Question 1

Deposited cash in a bond sinking fund.
Debit ________ Credit ________

Accepted Answer

The answer of Deposited cash in a bond sinking fund.
Debit...

Question 2

Plaza Corporation issued $350,000 of 8%,10-year bonds for 102.The entry to record the issuance of the bonds includes a:

Accepted Answer

A) debit to Discount on Bonds Payable for $7,000. 
B) credit to Bonds Payable for $343,000. 
C) debit to Bonds Payable for $350,000. 
D) credit to Premium on Bonds Payable for $7,000. 
A) debit to Discount on Bonds Payable for $7,000. 
B) credit to Bonds Payable for $343,000. 
C) debit to Bonds Payable for $350,000. 
D) credit to Premium on Bonds Payable for $7,000.

Question 3

At year end there was no accrual of interest on a bond payable.This error would cause:

Accepted Answer

A) the period end assets to be overstated. 
B) the period end liabilities to be overstated. 
C) the period's net income to be understated. 
D) None of the above 
A) the period end assets to be overstated. 
B) the period end liabilities to be overstated. 
C) the period's net income to be understated. 
D) None of the above

Question 4

A bond sinking fund is a:

Accepted Answer

A) short-term investment. 
B) long-term investment. 
C) current liability. 
D) long-term liability. 
A) short-term investment. 
B) long-term investment. 
C) current liability. 
D) long-term liability.

Question 5

At the time a bond was sold at face value,the entire amount of interest over the life of the bond was recorded as an expense and a liability.This error would cause:

Accepted Answer

A) the period end assets to be overstated. 
B) the period end liabilities to be understated. 
C) the period's net income to be understated. 
D) None of the above is correct. 
A) the period end assets to be overstated. 
B) the period end liabilities to be understated. 
C) the period's net income to be understated. 
D) None of the above is correct.

Question 6

The journal entry to establish a bond sinking fund would include:

Accepted Answer

A) a credit to Bond Sinking Fund. 
B) a debit to Bonds Payable. 
C) a debit to Bond Sinking Fund. 
D) a credit to Bonds Payable. 
A) a credit to Bond Sinking Fund. 
B) a debit to Bonds Payable. 
C) a debit to Bond Sinking Fund. 
D) a credit to Bonds Payable.

Question 7

A $1,000 bond quoted at 98 would sell for:

Accepted Answer

A) $1,000. 
B) $98. 
C) $980. 
D) None of the above 
A) $1,000. 
B) $98. 
C) $980. 
D) None of the above

Question 8

When bonds are retired at an amount greater than book value,the company records a loss on the retirement.

Accepted Answer

A) True 
 B)False

Question 9

A piece of paper held by a bondholder showing evidence of a bond issued by a corporation is called a(n)________.

Accepted Answer

The answer of A piece of paper held by a...

Question 10

Sold bonds at a discount.
Debit ________ & ________ Credit ________

Accepted Answer

Debit 1 &

Question 11

The interest rate specified in the bond indenture is called the:

Accepted Answer

A) market rate. 
B) discount rate. 
C) contract rate. 
D) effective rate. 
A) market rate. 
B) discount rate. 
C) contract rate. 
D) effective rate.

Question 12

The carrying value for bonds sold at a premium:

Accepted Answer

A) equals face value at all times. 
B) increases as time passes until it matures at face value. 
C) decreases as time passes until it matures at face value. 
D) None of these answers is correct. 
A) equals face value at all times. 
B) increases as time passes until it matures at face value. 
C) decreases as time passes until it matures at face value. 
D) None of these answers is correct.

Question 13

Describe bond refunding and explain why it might be advantageous for a company.

Accepted Answer

Bond refunding occurs when a company rea

Question 14

The corporation will repay the principal amount of the bond on the maturity date.

Accepted Answer

A) True 
 B)False

Question 15

A $200,000,8% bond issue was sold at face value and later redeemed at 110.The corporation would have a:

Accepted Answer

A) gain of $20,000. 
B) loss of $20,000. 
C) gain of $8,000. 
D) loss of $8,000. 
A) gain of $20,000. 
B) loss of $20,000. 
C) gain of $8,000. 
D) loss of $8,000.

Question 16

Simon Brothers pays $55,000 into a bond sinking fund each year to redeem the future maturity of its bonds.During the first year,the fund earned $3,500.At the time of bond redemption,the fund has a balance of $550,000.Of this,$525,000 was used to redeem the bonds.Journalize the a)initial deposit;b)the first year's interest;and c)the redemption of the bonds.

Accepted Answer

The answer of Simon Brothers pays $55,000 into a bond...

Question 17

A bond is issued for an amount equal to 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 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 secured by specific assets of the corporation.

Question 18

A bond's discount is amortized over the term of the bond.

Accepted Answer

A) True 
 B)False

Question 19

A bond that has a face value of $200,000 with an annual interest rate of 7% paid semiannually and sold at par would have an interest payment of ________ semiannually.

Accepted Answer

The answer of A bond that has a face value...

Question 20

The entry to record the issuance of a bond between interest payment dates would include a:

Accepted Answer

A) debit to Cash. 
B) credit to Bonds Payable. 
C) credit to Bonds Interest Payable. 
D) All of the above 
A) debit to Cash. 
B) credit to Bonds Payable. 
C) credit to Bonds Interest Payable. 
D) All of the above

Exam 20: Corporations and Bonds Payable

Deposited cash in a bond sinking fund. Debit ________ Credit ________

Plaza Corporation issued $350,000 of 8%,10-year bonds for 102.The entry to record the issuance of the bonds includes a:

At year end there was no accrual of interest on a bond payable.This error would cause:

A bond sinking fund is a:

At the time a bond was sold at face value,the entire amount of interest over the life of the bond was recorded as an expense and a liability.This error would cause:

The journal entry to establish a bond sinking fund would include:

A $1,000 bond quoted at 98 would sell for:

When bonds are retired at an amount greater than book value,the company records a loss on the retirement.

A piece of paper held by a bondholder showing evidence of a bond issued by a corporation is called a(n)________.

Sold bonds at a discount. Debit ________ & ________ Credit ________

The interest rate specified in the bond indenture is called the:

The carrying value for bonds sold at a premium:

Describe bond refunding and explain why it might be advantageous for a company.

The corporation will repay the principal amount of the bond on the maturity date.

A $200,000,8% bond issue was sold at face value and later redeemed at 110.The corporation would have a:

A bond is issued for an amount equal to its face value.Which of the following statements most likely would explain why?

A bond's discount is amortized over the term of the bond.

A bond that has a face value of $200,000 with an annual interest rate of 7% paid semiannually and sold at par would have an interest payment of ________ semiannually.

The entry to record the issuance of a bond between interest payment dates would include a:

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

Deposited cash in a bond sinking fund. Debit Credit

Sold bonds at a discount. Debit & Credit