Question 1

If the interest rate on bonds is the same as the current market rate, the bonds will sell for their face value.

Accepted Answer

A) True 
 B)False

Question 2

The sum of bonds payable and premium on bonds payable is called the carrying value of the bonds.

Accepted Answer

A) True 
 B)False

Question 3

A bond is an obligation of the shareholders.

Accepted Answer

A) True 
 B)False

Question 4

Match the terms with the definitions.
-Bonds whose ownership generally is not recorded by the corporation.

Accepted Answer

A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds 
A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds

Question 5

Bonds issued that mature at regular intervals are called serial bonds.

Accepted Answer

A) True 
 B)False

Question 6

Debenture bonds are backed by specific assets of the corporation.

Accepted Answer

A) True 
 B)False

Question 7

The discount on bonds payable account would be classified as a(n)

Accepted Answer

A)  current liability. 
B)  adjunct-liability. 
C)  contra-liability. 
D)  noncurrent liability. 
A)  current liability. 
B)  adjunct-liability. 
C)  contra-liability. 
D)  noncurrent liability.

Question 8

Match the terms with the definitions.
-Bonds that are backed by specific corporate assets.

Accepted Answer

A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds 
A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds

Question 9

Bonds classified as to the timing of principal payments include all of the following EXCEPT

Accepted Answer

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

Question 10

The interest rate specified in a bond contract is known as the market rate.

Accepted Answer

A) True 
 B)False

Question 11

Roof Top Corporation had the following bond issue:
Date of issue/sale: May 1, 20-A
Principal: $400,000
Sale price of bonds: 98
Life of bonds: 10 years
Stated rate: 6% a year payable semiannually on October 31 and April 30
​
Required:
Prepare the following general journal entries.
a.
The issuance of the bonds on May 1, 20-A.
b.
The first interest payment.
c.
The redemption of $100,000 worth of bonds on May 1, 20-D, at 99.

Accepted Answer

The answer of Roof Top Corporation had the following bond...

Question 12

The accumulation and investment of money over a period of years that provides the amount necessary for the redemption of a bond issued at its maturity is called a sinking fund.

Accepted Answer

A) True 
 B)False

Question 13

Premium on Bonds Payable should be classified as a contra-liability account.

Accepted Answer

A) True 
 B)False

Question 14

City Slicker Corporation pays $55,000 into a bond sinking fund each year for the future redemption of bonds. During the first year, the fund earns $1,475. When the bonds mature, there is a sinking fund balance of $612,000, and $600,000 is needed to redeem the bonds.
​
Required:
Prepare the following general journal entries.
a.
The initial sinking fund deposit.
b.
The first year's earnings.
c.
The redemption of the bonds.
d.
The return of excess cash to the corporation.

Accepted Answer

The answer of City Slicker Corporation pays $55,000 into a...

Question 15

Island Cove Corporation had the following bond issue:
Date of issue/sale: May 1, 20-A
Principal: $500,000
Sale price of bonds: 104
Life of bonds: 10 years
Stated rate: 6% a year payable semiannually on October 31 and April 30
​
Required:
Prepare the following general journal entries.
a.
The issuance of the bonds on May 1, 20-A.
b.
The first interest payment for 20-A.
c.
The adjusting entry for December 31, 20-A.
d.
The reversing entry for January 1, 20-B.

Accepted Answer

The answer of Island Cove Corporation had the following bond...

Question 16

Bondholders have which of the following relationships with a corporation?

Accepted Answer

A)  They are creditors. 
B)  They are owners. 
C)  They become members of the board. 
D)  They are silent managers. 
A)  They are creditors. 
B)  They are owners. 
C)  They become members of the board. 
D)  They are silent managers.

Question 17

Bonds issued at the same time so that they all have the same maturity date are called

Accepted Answer

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

Question 18

Match the terms with the definitions.
-The formal written agreement for issuing bonds.

Accepted Answer

A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds 
A) amortization 
B) bond 
C) bond indenture 
D) bond sinking fund 
E) callable bonds
F)carrying value
G)convertible bonds
H)coupon bonds
I)debenture bonds
J)discount
K)face value
L)market rate
M)mortgage bonds
N)premium
O)principal
P)registered bonds
Q)secured bonds
R)serial bonds
S)stated rate
T)term bonds

Exam 22: Corporations: Bonds

If the interest rate on bonds is the same as the current market rate, the bonds will sell for their face value.

The sum of bonds payable and premium on bonds payable is called the carrying value of the bonds.

A bond is an obligation of the shareholders.

Match the terms with the definitions. -Bonds whose ownership generally is not recorded by the corporation.

Bonds issued that mature at regular intervals are called serial bonds.

Debenture bonds are backed by specific assets of the corporation.

The discount on bonds payable account would be classified as a(n)

Match the terms with the definitions. -Bonds that are backed by specific corporate assets.

Bonds classified as to the timing of principal payments include all of the following EXCEPT

The interest rate specified in a bond contract is known as the market rate.

The accumulation and investment of money over a period of years that provides the amount necessary for the redemption of a bond issued at its maturity is called a sinking fund.

Premium on Bonds Payable should be classified as a contra-liability account.

Bondholders have which of the following relationships with a corporation?

Bonds issued at the same time so that they all have the same maturity date are called

Match the terms with the definitions. -The formal written agreement for issuing bonds.

Introduction to Accounting

Analyzing Transactions: the Accounting Equation

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Accounting for Purchases and Cash Payments

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Accounts Receivable

Accounting for Notes and Interest

Accounting for Long-Term Assets

Accounting for Partnerships

Corporations: Organization and Capital Stocks

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Statement of Cash Flows

Analysis of Financial Statements

Departmental Accounting

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

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