Question 1

To pay interest on------------ bonds, the corporation must keep a record of the name of each bondholder.

Accepted Answer

registered

Question 2

When bonds mature, a corporation will pay the bondholders

Accepted Answer

A) the face amount of the bonds. 
B) the face amount plus the original premium or minus the original discount. 
C) the face amount plus the interest accrued since the date the bonds were issued. 
D) the current market value of the bonds. 
A) the face amount of the bonds. 
B) the face amount plus the original premium or minus the original discount. 
C) the face amount plus the interest accrued since the date the bonds were issued. 
D) the current market value of the bonds. A

Question 3

Match between columns
                        Premises:  Long-term debt instruments
 Bonds that allow the issuing corporation to retire the bonds prior to their maturity date
 A fund established for the purpose of putting cash in to pay off bonds when due
 The book value of bonds (principal plus premium or principal less discount)
 The removal of the bond liability from the company's books when paid
 Bonds secured by the pledge of securities (i.e., stocks, bonds of another company)
 Cost incurred in issuing bonds (i.e., legal and accounting fees, printing costs)
 Bonds that give the bondholder the right to exchange their bonds for common stock under specified conditions
 A bond contract
 Bearer bonds

Accepted Answer

The Answer of Bond indenture and Bond issue costs and is...

Question 4

Bond interest expense usually appears in the-------------section of the income statement.

Accepted Answer

Other Expe

Question 5

The balance of the Bonds Payable account plus the balance of the Premium on Bonds Payable account or minus the balance of the Discount on Bonds Payable account is called the--------- of the bonds.

Accepted Answer

book value

Question 6

Twee Corporation creates a bond sinking fund on July 1, 2019, the first day of its fiscal year in preparation of payment of principal of $300,000 due in six years. Twee makes a $50,000 cash deposit into the account and invests it in an oil stock fund. During the year, $4,400 is earned on this investment. Fund administrative expenses for this fund amount to $50. Record the journal entry for the creation of this fund, the earnings on the investment, and for the required amount of investment into the sinking fund at the beginning of the second year.

Accepted Answer

The answer of Twee Corporation creates a bond sinking fund...

Question 7

To calculate the gain or loss on the retirement of bonds, the face amount of the bonds is subtracted from the repurchase price.

Accepted Answer

A) True 
 B)False

Question 8

Bonds with a face value of $400,000 were issued at 102. The entry to record the issuance will include a debit to the Cash account for

Accepted Answer

A) $392,000. 
B) $400,000. 
C) $408,000. 
D) $402,000. 
A) $392,000. 
B) $400,000. 
C) $408,000. 
D) $402,000.

Question 9

Bonds issued at a premium are

Accepted Answer

A) traded for stock. 
B) sold at face value. 
C) sold for more than face value. 
D) sold at less than face value. 
A) traded for stock. 
B) sold at face value. 
C) sold for more than face value. 
D) sold at less than face value.

Question 10

A bond sinking fund investment is started on January 5, 2019, by transferring $10,000 in cash to the fund. This $10,000 is invested and earns $1,100 during 2019. The entry to record the earnings made on the sinking fund investment includes

Accepted Answer

A) a debit to Cash for $1,100 and a credit to Income from Sinking Fund Investment for $1,100. 
B) a debit to Cash for $1,100 and a credit to Bond Sinking Fund Investment for $1,100. 
C) a debit to Bond Sinking Fund Investment for $1,100 and a credit to Income from Sinking Fund Investment for $1,100. 
D) a debit to Cash for $1,100 and a credit to Interest Income for $1,100. 
A) a debit to Cash for $1,100 and a credit to Income from Sinking Fund Investment for $1,100. 
B) a debit to Cash for $1,100 and a credit to Bond Sinking Fund Investment for $1,100. 
C) a debit to Bond Sinking Fund Investment for $1,100 and a credit to Income from Sinking Fund Investment for $1,100. 
D) a debit to Cash for $1,100 and a credit to Interest Income for $1,100.

Question 11

Interest on bonds must be paid in full as scheduled in the bond indenture even when the corporation operates at a loss.

Accepted Answer

A) True 
 B)False

Question 12

Bonds with a face value of $400,000 were issued at 98. The entry to record the issuance will include a credit to the Bonds Payable account for

Accepted Answer

A) $408,000. 
B) $400,000. 
C) $398,000. 
D) $392,000. 
A) $408,000. 
B) $400,000. 
C) $398,000. 
D) $392,000.

Question 13

A bond sinking fund investment is started on January 5, 2019, by transferring $12,000 in cash to the fund. The company intends to accumulate $12,000 each year in the fund. This $12,000 is invested and earns $1,500 during 2019. On January 5, 2020, the amount of cash transferred to the sinking fund investment will be

Accepted Answer

A) $10,500. 
B) $12,000. 
C) $13,500. 
D) $1,500. 
A) $10,500. 
B) $12,000. 
C) $13,500. 
D) $1,500.

Question 14

The issuing corporation has the right to require the owner of a convertible bond to surrender the bond for payment before the maturity date of the bond.

