Question 1

Bonds with a face value of $200,000 were issued at 103.The entry to record the issuance will include a credit to the Bonds Payable account for

Accepted Answer

A)  $206,000. 
B)  $200,000. 
C)  $103,000. 
D)  $230,000. 
A)  $206,000. 
B)  $200,000. 
C)  $103,000. 
D)  $230,000.

Question 2

The adjusting entry for Barstow Corporation on September 30,2013 (the end of the fiscal year)to accrue three months of bond interest due is as follows.Interest is paid on June 30 and December 31.   Make the entry to reverse this accrual.Include the proper date for the entry.

Accepted Answer

The answer of The adjusting entry for Barstow Corporation on...

Question 3

Which of the following is not a disadvantage of raising capital through the issue of bonds payable?

Accepted Answer

A)  the bonds are classified as a long-term liability 
B)  interest must be paid even if the firm suffers a loss 
C)  the face amount must be repaid at maturity 
D)  interest is deductible for income tax purposes 
A)  the bonds are classified as a long-term liability 
B)  interest must be paid even if the firm suffers a loss 
C)  the face amount must be repaid at maturity 
D)  interest is deductible for income tax purposes

Question 4

When the issuing corporation has the right to require the owners to surrender the bonds for payment before the maturity date of the bonds,the bonds are referred to as

Accepted Answer

A)  serial bonds. 
B)  convertible bonds. 
C)  registered bonds. 
D)  callable bonds. 
A)  serial bonds. 
B)  convertible bonds. 
C)  registered bonds. 
D)  callable bonds.

Question 5

Investors will pay an amount greater than the face amount of a bond if the face interest rate on bonds is greater than the market interest rate.

Accepted Answer

A) True 
 B)False

Question 6

The straight-line amortization method amortizes ____________________ amounts of the premium each month.

Accepted Answer

The answer of The straight-line amortization method amortizes ____________________ amounts...

Question 7

Bonds with a face value of $200,000 were issued at 103.The entry to record the issuance will include a debit to the Cash account for

Accepted Answer

A)  $206,000. 
B)  $200,000. 
C)  $103,000. 
D)  $230,000. 
A)  $206,000. 
B)  $200,000. 
C)  $103,000. 
D)  $230,000.

Question 8

Retained earnings are often appropriated while the bonds are outstanding.Which of the following is a reason for the appropriation?

Accepted Answer

A)  Corporation management wants to protect the bondholders. 
B)  The bond underwriters always require it. 
C)  Tax law requires it. 
D)  The buyers require it. 
A)  Corporation management wants to protect the bondholders. 
B)  The bond underwriters always require it. 
C)  Tax law requires it. 
D)  The buyers require it.

Question 9

To calculate the gain or loss on the retirement of bonds,the face amount of the bonds is subtracted from the repurchase price.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  $2,000. 
B)  $4,000. 
C)  $6,000. 
D)  $8,000. 
A)  $2,000. 
B)  $4,000. 
C)  $6,000. 
D)  $8,000.

Question 11

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

Accepted Answer

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

Question 12

Interest on bonds must be paid in full even when the corporation operates at a loss.

Accepted Answer

A) True 
 B)False

Question 13

A planned fund established to accumulate assets to pay off bonds when they mature is called a bond ____________________ fund investment.

Accepted Answer

The answer of A planned fund established to accumulate assets...

Question 14

If retained earnings are appropriated for bond retirement,a bond retirement sinking fund must be established.

Accepted Answer

A) True 
 B)False

Question 15

The issuing corporation has the right to require the owner of a convertible bond to surrender the bond for payment before the maturity date of the bond.

Accepted Answer

A) True 
 B)False

Question 16

The amortization of the bond discount __________ the carrying value of the bond,while the amortization of the bond premium __________ the carrying value of the bond.

Accepted Answer

A)  decreases;increases 
B)  increases;decreases 
C)  increases;increases 
D)  decreases;decreases 
A)  decreases;increases 
B)  increases;decreases 
C)  increases;increases 
D)  decreases;decreases

Question 17

A company issued 10-year,6% bonds with a par value of $1,000,000.The company received $1,120,000 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)  $36,000. 
D)  $60,000. 
A)  $24,000. 
B)  $30,000. 
C)  $36,000. 
D)  $60,000.

Question 18

When bonds are issued at a premium,the bond premium

Accepted Answer

A)  reduces the amount of interest expense over the life of the bonds. 
B)  increases the amount of interest expense over the life of the bonds. 
C)  does not change the amount of interest expense over the life of the bonds. 
D)  is charged to interest expense when the bonds are issued. 
A)  reduces the amount of interest expense over the life of the bonds. 
B)  increases the amount of interest expense over the life of the bonds. 
C)  does not change the amount of interest expense over the life of the bonds. 
D)  is charged to interest expense when the bonds are issued.

Question 19

Morris Corporation has 10-year,12% bonds Payable of $100,000 that were sold on January 2,2013 at a discount of $15,000.Amortization on the discount is recorded at the end of each year.Determine the Balance Sheet presentation of these bonds at December 31,2014.(Present only the section of the Balance Sheet in which the bonds appear. )

Accepted Answer

The answer of Morris Corporation has 10-year,12% bonds Payable of...

Question 20

Bonds on which a corporation has pledged property to guarantee payment to the bondholders are known as ____________________ bonds.

Accepted Answer

The answer of Bonds on which a corporation has pledged...

Exam 22: Long-Term Bonds

Bonds with a face value of $200,000 were issued at 103.The entry to record the issuance will include a credit to the Bonds Payable account for

The adjusting entry for Barstow Corporation on September 30,2013 (the end of the fiscal year)to accrue three months of bond interest due is as follows.Interest is paid on June 30 and December 31. Make the entry to reverse this accrual.Include the proper date for the entry.

Which of the following is not a disadvantage of raising capital through the issue of bonds payable?

When the issuing corporation has the right to require the owners to surrender the bonds for payment before the maturity date of the bonds,the bonds are referred to as

Investors will pay an amount greater than the face amount of a bond if the face interest rate on bonds is greater than the market interest rate.

The straight-line amortization method amortizes ____________________ amounts of the premium each month.

Bonds with a face value of $200,000 were issued at 103.The entry to record the issuance will include a debit to the Cash account for

Retained earnings are often appropriated while the bonds are outstanding.Which of the following is a reason for the appropriation?

To calculate the gain or loss on the retirement of bonds,the face amount of the bonds is subtracted from the repurchase price.

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

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

Interest on bonds must be paid in full even when the corporation operates at a loss.

A planned fund established to accumulate assets to pay off bonds when they mature is called a bond ____________________ fund investment.

If retained earnings are appropriated for bond retirement,a bond retirement sinking fund must be established.

The issuing corporation has the right to require the owner of a convertible bond to surrender the bond for payment before the maturity date of the bond.

The amortization of the bond discount __________ the carrying value of the bond,while the amortization of the bond premium __________ the carrying value of the bond.

A company issued 10-year,6% bonds with a par value of $1,000,000.The company received $1,120,000 upon issuance.Using the straight-line method,the amount of interest expense for the first semi-annual interest period is:

When bonds are issued at a premium,the bond premium

Bonds on which a corporation has pledged property to guarantee payment to the bondholders are known as ____________________ bonds.

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

The amortization of the bond discount the carrying value of the bond,while the amortization of the bond premium the carrying value of the bond.