Question 1

When bonds are issued at a price below face value,the Discount on Bonds Payable account is credited for the difference between the issue price and the face value.

Accepted Answer

A) True 
 B)False

Question 2

The IRS requires companies to issue coupon bonds in order to track taxable interest payments made to the bond holders.

Accepted Answer

A) True 
 B)False

Question 3

A bond sinking fund investment is started on January 5,2016,by transferring $12,000 in cash to the fund.The company intends to accumulate $12,000 each year in the fund.This $12,000 is invested and earns $1,500 during 2016.On January 5,2017,the amount of cash transferred to the sinking fund investment will be

Accepted Answer

A)  $10,500. 
B)  $12,000. 
C)  $13,500. 
D)  $1,500. 
A)  $10,500. 
B)  $12,000. 
C)  $13,500. 
D)  $1,500.

Question 4

Twenty-year bonds with a face value of $400,000 are issued on January 1 of the current year at 102.How much premium will be amortized under the straight-line method in the first semi-annual interest period?

Accepted Answer

A)  $200. 
B)  $400. 
C)  $800. 
D)  $8,000. 
A)  $200. 
B)  $400. 
C)  $800. 
D)  $8,000.

Question 5

Coupon bonds are often referred to as ____________________ bonds.

Accepted Answer

The answer of Coupon bonds are often referred to as...

Question 6

The investment banker who acts to protect the bondholders' interests,as in the case of default,is called a ____________________.

Accepted Answer

The answer of The investment banker who acts to protect...

Question 7

A company issued 10-year,6% bonds with a par value of $1,000,000.The company received $960,000 upon issuance.Using the straight-line method,the amount of interest expense for the first semi-annual interest period is:

Accepted Answer

A)  $24,000. 
B)  $30,000. 
C)  $32,000. 
D)  $60,000. 
A)  $24,000. 
B)  $30,000. 
C)  $32,000. 
D)  $60,000.

Question 8

Given the following information about a company's financing and net earnings,show in partial income statement format,why it might be advantageous to a stockholder for a company to issue bonds rather than stock to raise additional capital.Include an analysis of return on equity investment.

Accepted Answer

Issuing stock will dilute an investor's

Question 9

The Premium on Bonds Payable account is shown

Accepted Answer

A)  in the Current Assets section of the balance sheet. 
B)  in the Current Liabilities section of the balance sheet. 
C)  in the Long-Term Liabilities section of the balance sheet. 
D)  in the Revenue section of the income statement. 
A)  in the Current Assets section of the balance sheet. 
B)  in the Current Liabilities section of the balance sheet. 
C)  in the Long-Term Liabilities section of the balance sheet. 
D)  in the Revenue section of the income statement.

Question 10

When bonds are issued at a price below face value,the Discount on Bonds Payable account is ____________________ for the difference between the issue price and the face value.

Accepted Answer

The answer of When bonds are issued at a price...

Question 11

Corporations with many bondholders will open a separate checking account because

Accepted Answer

A)  it is required by law. 
B)  the account earns interest. 
C)  it is easier to do the bookkeeping on the bond interest. 
D)  it keeps the bond interest records separate for tax purposes. 
A)  it is required by law. 
B)  the account earns interest. 
C)  it is easier to do the bookkeeping on the bond interest. 
D)  it keeps the bond interest records separate for tax purposes.

Question 12

A company issues 6%,10 year bonds with a par value of $500,000 at 98.The current market rate of interest is 7%.Interest is payable each June 30 and December 31.The company uses the straight-line method to amortize the discount.The journal entry to record the first interest payment is:

Accepted Answer

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

Question 13

Bonds with a face value of $400,000 were issued at 98.The entry to record the issuance will include a debit to the Cash account for

Accepted Answer

A)  $408,000. 
B)  $400,000. 
C)  $398,000. 
D)  $392,000. 
A)  $408,000. 
B)  $400,000. 
C)  $398,000. 
D)  $392,000.

Question 14

When bonds mature,a corporation will pay the bondholders

Accepted Answer

A)  the current market value of the bonds. 
B)  the face amount plus the original premium or minus the original discount. 
C)  the face amount plus the interest accrued since the date the bonds were issued. 
D)  the face amount of the bonds. 
A)  the current market value of the bonds. 
B)  the face amount plus the original premium or minus the original discount. 
C)  the face amount plus the interest accrued since the date the bonds were issued. 
D)  the face amount of the bonds.

