Question 1

A bond payable is similar to which of the following?

Accepted Answer

A) Accounts Payable 
B) Accounts Receivable 
C) Notes Payable 
D) Cash 
A) Accounts Payable 
B) Accounts Receivable 
C) Notes Payable 
D) Cash C

Question 2

A $1,000 bond quoted at 105 would sell for:

Accepted Answer

A) $1,105. 
B) $1,050. 
C) $105. 
D) $1,000. 
A) $1,105. 
B) $1,050. 
C) $105. 
D) $1,000. B

Question 3

All bonds have accrued interest adjustments on December 31.

Accepted Answer

A) True 
 B)False  False

Question 4

Martin Corporation sells $300,000,10%,10-year bonds at face value on January 1.Interest is paid on January 1 and July 1.The entry to record the issuance of the bonds on January 1 is:

Accepted Answer

A) 
$$\begin{array} {| l l | l| } 
\hline \text { Cash } && 300,000 \
\hline & \text { Bonds Payable } & 300,000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | r | r | } 
\hline \text { Cash } & 300,000 \
\hline \text { Interest Payable } & 30,000 \
\hline \text { Bonds Payable } & 270,000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { |l | l |} 
\hline\text { Cash } & 270,000 \
\hline \text { Interest Expense } & 30,000 \
\hline \text { Bonds Payable } & 300,000\
\hline
\end{array}$$ 
D) 
$$\begin{array} { | c | l | } 
\hline \text { Bonds Payable } & 270,000 \
\hline \text { Interest Expense } & 30,000 \
\hline \text { Bonds Payable } &300,000 \
\hline
\end{array}$$ 
A) 
$$\begin{array} {| l l | l| } 
\hline \text { Cash } && 300,000 \
\hline & \text { Bonds Payable } & 300,000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | r | r | } 
\hline \text { Cash } & 300,000 \
\hline \text { Interest Payable } & 30,000 \
\hline \text { Bonds Payable } & 270,000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { |l | l |} 
\hline\text { Cash } & 270,000 \
\hline \text { Interest Expense } & 30,000 \
\hline \text { Bonds Payable } & 300,000\
\hline
\end{array}$$ 
D) 
$$\begin{array} { | c | l | } 
\hline \text { Bonds Payable } & 270,000 \
\hline \text { Interest Expense } & 30,000 \
\hline \text { Bonds Payable } &300,000 \
\hline
\end{array}$$

Question 5

Greg Corporation issued on January 1,$600,000 of 10%,5-year bonds at contract rate.Interest is to be paid semiannually on July 1 and January 1.Journalize the following entries:
a.Issued the bonds.
b.Paid the first semiannual interest payment.
c.Retired the bonds at maturity.

Accepted Answer

The answer of Greg Corporation issued on January 1,$600,000 of...

Question 6

Corbin Corporation issued 300,$1,000,11% bonds at 98.The entry to record this transaction is:

Accepted Answer

A) debit Cash $300,000;credit Bonds Payable $294,000;credit Discount on Bonds Payable $6,000. 
B) debit Cash $294,000;credit Bonds Payable $294,000. 
C) debit Cash $300,000;credit Bonds Payable $300,000. 
D) debit Cash $294,000;debit Discount on Bonds Payable $6,000;credit Bonds Payable $300,000. 
A) debit Cash $300,000;credit Bonds Payable $294,000;credit Discount on Bonds Payable $6,000. 
B) debit Cash $294,000;credit Bonds Payable $294,000. 
C) debit Cash $300,000;credit Bonds Payable $300,000. 
D) debit Cash $294,000;debit Discount on Bonds Payable $6,000;credit Bonds Payable $300,000.

Question 7

The sale and issuance of $400,000,8% bonds with a market rate of 8% would involving debiting Cash for:

Accepted Answer

A) $540,000. 
B) $460,000. 
C) $400,000. 
D) $40,000. 
A) $540,000. 
B) $460,000. 
C) $400,000. 
D) $40,000.

Question 8

All other factors being equal,issuing stocks rather than issuing bonds will:

Accepted Answer

A) increase earnings per share. 
B) decrease earnings per share. 
C) have no effect on earnings per share. 
D) Cannot be determined from information given 
A) increase earnings per share. 
B) decrease earnings per share. 
C) have no effect on earnings per share. 
D) Cannot be determined from information given

Question 9

Applegate Corporation sells $150,000,5%,10-year bonds for 96 on January 1.Interest is paid on January 1 and July 1.Straight-line amortization is used.The amount of interest expense recorded on July 1,six months after issuance is:

Accepted Answer

A) $4,050. 
B) $4,250. 
C) $3,750. 
D) $8,500. 
A) $4,050. 
B) $4,250. 
C) $3,750. 
D) $8,500.

Question 10

A fund set up so that a bond can be retired at maturity is called a:

Accepted Answer

A) bond sinking fund. 
B) bond payable fund. 
C) stock fund. 
D) retirement fund. 
A) bond sinking fund. 
B) bond payable fund. 
C) stock fund. 
D) retirement fund.

Question 11

To determine the interest payment on a bond,multiply the ________ interest rate times the ________ value.

Accepted Answer

contract (

Question 12

A bond is issued for more than its face value.Which of the following statements most likely would explain why?

Accepted Answer

A) The bond's contract rate is lower than the market rate at the time of the issue. 
B) The bond's contract rate is the same as the market rate at the time of the issue. 
C) The bond's contract rate is higher than the market rate at the time of the issue. 
D) The bond is not secured by specific assets of the corporation. 
A) The bond's contract rate is lower than the market rate at the time of the issue. 
B) The bond's contract rate is the same as the market rate at the time of the issue. 
C) The bond's contract rate is higher than the market rate at the time of the issue. 
D) The bond is not secured by specific assets of the corporation.

