Exam 15: Long-Term Liabilities

On January 1 2017 Timber Corporation issued $800000 6% 5-year bonds for $735110. The bonds were sold to yield an effective-interest rate of 8%. Interest is paid annually on January 1. The company uses the effective-interest method of amortization. Instructions (a) Prepare a bond discount amortization schedule which shows the amortization of discount for the first two interest payment dates. (Round to the nearest dollar.) (b) Prepare the journal entries that Timber Corporation would make on January 1 and December 31 2017 and January 1 2018 related to the bond issue.

Robin Corporation retires its $800000 face value bonds at 104 on January 1 following the payment of annual interest. The carrying value of the bonds at the redemption date is $829960. The entry to record the redemption will include a

Presented here is a partial amortization schedule for Graceland Company who sold $100000 five year 10% bonds on January 1 2016 for $108000 and uses annual straight-line amortization. $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { BOND AMORTIZATION SCHEDULE }$ Interest Period Interest Paid Interest Expense Premium Amortization Unamortized Premium Bond Carrying Value January 1,2016 \ 8,000 \ 108,000 January 1,2017 (i) (ii) (iii) (iv) (v) Which of the following amounts should be shown in cell (i)?

On January 1 2016 Focus Corporation issued $500000 6% 5-year bonds at face value. Interest is payable annually on January 1. Instructions Prepare journal entries to record the (a) Issuance of the bonds. (b) Accrual of interest on December 31. (c) Payment of interest on January 1 2017.

The selling price of a $10000 5-year bond will be less than $10000 if the

Dayton Inc. is considering two alternatives to finance its construction of a new $5 million plant. (a) Issuance of 500000 shares of common stock at the market price of $10 per share. (b) Issuance of $5 million 9% bonds at par. Instructions Complete the following table. 11eb1392_1bb0_b395_8021_6370db65944a

Dakota Company issued $700000 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?

Wendy Company issued $600000 of 8% 5-year bonds at 105. Assuming straight-line amortization and annual interest payments how much bond interest expense is recorded on the next interest date?

Mystle Company issued $500000 8% 10-year bonds on December 31 2017 for $470000. Interest is payable annually on December 31. Mystle uses the straight-line method of amortization and has a calendar year end. Instructions Prepare the appropriate journal entries on (a) December 31 2017. (b) December 31 2018.

When bonds are converted into common stock

Bonds are a form of interest-bearing notes payable.

Discount on bonds is an additional cost of borrowing and should be recorded as interest expense over the life of the bonds.

Bond discount should be amortized to comply with

Stengle Company retired $500000 face value 9% bonds on June 30 2017 at 96. The carrying value of the bonds at the redemption date was $508000. Instructions Prepare the journal entry to record the redemption of the bonds.

On January 1 2017 Maris Enterprises issued 9% 5-year bonds with a face amount of $800000 at par. Interest is payable annually on January 1. Instructions Prepare the entries to record the issuance of the bonds and the first annual interest accrual on December 31.

The debt to assets ratio is computed by dividing

On January 1 2017 $3000000 5-year 10% bonds were issued for $2916000. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable the amortization amount per year is

Pan Company received proceeds of $188000 on 10-year 6% bonds issued on January 1 2016. The bonds had a face value of $200000 pay interest annually on December 31 and have a call price of 101. Pan uses the straight-line method of amortization. What is the amount of interest expense Pan will show with relation to these bonds for the year ended December 31 2017?

On the date of issue Radisch Corporation sells $5 million of 5-year bonds at 98. The entry to record the sale will include the following debits and credits: Bonds Payable Discount on Bonds Payable A) \ 4,900,000. \ 0. B) \ 5,000,000. \ 100,000. C) \ 4,900,000. \ 1,200,000. D) \ 5,000,000. \ 10,000.

The adjusted trial balance for Katy Corporation at the end of 2017 contained the following accounts: Bonds payable, 10 \% . \7 00,000 Interest payable 20,000 Discount on bonds payable 40,000 Lease liability 50,000 Mortgage notes payable, 9\%, due 2020 90,000 Accounts pavable 120,000 Instructions (a) Prepare the long-term liabilities section of the balance sheet. (b) Indicate the proper balance sheet classification for the accounts listed above that do not belong in the long-term liabilities section.