Question 15

A company issued 6%,10-year bonds with a par value of $500,000.The current market rate of interest is 5%.The journal entry to record each semiannual interest payment is:

Accepted Answer

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

Question 16

Using the following format,compare capital stock and bonds as means of financing.List characteristics and differences.

Accepted Answer

The answer of Using the following format,compare capital stock and...

Question 17

Galoot Corporation pays and records the semiannual interest on its $500,000,10-year,6% bonds outstanding on July 1,2013.On the same date,amortization of the discount of $10,000 received on $200,000 of those bonds is recorded.Prepare the journal entries recorded by Galoot Corporation.

Accepted Answer

The answer of Galoot Corporation pays and records the semiannual...

Question 18

The entry to record the issuance of bonds at face value includes

Accepted Answer

A)  a credit to Bond Interest Payable. 
B)  a credit to Bond Payable. 
C)  a debit to Bond Interest Expense. 
D)  a debit to Bond Interest Payable. 
A)  a credit to Bond Interest Payable. 
B)  a credit to Bond Payable. 
C)  a debit to Bond Interest Expense. 
D)  a debit to Bond Interest Payable.

Question 19

What are the four things that must be done to remove the bonds from the books in an early retirement? (This is the second step.Step one is to amortize the discount or premium on the bonds up to the date of retirement. )

Accepted Answer

First,the company must remove the book v

Question 20

In the case of liquidation,bondholders and other creditors must be paid in full before stockholders can receive anything.

Accepted Answer

A) True 
 B)False

Exam 22: Long-Term Bonds

When bonds are issued at a price below face value,the Discount on Bonds Payable account is credited for the difference between the issue price and the face value.

The IRS requires companies to issue coupon bonds in order to track taxable interest payments made to the bond holders.

Twenty-year bonds with a face value of $400,000 are issued on January 1 of the current year at 102.How much premium will be amortized under the straight-line method in the first semi-annual interest period?

Coupon bonds are often referred to as ____________________ bonds.

The investment banker who acts to protect the bondholders' interests,as in the case of default,is called a ____________________.

A company issued 10-year,6% bonds with a par value of $1,000,000.The company received $960,000 upon issuance.Using the straight-line method,the amount of interest expense for the first semi-annual interest period is:

Given the following information about a company's financing and net earnings,show in partial income statement format,why it might be advantageous to a stockholder for a company to issue bonds rather than stock to raise additional capital.Include an analysis of return on equity investment.

The Premium on Bonds Payable account is shown

When bonds are issued at a price below face value,the Discount on Bonds Payable account is ____________________ for the difference between the issue price and the face value.

Corporations with many bondholders will open a separate checking account because

A company issues 6%,10 year bonds with a par value of $500,000 at 98.The current market rate of interest is 7%.Interest is payable each June 30 and December 31.The company uses the straight-line method to amortize the discount.The journal entry to record the first interest payment is:

Bonds with a face value of $400,000 were issued at 98.The entry to record the issuance will include a debit to the Cash account for

When bonds mature,a corporation will pay the bondholders

A company issued 6%,10-year bonds with a par value of $500,000.The current market rate of interest is 5%.The journal entry to record each semiannual interest payment is:

Using the following format,compare capital stock and bonds as means of financing.List characteristics and differences.

Galoot Corporation pays and records the semiannual interest on its $500,000,10-year,6% bonds outstanding on July 1,2013.On the same date,amortization of the discount of $10,000 received on $200,000 of those bonds is recorded.Prepare the journal entries recorded by Galoot Corporation.

The entry to record the issuance of bonds at face value includes

What are the four things that must be done to remove the bonds from the books in an early retirement? (This is the second step.Step one is to amortize the discount or premium on the bonds up to the date of retirement. )

In the case of liquidation,bondholders and other creditors must be paid in full before stockholders can receive anything.

Accounting: the Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and the Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounting Principles and Reporting Standards

Accounts Receivable and Uncollectible Accounts

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Financial Statement Analyses

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

Filters