Accepted Answer

A) True 
 B)False

Question 15

Bonds with a face value of $400,000 were issued at 98. The entry to record the issuance will include a debit to the Cash account for

Accepted Answer

A) $408,000. 
B) $400,000. 
C) $398,000. 
D) $392,000. 
A) $408,000. 
B) $400,000. 
C) $398,000. 
D) $392,000.

Question 16

If bonds are issued for a price below their face value, the bond discount should be

Accepted Answer

A) charged to expense on the date the bonds are issued. 
B) shown as an addition to Bonds Payable in the Long-Term Liabilities section of the balance sheet. 
C) amortized over the life of the bond issue. 
D) shown as a current liability on the balance sheet. 
A) charged to expense on the date the bonds are issued. 
B) shown as an addition to Bonds Payable in the Long-Term Liabilities section of the balance sheet. 
C) amortized over the life of the bond issue. 
D) shown as a current liability on the balance sheet.

Question 17

The board of directors of the Columbus Corporation authorized the issuance of $400,000 face value of 8-year, 9 percent bonds dated April 1, 2019, and maturing on April 1, 2027. Interest is payable semiannually on April 1 and October 1. Each bond has a face value of $1,000. Because the funds to be raised were not immediately needed, no bonds were issued until April 1, 2021. Record the following transactions on page 8 of a general journal. Omit descriptions.
2021
Apr. 1 Issued $80,000 of bonds at 102.4 
Oct. 1 Paid the semiannual bond interest
1 Issued $50,000 bonds at face value
1 Recorded the amortization of the premium on the bonds sold on April 1 using the straight-line method
Dec.31 Recorded the adjusting entry to accrue the bond interest and to amortize the premium
31 Closed the Bond Interest Expense account into the Income Summary account

Accepted Answer

The answer of The board of directors of the Columbus...

Question 18

Bonds Payable has a balance of $900,000 and Premium on Bonds Payable has a balance of
$10,000. If the issuing corporation redeems the bonds at 98, what is the amount of gain or loss on the redemption of the bonds?

Accepted Answer

A) $10,000 loss. 
B) $10,000 gain. 
C) $28,000 gain. 
D) $28,000 loss. 
A) $10,000 loss. 
B) $10,000 gain. 
C) $28,000 gain. 
D) $28,000 loss.

Question 19

Match between columns
                        Premises: The interest rate a corporation is willing to pay and investors will accept.
Bonds for which property is pledged to secure the bondholders' claims.
The amount the company must pay for the bond when it is called.
Unsecured bonds backed only by a corporation's general credit.
Bonds issued at one time but payable over a period of time.
Bonds issued to a party whose name is listed in the corporation's records.
The excess of the price paid over the face value of a bond.
Using borrowed funds to earn a profit greater than the interest paid on borrowing.
The excess of the face value over the price received by a company for bonds.
The contractual interest specified on the bond.

Accepted Answer

The Answer of leveraging and premium on bonds payable and is...

Question 20

The amortization of the bond discount the carrying value of the bond, while the amortization of the bond premium the carrying value of the bond.

Accepted Answer

A) increases; decreases 
B) increases; increases 
C) decreases; increases 
D) decreases; decreases 
A) increases; decreases 
B) increases; increases 
C) decreases; increases 
D) decreases; decreases

Exam 22: Long-Term Bonds

To pay interest on------------ bonds, the corporation must keep a record of the name of each bondholder.

When bonds mature, a corporation will pay the bondholders

Bond interest expense usually appears in the-------------section of the income statement.

The balance of the Bonds Payable account plus the balance of the Premium on Bonds Payable account or minus the balance of the Discount on Bonds Payable account is called the--------- of the bonds.

To calculate the gain or loss on the retirement of bonds, the face amount of the bonds is subtracted from the repurchase price.

Bonds with a face value of $400,000 were issued at 102. The entry to record the issuance will include a debit to the Cash account for

Bonds issued at a premium are

A bond sinking fund investment is started on January 5, 2019, by transferring $10,000 in cash to the fund. This $10,000 is invested and earns $1,100 during 2019. The entry to record the earnings made on the sinking fund investment includes

Interest on bonds must be paid in full as scheduled in the bond indenture even when the corporation operates at a loss.

Bonds with a face value of $400,000 were issued at 98. The entry to record the issuance will include a credit to the Bonds Payable account for

The issuing corporation has the right to require the owner of a convertible bond to surrender the bond for payment before the maturity date of the bond.

Bonds with a face value of $400,000 were issued at 98. The entry to record the issuance will include a debit to the Cash account for

If bonds are issued for a price below their face value, the bond discount should be

Bonds Payable has a balance of $900,000 and Premium on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 98, what is the amount of gain or loss on the redemption of the bonds?

The amortization of the bond discount the carrying value of the bond, while the amortization of the bond premium the carrying value of the bond.

Accounting: The Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and Teh Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounting Principles and Reporting Standards

Accounts Receivable and Uncollectible Accounts

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

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