Exam 20: Corporations and Bonds Payable

When interest payments are made on a bond issued at face value, the journal entry would include:

The contract rate for a bond is:

A $10,000 bond quoted at 97 would sell for:

A $10,000 bond quoted at 106 would sell for:

To determine the interest payment on a bond, multiply the ________ interest rate times the ________ value.

Using the straight-line method, the semiannual interest expense of a 11%, $500,000 bond for 10 years at 105 would be:

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transactions. -Accrued interest on bonds which sold at 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

Evans Corporation sells $400,000, 12%, 10-year bonds for 98 on January 1. Compute the semiannual interest expense recorded on July 1 using the interest method. The market rate is 15%.

Bond certificates state the:

On April 1, Braintree Corporation issued 10%, 10-year, $800,000 bonds at 110. Interest dates are April 1 and October 1. The amount of cash paid out for interest during the current calendar year is:

Usually, there is a gain or loss associated with early retirement of bonds.

On January 1, Pearson Corporation issued 5%, 20-year bonds at 105. The face value is $300,000 and interest is paid semiannually. Interest is paid January 1 and July 1. Prepare the journal entries to record:: a. Issuance of the bonds. b. First semiannual interest payment and amortization of the premium using the straight-line method.

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transactions. -Sold bonds at a discount. Debit ________ & ________ Credit ________

On October 1, Pile Company issued $60,000, 9%, 5-year bonds at 96. What is the adjusting entry on December 31 using the straight-line method?

On January 1, 20XX, Baker Company issued $200,000, 10-year, 6% bonds at face values. The bonds have semiannual interest payments on June 30 and December 31. Record the 20XX journal entries.

When a bond is bought between interest dates:

Which of the following statements is true in regards to secured bonds?

Interest earned on the sinking fund will be added to the Interest Revenue account.