Question 1

When a company retires bonds before maturity, the gain or loss on redemption is the difference between the cash paid and the

Accepted Answer

A) carrying value of the bonds. 
B) face value of the bonds. 
C) original selling price of the bonds. 
D) maturity value of the bonds. 
A) carrying value of the bonds. 
B) face value of the bonds. 
C) original selling price of the bonds. 
D) maturity value of the bonds.

Question 2

Beonce Company received proceeds of $188,000 on 10-year, 6% bonds issued on January 1, 2013. The bonds had a face value of $200,000, pay interest semi-annually on June 30 and December 31, and have a call price of 101. Beonce uses the straight-line method of amortization. Beonce Company decided to redeem the bonds on January 1, 2015. What amount of gain or loss would Beonce report on its 2015 income statement?

Accepted Answer

A) $9,600 gain 
B) $11,600 gain 
C) $11,600 loss 
D) $9,600 loss 
A) $9,600 gain 
B) $11,600 gain 
C) $11,600 loss 
D) $9,600 loss

Question 3

A $1,000 face value bond with a quoted price of 98 is selling for

Accepted Answer

A) $1,000. 
B) $980. 
C) $908. 
D) $98. 
A) $1,000. 
B) $980. 
C) $908. 
D) $98.

Question 4

Bond interest paid is

Accepted Answer

A) higher when bonds sell at a discount. 
B) lower when bonds sell at a premium. 
C) the same whether bonds sell at a discount or a premium. 
D) higher when bonds sell at a discount and lower when bonds sell at a premium. 
A) higher when bonds sell at a discount. 
B) lower when bonds sell at a premium. 
C) the same whether bonds sell at a discount or a premium. 
D) higher when bonds sell at a discount and lower when bonds sell at a premium.

Question 5

234. If bonds have been issued at a discount, over the life of the bonds, the

Accepted Answer

A) carrying value of the bonds will decrease. 
B) carrying value of the bonds will increase. 
C) interest expense will increase, if the discount is being amortized on a straight-line basis. 
D) unamortized discount will increase. 
A) carrying value of the bonds will decrease. 
B) carrying value of the bonds will increase. 
C) interest expense will increase, if the discount is being amortized on a straight-line basis. 
D) unamortized discount will increase.

Question 6

If bonds with a face value of $140,000 are converted into common stock when the carrying value of the bonds is $135,000, the entry to record the conversion will include a debit to

Accepted Answer

A) Bonds Payable for $140,000. 
B) Bonds Payable for $135,000. 
C) Discount on Bonds Payable for $5,000. 
D) Bonds Payable equal to the market price of the bonds on the date of conversion. 
A) Bonds Payable for $140,000. 
B) Bonds Payable for $135,000. 
C) Discount on Bonds Payable for $5,000. 
D) Bonds Payable equal to the market price of the bonds on the date of conversion.

Question 7

If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount.

Accepted Answer

A) True 
 B)False

Question 8

227. Pakota Company issued $700,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year?

Accepted Answer

A) $686,000 
B) $683,200 
C) $688,800 
D) $697,200 
A) $686,000 
B) $683,200 
C) $688,800 
D) $697,200

Question 9

Each payment on a mortgage note payable consists of

Accepted Answer

A) interest on the original balance of the loan only. 
B) reduction of loan principal only. 
C) interest on the original balance of the loan and reduction of loan principal. 
D) interest on the unpaid balance of the loan and reduction of loan principal. 
A) interest on the original balance of the loan only. 
B) reduction of loan principal only. 
C) interest on the original balance of the loan and reduction of loan principal. 
D) interest on the unpaid balance of the loan and reduction of loan principal.

Question 10

Sales taxes collected by the retailer are recorded as a(n)

Accepted Answer

A) revenue. 
B) liability. 
C) expense. 
D) asset. 
A) revenue. 
B) liability. 
C) expense. 
D) asset.

Question 11

213. On January 1, Jorge Inc. issued $3,000,000, 8% bonds for $2,817,000. The market rate of interest for these bonds is 9%. Interest is payable annually on December 31. Jorge uses the effective-interest method of amortizing bond discount. At the end of the first year, Jorge should report unamortized bond discount of:

Accepted Answer

A) $164,700. 
B) $169,470. 
C) $157,467. 
D) $153,000. 
A) $164,700. 
B) $169,470. 
C) $157,467. 
D) $153,000.

Question 12

Sales taxes collected by a retailer are reported as

Accepted Answer

A) contingent liabilities. 
B) revenues. 
C) expenses. 
D) current liabilities. 
A) contingent liabilities. 
B) revenues. 
C) expenses. 
D) current liabilities.

Question 13

Metropolitan Symphony sells 200 season tickets for $50,000 that represents a five concert season. The amount of Unearned Ticket Revenue after the second concert is $20,000.