Question 13

When the amount received for the bond is less than the face value,the difference is written off over time in an account called Premium on Bonds Payable.

Accepted Answer

A) True 
 B)False

Question 14

Crafton Corporation is planning to issue 5-year,8%,semiannual interest bonds with a face value of $500,000.
Required: Prepare the necessary journal entry under each of the following assumptions.
a.The bonds are sold on issuance date at par.
b.The bonds are sold on issuance date at 97.
c.The bonds are sold on issuance date at 105.

Accepted Answer

The answer of Crafton Corporation is planning to issue 5-year,8%,semiannual...

Question 15

Casey issued bonds for $20,000 at 12% face value on July 1.12% interest payments are due January 1 and July 1.What is the adjusting entry on December 31?

Accepted Answer

A) 
$$\begin{array} { | c | l | } 
\hline \text { Bond Interest Expense } & 200 \
\hline \text { Bond Interest Payable } & 200 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | c | c | } 
\hline \text { Bond Interest Expense } & 1200 \
\hline \text { Bond Interest Payable } & 1200 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | c | c | } 
\hline \text { Bond Interest Expense } & 2400 \
\hline \text { Bond Interest Expense } & 2400 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | c | c | } 
\hline \text { Bond Interest Payable } & 1400 \
\hline \text { Bond Interest Expense } & 1400 \
\hline
\end{array}$$ 
A) 
$$\begin{array} { | c | l | } 
\hline \text { Bond Interest Expense } & 200 \
\hline \text { Bond Interest Payable } & 200 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | c | c | } 
\hline \text { Bond Interest Expense } & 1200 \
\hline \text { Bond Interest Payable } & 1200 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | c | c | } 
\hline \text { Bond Interest Expense } & 2400 \
\hline \text { Bond Interest Expense } & 2400 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | c | c | } 
\hline \text { Bond Interest Payable } & 1400 \
\hline \text { Bond Interest Expense } & 1400 \
\hline
\end{array}$$

Question 16

When bonds are retired,the Bonds Payable account is credited for face value even if the bonds were originally sold at a premium.

Accepted Answer

A) True 
 B)False

Question 17

The interest paid to bondholders is determined by:

Accepted Answer

A) multiplying the bond's annual rate of interest by the face value. 
B) multiplying the market rate of interest by the face value. 
C) dividing the bond's annual rate of interest by the face value. 
D) dividing the face value by the bond's annual rate of interest. 
A) multiplying the bond's annual rate of interest by the face value. 
B) multiplying the market rate of interest by the face value. 
C) dividing the bond's annual rate of interest by the face value. 
D) dividing the face value by the bond's annual rate of interest.

Question 18

The Face Value of a bond:

Accepted Answer

A) is a special type of long-term interest-bearing note payable issued by a corporation to raise capital. 
B) is the annual interest rate based on face value. 
C) is the amount to be paid on the maturity date of a bond. 
D) is the information on the bond certificate written by the corporation in a formal agreement. 
A) is a special type of long-term interest-bearing note payable issued by a corporation to raise capital. 
B) is the annual interest rate based on face value. 
C) is the amount to be paid on the maturity date of a bond. 
D) is the information on the bond certificate written by the corporation in a formal agreement.

Question 19

When the market rate of interest on bonds is higher than the contract rate,the bonds will sell at:

Accepted Answer

A) a premium. 
B) their face value. 
C) their maturity value. 
D) a discount. 
A) a premium. 
B) their face value. 
C) their maturity value. 
D) a discount.

Question 20

Bonds that may be redeemed at a certain price level are known as:

Accepted Answer

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

Exam 20: Corporations and Bonds Payable

A bond payable is similar to which of the following?

A $1,000 bond quoted at 105 would sell for:

All bonds have accrued interest adjustments on December 31.

Martin Corporation sells $300,000,10%,10-year bonds at face value on January 1.Interest is paid on January 1 and July 1.The entry to record the issuance of the bonds on January 1 is:

Greg Corporation issued on January 1,$600,000 of 10%,5-year bonds at contract rate.Interest is to be paid semiannually on July 1 and January 1.Journalize the following entries: a.Issued the bonds. b.Paid the first semiannual interest payment. c.Retired the bonds at maturity.

Corbin Corporation issued 300,$1,000,11% bonds at 98.The entry to record this transaction is:

The sale and issuance of $400,000,8% bonds with a market rate of 8% would involving debiting Cash for:

All other factors being equal,issuing stocks rather than issuing bonds will:

Applegate Corporation sells $150,000,5%,10-year bonds for 96 on January 1.Interest is paid on January 1 and July 1.Straight-line amortization is used.The amount of interest expense recorded on July 1,six months after issuance is:

A fund set up so that a bond can be retired at maturity is called a:

To determine the interest payment on a bond,multiply the ________ interest rate times the ________ value.

A bond is issued for more than its face value.Which of the following statements most likely would explain why?

When the amount received for the bond is less than the face value,the difference is written off over time in an account called Premium on Bonds Payable.

Casey issued bonds for $20,000 at 12% face value on July 1.12% interest payments are due January 1 and July 1.What is the adjusting entry on December 31?

When bonds are retired,the Bonds Payable account is credited for face value even if the bonds were originally sold at a premium.

The interest paid to bondholders is determined by:

The Face Value of a bond:

When the market rate of interest on bonds is higher than the contract rate,the bonds will sell at:

Bonds that may be redeemed at a certain price level are known as:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property,plant,equipment,and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values,dividends,treasury Stocks,

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

To determine the interest payment on a bond,multiply the interest rate times the value.