Question 1

The adjusting entry to record the amortization of a discount on bonds payable is

Accepted Answer

A) debit Discount on Bonds Payable, credit Interest Expense 
B) debit Interest Expense, credit Discount on Bonds Payable 
C) debit Interest Expense, credit Cash 
D) debit Bonds Payable, credit Interest Expense 
A) debit Discount on Bonds Payable, credit Interest Expense 
B) debit Interest Expense, credit Discount on Bonds Payable 
C) debit Interest Expense, credit Cash 
D) debit Bonds Payable, credit Interest Expense

Question 2

When a portion of a bond issue is redeemed, a related proportion of the unamortized premium or discount must be written off.

Accepted Answer

A) True 
 B)False

Question 3

The face value of a term bond is payable at a single specific date in the future.

Accepted Answer

A) True 
 B)False

Question 4

The total interest expense over the entire life of a bond is equal to the sum of the interest payments plus the total discount or minus the total premium related to the bond.

Accepted Answer

A) True 
 B)False

Question 5

Marmalice Co. issued $4,000,000 of five-year, 10 percent bonds, with interest payable semiannually, at a market (effective) interest rate of 11 percent. Determine the present value of the bonds payable using the present value tables. Round to the nearest dollar.​
Present value of an annuity of $1 at compound interest:   Present value of a $1 at compound interest:

Accepted Answer

The answer of Marmalice Co. issued $4,000,000 of five-year, 10...

Question 6

On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. Prepare entries to record the following transactions for the current fiscal year.(a)Issuance of the bonds.(b)Second semiannual interest payment.(c)Amortization of bond premium for the first year, using the straight-line method of amortization.

Accepted Answer

(a)Cash
1,050,000
Premium on B

Question 7

A bond is usually divided into a number of individual bonds of $500 each.

Accepted Answer

A) True 
 B)False

Question 8

If $2,000,000 of 10% bonds are issued at 97, the amount of cash received from the sale is

Accepted Answer

A) $2,060,000 
B) $2,000,000 
C) $2,100,000 
D) $1,940,000 
A) $2,060,000 
B) $2,000,000 
C) $2,100,000 
D) $1,940,000

Question 9

The present value of $60,000 to be received in one year, at 6% compounded annually, is _____ (rounded to nearest dollar). Use the following table, if needed.​

Accepted Answer

A) $56,604 
B) $63,396 
C) $60,000 
D) $3,396 
A) $56,604 
B) $63,396 
C) $60,000 
D) $3,396

Question 10

The balance in Discount on Bonds Payable

Accepted Answer

A) should be reported on the balance sheet as an asset because it has a debit balance 
B) should be allocated to the remaining periods for the life of the bonds by the straight-line method, if the results obtained by that method materially differ from the results that would be obtained by the effective interest rate method 
C) would be added to the related bonds payable to determine the carrying amount of the bonds 
D) would be subtracted from the related bonds payable on the balance sheet 
A) should be reported on the balance sheet as an asset because it has a debit balance 
B) should be allocated to the remaining periods for the life of the bonds by the straight-line method, if the results obtained by that method materially differ from the results that would be obtained by the effective interest rate method 
C) would be added to the related bonds payable to determine the carrying amount of the bonds 
D) would be subtracted from the related bonds payable on the balance sheet

Question 11

On January 1, Year 1, Kennard Co. issued $2,000,000, 5%, 10-year bonds, with interest payable on June 30 and December 31 to yield 6%. Use the following format and round figures to nearest dollar. The bonds were issued for $1,851,234.​
(a) Prepare an amortization schedule for Year 1 and Year 2 using the effective interest rate method.Date Interest Paid Interest Expense Amortization Bond Carrying Amount
(b) Show how this bond would be reported on the balance sheet at December 31, Year 2.

Accepted Answer

(a)​ @#IMG-DLM& (b) ​ Bond pay

Question 12

Luke Corp. issued $2,000,000 of 20-year, 9% callable bonds on July 1, Year 1, with interest payable on June 30 and December 31. The fiscal year of the company is the calendar year. What is the entry to record the payment of interest on December 31 in the year the bonds were issued?

Accepted Answer

The answer of Luke Corp. issued $2,000,000 of 20-year, 9%...

