Exam 15: Long-Term Liabilities

Buffon Electronics Company issues a $1,000,000, 10%, 20-year mortgage note on January 1. The terms provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $58,276. After the first installment payment, the principal balance is

The sale of bonds above face value

Premium on Bonds Payable

Discount on Bonds Payable is ________________ (from)(to) bonds payable on the balance sheet. Premium on Bonds Payable is ________________ (from)(to) bonds payable on the balance sheet.

A lease may be classified as an _______________ lease or as a ________________ lease.

The market rate of interest for a bond issue which sells for more than its face value is

Bonds that may be exchanged for common stock at the option of the bondholders are called

Wenger Corporation is issuing $500,000 of 8%, 5-year bonds when potential bond investors want a return of 10%. Interest is payable semiannually. The present value of 1 factors are 4%, .67556 and 5%, .61391. The present value of an annuity factors are 4%, 8.1109 and 5%, 7.72173. Instructions Compute the market price (present value) of the bonds.

Terrance Company issued $500,000 of 8%, 5-year bonds at 106. Assuming straight-line amortization and annual interest payments, how much bond interest expense is recorded on the next interest date?

If bonds are issued at a discount, it means that the

Bonds are a form of interest-bearing notes payable.

A $600,000 bond was retired at 103 when the carrying value of the bond was $622,000. The entry to record the retirement would include a

Gomez Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1, 2010, at 98. The journal entry to record the issuance will show a

On January 1, 2010, Grant Corporation issued $4,000,000, 10-year, 8% bonds at 102. Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2010 is

The terms of a bond issue are set forth in a formal legal document called a bond ________________.

On January 1, Hurley Corporation issues $2,000,000, 5-year, 12% bonds at 96 with interest payable on July 1 and January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a

The current carrying value of Kruger's $800,000 face value bonds is $797,000. If the bonds are retired at 102, what would be the amount Kruger would pay its bondholders?

Bonds that mature at a single specified future date are called term bonds.

The carrying value of bonds will equal the market price

If there is a loss on bonds redeemed early, it is