium on a bond payable increases interest revenue.

A bondholder participates in the management of a company and in its accumulated profit.

The effective (market)interest rate almost always exceeds the stated interest rate on bonds.

Pleasant Company has established a pension plan for its employees that operates as follows: Each year,Pleasant Company places a fixed dollar amount in a pension fund for each employee.The funds are then invested.Upon retirement,each employee is entitled to the cash value of the funds that have been invested in his/her name.This arrangement is an example of which of the following? A.Defined benefit program. B.Defined contribution program. C.Contingent program. D.Deferred timing program.

On January 1,20B,Dole Corporation sold (issued)400 of its $1,000,ten-year,9% bonds.The bonds were dated January 1,20B,and interest is paid semi-annually each June 30 and December 31.The bonds sold at 99. Part A: Give the entry to record the sale of the bonds on January 1,20B Part B: Were the bonds sold at par,at a premium or at a discount and how did you arrive at your answer?

The carrying value (book value)of a bond payable is equal to the maturity amount of the bond plus any unamortized discount or premium.

An amount is to be deposited in a savings account at the end of each year in order to provide funds for a trip to Europe at the end of the fourth year.You have been asked to determine the amount of the annual deposit.What is the interest concept that best describes this application?

On March 1,20A,Warner Corporation,a calendar year company,issued 40 of its $1,000,8%,five-year bonds at par.The bonds were dated March 1,20A,and the first interest payment will be on February 28,20B.The accounting period ends December 31. Part A: Complete the journal entry grid for each of the following dates (round to the nearest dollar) Part B: Discuss why an entry is needed on December 31,20A

As a held-to-maturity investment,Jones Company purchased a $1,000,7% bond of Company Y on January 1,20A.The interest is paid each December 31 and the bonds mature in five years from the acquisition date.Give the journal entry to record the acquisition of the bond under each of the following three assumptions. The bond sold at par The bond sold at 103: The bond sold at 97:

In 2012,H Co had a debt to equity ratio of 2.86.It appears their business has a high ratio.

Match the way a bond will sell with the situations given. Bond will sell for A.Par B.A discount C.A premium D.None of the above

A $100,000 bond was retired at 97 when the carrying amount of the bond was $102,500.The entry to record the retirement would include a

Whether a bond will sell at a discount or premium depends solely on its conversion privileges.

The amortization of bond premium by the issuer will do which of the following?