Accepted Answer

A) True 
 B)False

Question 14

235. Hooke Company received proceeds of $377,000 on 10-year, 8% bonds issued on January 1, 2014. The bonds had a face value of $400,000, pay interest semi-annually on June 30 and December 31, and have a call price of 101. Hooke uses the straight-line method of amortization. What is the amount of interest expense Hooke will show with relation to these bonds for the year ended December 31, 2015?

Accepted Answer

A) $32,000 
B) $30,160 
C) $34,300 
D) $29,700 
A) $32,000 
B) $30,160 
C) $34,300 
D) $29,700

Question 15

Under IFRS, liabilities

Accepted Answer

A) must be legally enforceable by a contract. 
B) must be legally enforceable by law. 
C) may be legally enforceable by a contract or law but need not be. 
D) are defined differently than under GAAP. 
A) must be legally enforceable by a contract. 
B) must be legally enforceable by law. 
C) may be legally enforceable by a contract or law but need not be. 
D) are defined differently than under GAAP.

Question 16

The present value of a $10,000, 5-year bond, will be less than $10,000 if the

Accepted Answer

A) contractual interest rate is less than the market interest rate. 
B) contractual interest rate is greater than the market interest rate. 
C) bond is convertible. 
D) contractual interest rate is equal to the market interest rate. 
A) contractual interest rate is less than the market interest rate. 
B) contractual interest rate is greater than the market interest rate. 
C) bond is convertible. 
D) contractual interest rate is equal to the market interest rate.

Question 17

Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

Accepted Answer

A) callable bonds. 
B) early retirement bonds. 
C) options. 
D) debentures. 
A) callable bonds. 
B) early retirement bonds. 
C) options. 
D) debentures.

Question 18

A $30,000, 8%, 9-month note payable requires an interest payment of $1,800 at maturity.

Accepted Answer

A) True 
 B)False

Question 19

The contractual interest rate is always equal to the market interest rate on the date that bonds are issued.

Accepted Answer

A) True 
 B)False

Question 20

As interest is recorded on an interest-bearing note, the Interest Expense account is

Accepted Answer

A) increased; the Notes Payable account is increased. 
B) increased; the Notes Payable account is decreased. 
C) increased; the Interest Payable account is increased. 
D) decreased; the Interest Payable account is increased. 
A) increased; the Notes Payable account is increased. 
B) increased; the Notes Payable account is decreased. 
C) increased; the Interest Payable account is increased. 
D) decreased; the Interest Payable account is increased.

When a company retires bonds before maturity, the gain or loss on redemption is the difference between the cash paid and the

A $1,000 face value bond with a quoted price of 98 is selling for

Bond interest paid is

234. If bonds have been issued at a discount, over the life of the bonds, the

If bonds with a face value of $140,000 are converted into common stock when the carrying value of the bonds is $135,000, the entry to record the conversion will include a debit to

If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount.

227. Pakota Company issued $700,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year?

Each payment on a mortgage note payable consists of

Sales taxes collected by the retailer are recorded as a(n)

Sales taxes collected by a retailer are reported as

Metropolitan Symphony sells 200 season tickets for $50,000 that represents a five concert season. The amount of Unearned Ticket Revenue after the second concert is $20,000.

Under IFRS, liabilities

The present value of a $10,000, 5-year bond, will be less than $10,000 if the

Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

A $30,000, 8%, 9-month note payable requires an interest payment of $1,800 at maturity.

The contractual interest rate is always equal to the market interest rate on the date that bonds are issued.

As interest is recorded on an interest-bearing note, the Interest Expense account is

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The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

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Exam 10: Liabilities

When a company retires bonds before maturity, the gain or loss on redemption is the difference between the cash paid and the

A $1,000 face value bond with a quoted price of 98 is selling for

Bond interest paid is

234. If bonds have been issued at a discount, over the life of the bonds, the

If bonds with a face value of $140,000 are converted into common stock when the carrying value of the bonds is $135,000, the entry to record the conversion will include a debit to

If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount.

227. Pakota Company issued $700,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year?

Each payment on a mortgage note payable consists of

Sales taxes collected by the retailer are recorded as a(n)

Sales taxes collected by a retailer are reported as

Metropolitan Symphony sells 200 season tickets for $50,000 that represents a five concert season. The amount of Unearned Ticket Revenue after the second concert is $20,000.

Under IFRS, liabilities

The present value of a $10,000, 5-year bond, will be less than $10,000 if the

Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

A $30,000, 8%, 9-month note payable requires an interest payment of $1,800 at maturity.

The contractual interest rate is always equal to the market interest rate on the date that bonds are issued.

As interest is recorded on an interest-bearing note, the Interest Expense account is

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters