Question 1

Bond Interest Payable is reported as a:

Accepted Answer

A) current liability on the balance sheet. 
B) current liability on the income statement. 
C) contra-liability on the balance sheet. 
D) contra-liability on the income statement. 
A) current liability on the balance sheet. 
B) current liability on the income statement. 
C) contra-liability on the balance sheet. 
D) contra-liability on the income statement.

Question 2

Bonds that are backed solely by the general credit of the corporation issuing the bonds are called:

Accepted Answer

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

Question 3

Retired bonds plus interest previously accrued when the book value was above the cost of retirement,cash was paid.
Debit ________ & ________ Credit ________ & ________

Accepted Answer

Debit 8 &

Question 4

Miranda Corporation issued $200,000 of 12%,10-year bonds for $180,000.The entry to record the issuance of the bonds includes a:

Accepted Answer

A) debit to Bonds Payable for $200,000. 
B) credit to Premium on Bonds Payable for $20,000. 
C) credit to Bonds Payable for $220,000. 
D) debit to Discount on Bonds Payable $20,000. 
A) debit to Bonds Payable for $200,000. 
B) credit to Premium on Bonds Payable for $20,000. 
C) credit to Bonds Payable for $220,000. 
D) debit to Discount on Bonds Payable $20,000.

Question 5

The real or actual rate of interest to the borrowing corporation is called the:

Accepted Answer

A) stated rate of interest. 
B) effective rate of interest. 
C) discount rate of interest. 
D) premium rate of interest. 
A) stated rate of interest. 
B) effective rate of interest. 
C) discount rate of interest. 
D) premium rate of interest.

Question 6

The carrying value of bonds is calculated by:

Accepted Answer

A) adding the Premium on Bonds Payable account balance from the Bonds Payable account balance. 
B) subtracting the Premium on Bonds Payable account balance from the Bonds Payable account balance. 
C) subtracting the Discount on Bonds Payable account balance from the Bonds Payable account balance. 
D) adding the Bonds Payable account balance to the Bond Interest Payable account balance. 
A) adding the Premium on Bonds Payable account balance from the Bonds Payable account balance. 
B) subtracting the Premium on Bonds Payable account balance from the Bonds Payable account balance. 
C) subtracting the Discount on Bonds Payable account balance from the Bonds Payable account balance. 
D) adding the Bonds Payable account balance to the Bond Interest Payable account balance.

Question 7

When making the adjustment for accrued interest,the Bond Premium account was not taken into account.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 8

Northern Union Pacific is planning to issue 10-year,10% semiannual interest bonds with a par value of $100,000.
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 96.
c.The bonds are sold on issuance date at 103.

Accepted Answer

The answer of Northern Union Pacific is planning to issue...

Question 9

Accrued interest on bonds which sold at face value.
Debit ________ Credit ________

Accepted Answer

The answer of Accrued interest on bonds which sold at...

Question 10

At maturity,the Premium on Bonds will have a balance equal to the original premium.

Accepted Answer

A) True 
 B)False

Question 11

Condi Corporation sells $150,000,5%,10-year bonds for 95 on January 1,2016.Interest is paid on January 1 and July 1.Straight-line amortization is used.The amount of interest paid on July 1,2016 is:

Accepted Answer

A) $4,750. 
B) $5,750. 
C) $3,750. 
D) $5,000. 
A) $4,750. 
B) $5,750. 
C) $3,750. 
D) $5,000.

Question 12

For a corporation,bond interest:

Accepted Answer

A) is treated the same as dividends for tax purposes. 
B) has no effect on earnings and therefore has no effect on income taxes. 
C) increases income tax by reducing earnings. 
D) None of the above 
A) is treated the same as dividends for tax purposes. 
B) has no effect on earnings and therefore has no effect on income taxes. 
C) increases income tax by reducing earnings. 
D) None of the above

Question 13

If bonds are sold between interest payment dates,the amount of cash the issuer receives is:

Accepted Answer

A) more than the market value of the bonds. 
B) less than the market value of the bonds. 
C) equal to the market value of the bonds. 
D) equal to the face value of the bonds. 
A) more than the market value of the bonds. 
B) less than the market value of the bonds. 
C) equal to the market value of the bonds. 
D) equal to the face value of the bonds.

Question 14

A long term investment established to pay off bondholders at maturity is called a(n):

Accepted Answer

A) discount fund. 
B) maturity fund. 
C) bond sinking fund. 
D) annuity fund. 
A) discount fund. 
B) maturity fund. 
C) bond sinking fund. 
D) annuity fund.

Question 15

What is the difference between a secured bond and a debenture bond?

Accepted Answer

A secured bond is backed by specific ple

Question 16

Using the straight-line method,the semiannual interest expense of a 10%,$200,000 bond for 10 years at 102 would be:

Accepted Answer

A) $20,000. 
B) $10,000. 
C) $9,800. 
D) $10,200. 
A) $20,000. 
B) $10,000. 
C) $9,800. 
D) $10,200.

Question 17

When interest payments are made on a bond issued at face value,the journal entry would include:

Accepted Answer

A) a debit to Bond Interest Expense. 
B) a credit to Cash. 
C) a debit to Cash. 
D) Both A and B 
A) a debit to Bond Interest Expense. 
B) a credit to Cash. 
C) a debit to Cash. 
D) Both A and B

Question 18

Bonds are short-term interest-bearing notes issued to multiple lenders,usually in increments of $1,000.

Accepted Answer

A) True 
 B)False

Question 19

Usually,there is a gain or loss associated with early retirement of bonds.

Accepted Answer

A) True 
 B)False

Question 20

When a bond is sold at a discount,the person buying the bond receives less interest than if the bond had been purchased at face value.

Accepted Answer

A) True 
 B)False

Exam 20: Corporations and Bonds Payable

Bond Interest Payable is reported as a:

Bonds that are backed solely by the general credit of the corporation issuing the bonds are called:

Retired bonds plus interest previously accrued when the book value was above the cost of retirement,cash was paid. Debit ________ & ________ Credit ________ & ________

Miranda Corporation issued $200,000 of 12%,10-year bonds for $180,000.The entry to record the issuance of the bonds includes a:

The real or actual rate of interest to the borrowing corporation is called the:

The carrying value of bonds is calculated by:

When making the adjustment for accrued interest,the Bond Premium account was not taken into account.This error would cause:

Accrued interest on bonds which sold at face value. Debit ________ Credit ________

At maturity,the Premium on Bonds will have a balance equal to the original premium.

Condi Corporation sells $150,000,5%,10-year bonds for 95 on January 1,2016.Interest is paid on January 1 and July 1.Straight-line amortization is used.The amount of interest paid on July 1,2016 is:

For a corporation,bond interest:

If bonds are sold between interest payment dates,the amount of cash the issuer receives is:

A long term investment established to pay off bondholders at maturity is called a(n):

What is the difference between a secured bond and a debenture bond?

Using the straight-line method,the semiannual interest expense of a 10%,$200,000 bond for 10 years at 102 would be:

When interest payments are made on a bond issued at face value,the journal entry would include:

Bonds are short-term interest-bearing notes issued to multiple lenders,usually in increments of $1,000.

Usually,there is a gain or loss associated with early retirement of bonds.

When a bond is sold at a discount,the person buying the bond receives less interest than if the bond had been purchased at face value.

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

Retired bonds plus interest previously accrued when the book value was above the cost of retirement,cash was paid. Debit & Credit &

Accrued interest on bonds which sold at face value. Debit Credit