Exam 14: Long-Term Liabilities

When a bond is sold at a price higher than the face value, the difference is known as a:

The principal amount of a bond is $65,000, its stated rate is 7%, and the term of the bond is 5 years. The bond pays interest semiannually. At the time of issue, the market rate is 8%. Determine the present value of the bonds at issuance.

On March 1, 2015, Vinnie Services issued a 5% long-term notes payable for $15,000. It is payable over a 3-year term in $5,000 principal installments on March 1 of each year, beginning March 1, 2016. Which of the following entries needs to be made at March 1, 2015?

The balance in the Bonds Payable account is a credit of $72,000. The balance in the Discount on Bonds Payable is a debit of $3,500. The balance sheet will report the bond balance as $75,500.

The Current Portion of Notes Payable would normally be shown on the balance sheet under current liabilities.

The date on which the principal amount is repaid to the bondholder is known as:

On January 1, 2013, Davie Services issued $20,000 of 8% bonds that mature in five years. They were sold at par. The bonds pay semiannual interest payments on June 30 and December 31 of each year. Provide the journal entry for the payment made on June 30, 2013.

Refer to the following list of liability balances at December 31, 2015. What is the total amount of long-term liabilities?

On the maturity date, the bondholder is paid the face amount of the bond plus the last interest payment.

Using the present value tables, compute the present value of $30,000 discounted back 6 periods at 7%.

On January 2, 2014, Mahoney Sales issued $10,000 in bonds for $10,900. They were 5-year bonds with a stated rate of 4%, and pay semiannual interest. Mahoney Sales uses the straight-line method to amortize bond premium. Provide the journal entry for the first interest payment to be made on June 30, 2014.

On January 1, 2013, Davie Services issued $20,000 of 8% bonds that mature in five years. They were issued at par. Provide the journal entry to issue bonds.

If a bond's stated interest rate is higher than the market rate, which of the following is true?

If bonds with a face value of $200,000 are sold at 105, the amount of cash proceeds is:

A mortgage payable is a long-term debt that is backed with a security interest in specific property.

On April 1, 2015, Nurix Manufacturers purchases equipment for $100,000, paying $30,000 in cash and signing a 10-year mortgage for $70,000 taken out at 8%. Prepare the journal entry to record the acquisition of the equipment.

A bond is sold for an amount less than its face value. Which of the following statements is true?

On July 1, 2014, Miniature Company has bonds with balances as shown below. If the company retires the bonds for $66,150, what will be the effect on the income statement?

The reason investors buy bonds is to:

The balance in the Bonds Payable Account is a credit of $68,000. The balance in the Premium on Bonds Payable Account is a credit of $900. How much is the bond carrying amount?