Exam 12: Debt Financing

How much premium or discount should be amortized on June 30,2014?

Tarpon Corp.had the following long-term debt at December 31: The debenture bonds amounted to

On January 1,2014,Madrid Corp.issued 2,000 of its 9 percent,$1,000 bonds at 95.Interest is payable semiannually on July 1 and January 1.The bonds mature on January 1,2024.Madrid paid bond issue costs of $80,000,which are appropriately recorded as a deferred charge.Madrid uses the straight-line method of amortizing bond discount and bond issue costs.On Madrid's December 31,2014,balance sheet,how much would be shown as the carrying amount of the bonds payable?

Which of the following is true of a premium on bonds payable?

Unamortized debt premium should be reported on the balance sheet of the issuer as a

Bonds that were authorized on January 1,2014,and that pay interest on January 1 and July 1 of each year were issued on October 1,2014.If the issuer's accounting year ends on December 31,how many months would any discount or premium be amortized in 2014?

The net amount required to retire a bond before maturity (assuming no call premium and constant interest rates)is the

How would the carrying value of a bond payable be affected by amortization of each of the following?

On January 1,2014,Gravel Company lent $17,800 cash to Paver Company.The promissory note made by Paver for $20,000 did not bear explicit interest and was due on December 31,2016.No other rights or privileges were exchanged.The prevailing interest rate for a loan of this type was six percent. Assume that the present value of $1 for two periods at six percent is .89.Paver should recognize interest expense in 2014 of

The effective-interest method of amortizing bond premiums

On January 1,2014,Yearly Corporation issued $500,000 of 10 percent,10-year bonds at 88.5.Interest is payable on December 31.If the market rate of interest was 12 percent at the time the bonds were issued,how much cash was paid for interest in 2014?

On December 31,2014,Omar Corporation's current liabilities total $60,000 and long-term liabilities total $160,000.Working capital at December 31,2014,is equal to $90,000.If Omar Corporation's debt-to-equity ratio is .40 to 1,total long-term assets must equal

Included in Zollar Corporation's liability account balances at December 31,2014,were the following: Zollar's December 31,2014,financial statements were issued on March 31,2015.On January 15,2015,the entire $400,000 balance of the 16 percent note was refinanced by issuance of a long-term obligation payable in a lump sum.In addition,on March 10,2015,Zollar consummated a noncancelable agreement with the lender to refinance the 14 percent,$250,000 note on a long-term basis,on readily determinable terms that have not yet been implemented.Both parties are financially capable of honoring the agreement,and there have been no violations of the agreement's provisions.On the December 31,2014,balance sheet,the amount of the notes payable that Zollar should classify as noncurrent obligations is

Romer Corporation, a calendar-year firm, is authorized to issue $200,000 of 10 percent, 20-year bonds dated January 1, 2014, with interest payable on January 1 and July 1 of -If the bonds were issued on April 1,2014,the amount of accrued interest on the date of sale is

The net amount of a bond liability that appears on the balance sheet is the

On January 1,2014,Gustavo Hospital issued a $250,000,10 percent,5-year bond for $231,601.Interest is payable on June 30 and December 31.Gustavo uses the effective-interest method to amortize all premiums and discounts.Assuming an effective interest rate of 12 percent,how much interest expense should be recorded on June 30,2014?

In theory (disregarding any other marketplace variables),the proceeds from the sale of a bond will be equal to the

If a $1,000,9 percent,10-year bond was issued at 103 plus accrued interest one month after the authorization date,how much cash did the issuer receive?

If a $6,000,10 percent,10-year bond was issued at 104 plus accrued interest two months after the authorization date,how much cash was received by the issuer?

On January 1,SOMA issued ten-year bonds with a face amount of $1,000,000 and a stated interest rate of 8 percent payable annually each January 1.The bonds were priced to yield 10 percent.The total issue price (rounded)of the bonds was