Exam 20: Corporations and Bonds Payable

Scooters Doll Flower Company on July 1 issued 10% 10 year,$600,000 bonds for $564,149.This price will yield a market rate of 11%.Interest dates are June 30 and December 31.Prepare the journal entries to record: a.Issuance of the bond. b.Payment for the first semiannual interest period plus amortization of the discount using the interest method. c.Payment for the second semiannual interest period plus amortization of the discount using the interest method.

Issued bonds at a value above face value in exchange for equipment. Debit ________ Credit ________

Allan Corporation issued 300,8%,10-year,$1,000 bonds on Jan.1.The annual bond interest date is June 30,and the bonds were issued at face value.The amount of interest expense reported for the current year is:

Discount on Bonds Payable is a:

To determine the bond interest expense using interest method,the computation is the ________ value times the ________ of interest.

On October 1,Allan Company issued 8%,10-year,$300,000 bonds at 100.Interest dates are April 1 and October 1.The amount of cash paid out for interest during the current calendar year is:

When the maturities of a bond issue are spread over a several dates,the bonds are called:

Bonds that can be bought back by the corporation before the maturity date are called ________ bonds.

A bond that pays interest on February 28 and October 31 will have to be adjusted for 3 months interest on December 31.

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

Interest earned on the sinking fund will be added to the Bond Sinking Fund account.

The straight line method for amortization of bonds allocates equal amounts of premium to Bonds Interest Expense each period.

Recorded the interest earned on the bond sinking fund. Debit ________ Credit ________

The market rate of interest and the contract rate of interest will always be the same for a bond sold at a discount.

Paid the bondholders the amount due,face value plus accrued interest,using the sinking fund. Debit ________ & ________ Credit ________

One reason a corporation might issue bonds rather than selling stock is that:

Bonds that are unsecured and are issued only on the general credit of a corporation are called ________ bonds.

When a bond is bought between interest dates:

On March 1,20XX,Jones Company issued $100,000,10-year,6% bonds at face value.The bonds have semiannual interest payments on June 30 and December 31.Record the 20XX journal entries.

The interest method amortizes an equal amount of discount to Bonds Interest Expense each period.