Exam 20: Corporations and Bonds Payable

Bonds are issued for $80,000 at face value with 6% interest on October 1. What is the adjusting entry on December 31?

Cane Corporation issued $800,000, 12% bonds at 97. The entry to record this transaction is:

When selling bonds at a discount, the discount received effectively:

The interest method amortizes an equal amount of discount to Bonds Interest Expense each period.

A fund set up so that a bond can be retired at maturity is called a:

Dividends paid to stockholders are:

On October 1, Garson Company issued 8%, 10-year, $300,000 bonds at 100. Interest dates are April 1 and October 1. The amount of cash paid out for interest during the current calendar year is:

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transactions. -Retired bonds plus interest previously accrued when the book value was beneath the cost of retirement, cash was paid. Debit ________ & ________ & ________ Credit ________ A)Cash B)Bond Sinking fund C)Equipment D)Building E)Land F)Accounts payable G)Notes payable H)Bond payable I)Bond interest payable J)Premium on bonds payable K)Discount on bonds payable L)Common stock M)Retained earnings N)Sinking fund earned O)Bond interest expense P)Gain on retirement Q)Loss on retirement

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transactions. -Accrued interest on bonds which sold above face value. Debit ________ & ________ Credit ________ A)Cash B)Bond Sinking fund C)Equipment D)Building E)Land F)Accounts payable G)Notes payable H)Bond payable I)Bond interest payable J)Premium on bonds payable K)Discount on bonds payable L)Common stock M)Retained earnings N)Sinking fund earned O)Bond interest expense P)Gain on retirement Q)Loss on retirement

Bond Indenture:

A piece of paper held by a bondholder showing evidence of a bond issued by a corporation is called a(n) ________.

The carrying value of a bond sold at a(n) ________ falls over time until it reaches the face value.

A bond that has a face value of $300,000 with an annual interest rate of 8% paid semiannually and sold at par would have an interest payment of ________ semiannually.

To determine the bond interest expense using effective interest method, the computation is the ________ times the ________ of interest.

The interest rate on which interest payments to bondholders are based is the:

Crafton Corporation is planning to issue 5-year, 8%, semiannual interest bonds with a face value of $500,000. Required: Prepare the necessary journal entry under each of the following assumptions. a. The bonds are sold on issuance date at par. b. The bonds are sold on issuance date at 97. c. The bonds are sold on issuance date at 105.

Bond Interest Payable is reported as a:

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transactions. -Retired bonds plus interest previously accrued when the book value was above the cost of retirement, cash was paid. Debit ________ & ________ Credit ________ & ________ A)Cash B)Bond Sinking fund C)Equipment D)Building E)Land F)Accounts payable G)Notes payable H)Bond payable I)Bond interest payable J)Premium on bonds payable K)Discount on bonds payable L)Common stock M)Retained earnings N)Sinking fund earned O)Bond interest expense P)Gain on retirement Q)Loss on retirement

Carrying value is the same thing as:

James issued bonds for $30,000 at face value on July 1. 14% interest payments are due January 1 and July 1. What is the adjusting entry on December 31?