Question 13

The Levi Company issued $200,000 of 12% bonds on January 1 of the current year at face value. The bonds pay interest semiannually on January 1 and July 1. The bonds are dated January 1, and mature in five years, on January 1. The total interest expense related to these bonds for the current year ending on December 31 is

Accepted Answer

A) $2,000 
B) $6,000 
C) $18,000 
D) $24,000 
A) $2,000 
B) $6,000 
C) $18,000 
D) $24,000

Question 14

Present entries to record the selected transactions described below:
(a)Issued $2,750,000 of 10-year, 8% bonds at 97.(b)Amortized bond discount for a full year, using the straight-line method.(c)Called bonds at 98. Assume the bonds were carried at $2,692,250 at the time of the redemption.

Accepted Answer

(a)Cash
2,667,500
Discount on Bonds Paya

Question 15

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was _____. Use the following table, if needed.​

Accepted Answer

A) $321,970 
B) $1,000,000 
C) $943,494 
D) $621,524 
A) $321,970 
B) $1,000,000 
C) $943,494 
D) $621,524

Question 16

On the first day of the current fiscal year, $1,500,000 of 10-year, 8% bonds, with interest payable semiannually, were sold for $1,225,000. Present entries to record the following transactions for the current fiscal year:
(a)Issuance of the bonds.(b)First semiannual interest payment (record as separate entry from discount amortization).(c)Amortization of bond discount for the year, using the straight-line method of amortization.

Accepted Answer

(a) @#IMG-DLM& (b) @#IMG-DLM& (c)Interes

Question 17

Using the following table, what is the present value of $40,000 to be received in 5 years, if the market rate is 7% compounded annually?

Accepted Answer

$40,000 ×

Question 18

Match each description below to the appropriate term (a-g).
-The value of a bond stated on the bond certificate
A)carrying amount
B)face value
C)callable bond
D)indenture
E)term bond
F)convertible bond
G)serial bond

Accepted Answer

The answer of Match each description below to the appropriate...

Question 19

If the bondholder has the right to exchange a bond for shares of common stock, the bond is called a convertible bond.

Accepted Answer

A) True 
 B)False

Question 20

The carrying amount of the bonds is defined as the face value of the bonds plus any unamortized discount or less any unamortized premium.

Accepted Answer

A) True 
 B)False

Exam 11: Liabilities: Bonds Payable

The adjusting entry to record the amortization of a discount on bonds payable is

When a portion of a bond issue is redeemed, a related proportion of the unamortized premium or discount must be written off.

The face value of a term bond is payable at a single specific date in the future.

The total interest expense over the entire life of a bond is equal to the sum of the interest payments plus the total discount or minus the total premium related to the bond.

A bond is usually divided into a number of individual bonds of $500 each.

If $2,000,000 of 10% bonds are issued at 97, the amount of cash received from the sale is

The present value of $60,000 to be received in one year, at 6% compounded annually, is _____ (rounded to nearest dollar). Use the following table, if needed.​

The balance in Discount on Bonds Payable

Luke Corp. issued $2,000,000 of 20-year, 9% callable bonds on July 1, Year 1, with interest payable on June 30 and December 31. The fiscal year of the company is the calendar year. What is the entry to record the payment of interest on December 31 in the year the bonds were issued?

Present entries to record the selected transactions described below: (a)Issued $2,750,000 of 10-year, 8% bonds at 97.(b)Amortized bond discount for a full year, using the straight-line method.(c)Called bonds at 98. Assume the bonds were carried at $2,692,250 at the time of the redemption.

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was _____. Use the following table, if needed.​

Using the following table, what is the present value of $40,000 to be received in 5 years, if the market rate is 7% compounded annually?

Match each description below to the appropriate term (a-g). -The value of a bond stated on the bond certificate A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

If the bondholder has the right to exchange a bond for shares of common stock, the bond is called a convertible bond.

The carrying amount of the bonds is defined as the face value of the bonds plus any unamortized discount or less any unamortized premium.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

The Accounting Cycle

Accounting for Retail Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Support Department and Joint Cost Allocation

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

The Balanced Scorecard and Corporate Social Responsibility

Investments

Filters

The present value of $60,000 to be received in one year, at 6% compounded annually, is _____ (rounded to nearest dollar). Use the following table, if needed.

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was _____. Use the following table, if needed.