A) the owner of the property is called the lessee. B) the presence of a bargain purchase option indicates that it is a capital lease. C) the renter of the property is called the lessor. D) there is always a transfer of ownership at the end of the lease term. A) the owner of the property is called the lessee. B) the presence of a bargain purchase option indicates that it is a capital lease. C) the renter of the property is called the lessor. D) there is always a transfer of ownership at the end of the lease term.

Exam 15: Long-Term Liabilities

On January 1, 2010, Potter Corporation issued $800,000, 9%, 5-year bonds for $769,112. The bonds were sold to yield an effective-interest rate of 10%. Interest is paid semiannually on June 30 and December 31. 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 Potter Corporation would make on January 1, June 30, and December 31, 2010, related to the bond issue.

(Essay)

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(78)

Question 81

S-A E 218 Kim Estes and Jeff Malone are discussing how the market price of a bond is determined. Kim believes that the market price of a bond is solely a function of the amount of the principal payment at the end of the term of a bond. Is she right? Discuss.

(Essay)

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Question 82

When bonds are converted into common stock and the conversion is recorded, the ________________ of the bonds is transferred to paid-in capital accounts.

(Short Answer)

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Question 83

Finney Company borrowed $800,000 from BankTwo on January 1, 2009 in order to expand its mining capabilities. The five-year note required annual payments of $208,349 and carried an annual interest rate of 9.5%. What is the amount of expense Finney must recognize on its 2010 income statement?

(Multiple Choice)

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Question 84

If a corporation issued bonds at an amount less than face value, it indicates that the corporation has a weak credit rating.

(True/False)

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Question 85

If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date.

(True/False)

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Question 86

A debenture bond is an unsecured bond which is issued against the general credit of the borrower.

(True/False)

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Question 87

In a lease contract,

(Multiple Choice)

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Question 88

If $150,000 face value bonds are issued at 103, the proceeds received will be $103,000.

(True/False)

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Question 89

Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation.

(True/False)

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Question 90

The loss on bond redemption is the difference between the cash paid and the carrying value of the bonds.

(True/False)

4.7/5

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Question 91

Downey Corporation issues a $3,000,000, 12%, 20-year mortgage note payable on December 31, 2010, to obtain needed financing for the construction of a building addition. The terms provide for semiannual installment payments of $199,386 on June 30 and December 31. Instructions (a) Prepare the journal entries to record the mortgage loan on December 31, 2010, and the first installment payment. (b) Will the amount of principal reduction in the second installment payment be more or less than with the first installment payment?

(Essay)

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Question 92

Each of the following may be shown on a supporting schedule instead of on the balance sheet except the

(Multiple Choice)

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Question 93

Carpino Company issued $500,000 of bonds on January 1, 2010. Instructions (a) Prepare the journal entry to record the retirement of the bonds at maturity, assuming the bonds were issued at 100. (b) Prepare the journal entry to record the retirement of the bonds before maturity at 98. Assume the balance in Premium on Bonds Payable is $5,000. (c) Prepare the journal entry to record the conversion of the bonds into 20,000 shares of $10 par value common stock. Assume the bonds were issued at par.

(Essay)

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Question 94

Registered bonds are bonds that are delivered to owners by U.S. registered mail service.

(True/False)

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Question 95

If bonds with a face value of $150,000 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

(Multiple Choice)

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(67)

Question 96

Presented here is a partial amortization schedule for Courtney Company who sold $200,000, five year 10% bonds on January 1, 2010 for $208,000 and uses annual straight-line amortization. Which of the following amounts should be shown in cell (v)?

(Multiple Choice)

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Question 97

Bonds that mature at a single specified future date are called

(Multiple Choice)

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Question 98

Delmar Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,400. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be

(Multiple Choice)

4.9/5

(92)

Question 99

The market price of a bond is obtained by discounting to its present value the ___ paid at maturity, and all _ payments to be made over the term of the bond.

(Short Answer)

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Question 100

Showing 81 - 100 of 215

Exam 15: Long-Term Liabilities

S-A E 218 Kim Estes and Jeff Malone are discussing how the market price of a bond is determined. Kim believes that the market price of a bond is solely a function of the amount of the principal payment at the end of the term of a bond. Is she right? Discuss.

When bonds are converted into common stock and the conversion is recorded, the ________________ of the bonds is transferred to paid-in capital accounts.

Finney Company borrowed $800,000 from BankTwo on January 1, 2009 in order to expand its mining capabilities. The five-year note required annual payments of $208,349 and carried an annual interest rate of 9.5%. What is the amount of expense Finney must recognize on its 2010 income statement?

If a corporation issued bonds at an amount less than face value, it indicates that the corporation has a weak credit rating.

If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date.

A debenture bond is an unsecured bond which is issued against the general credit of the borrower.

In a lease contract,

If $150,000 face value bonds are issued at 103, the proceeds received will be $103,000.

Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation.

The loss on bond redemption is the difference between the cash paid and the carrying value of the bonds.

Each of the following may be shown on a supporting schedule instead of on the balance sheet except the

Registered bonds are bonds that are delivered to owners by U.S. registered mail service.

If bonds with a face value of $150,000 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

Presented here is a partial amortization schedule for Courtney Company who sold $200,000, five year 10% bonds on January 1, 2010 for $208,000 and uses annual straight-line amortization. Which of the following amounts should be shown in cell (v)?

Bonds that mature at a single specified future date are called

Delmar Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,400. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be

The market price of a bond is obtained by discounting to its present value the _______________ paid at maturity, and all _____________ payments to be made over the term of the bond.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Investments

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Filters

The market price of a bond is obtained by discounting to its present value the ___ paid at maturity, and all _ payments to be made over the term of the bond.