Exam 20: Corporations and Bonds Payable

On April 1, Ballentine Corporation issued 10%, 10-year, $800,000 bonds at face value. Interest dates are April 1 and October 1. The amount of cash paid out for interest during the current calendar year is:

If a corporation issues serial bonds, each bond will have the same maturity dates.

The journal entry to record the payment of semiannual interest on 9%, $90,000 bonds issued at par would be to:

Barnes Corporation has decided to issue bonds that can be converted into stock at a specified exchange rate. What type of bonds is it offering?

When bonds are retired, the Bonds Payable account is credited for face value even if the bonds were originally sold at a premium.

Bonds that are backed solely by the general credit of the corporation issuing the bonds are called:

Bonds are issued for $100,000 at face value on September 1. The stated interest is 12% and interest is paid on September 1 and March 1. What is the adjusting entry on December 31? (Do not round any intermediate calculations. Round your final answer to the nearest dollar.)

The Face Value of a bond:

On July 1, Shooter's Poultry Company issued 10% 10-year, $500,000 bonds for $462,000. This price will yield a market rate of 11%. Interest dates are June 30 and December 31. Prepare the journal entries to record: a. Issuance of the bond. b. Payment for the first semiannual interest period plus amortization of the discount using the interest method. c. Payment for the second semiannual interest period plus amortization of the discount using the interest method.

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transactions. -Deposited cash in a bond sinking fund. 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

All other factors being equal, issuing stocks rather than issuing bonds will:

On October 1, 2015, Port Company issued 11%, 10-year, $800,000 bonds at 108. Interest dates are April 1 and October 1. The amount of straight-line amortization for 2015 is:

Describe bond refunding and explain why it might be advantageous for a company.

The entry to record the semiannual payment and amortization of the discount using the straight-line method on a 11%, $500,000, 9-year bond issued at 96 would be to:

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transactions. -Recorded the interest earned on the bond sinking fund. 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

The sale and issuance of $800,000, 9% bonds with a market rate of 9% would involving debiting Cash for:

Bonds that can be bought back by the corporation before the maturity date are called ________ bonds.

When interest payments are made on a discounted bond, a portion of the discount is:

Bolan Corporation issued 300, 12%, 10-year, $1,000 bonds on Jan. 1. The annual bond interest date is June 30, and the bonds were issued at face value. The amount of interest expense reported for the current year is:

A bond payable: