Exam 20: Corporations and Bonds Payable

The interest rate on which cash payments to bondholders are based is the:

Using the following accounts: [1]Cash [2]Sinking fund [3]Equipment [4]Building [5]Land [6]Accounts payable [7]Notes payable [8]Bond payable [9]Bond interest expense payable [10]Premium on bonds payable [11]Discount on bonds payable [12]Common stock [13]Retained earnings [14]Sinking fund earned [15]Bond interest expense [16]Gain on retirement [17]Loss on retirement Indicate the account(s) to be debited and credited to record the following transactions. -Issued bonds at a value above face value in exchange for equipment. Debit ________ & ________ & ________ Credit ________ & ________ & ________

The amount to be paid on the maturity date of a bond is called the:

The straight-line method amortizes an equal amount of discount to Bonds Interest Expense each period.

Using the following accounts: [1]Cash [2]Sinking fund [3]Equipment [4]Building [5]Land [6]Accounts payable [7]Notes payable [8]Bond payable [9]Bond interest expense payable [10]Premium on bonds payable [11]Discount on bonds payable [12]Common stock [13]Retained earnings [14]Sinking fund earned [15]Bond interest expense [16]Gain on retirement [17]Loss on retirement Indicate the account(s) to be debited and credited to record the following transactions. -Recorded the interest earned on the bond sinking fund. Debit ________ & ________ & ________ Credit ________ & ________ & ________

One reason a corporation might issue bonds rather than selling stock is that:

Using the following accounts: [1]Cash [2]Sinking fund [3]Equipment [4]Building [5]Land [6]Accounts payable [7]Notes payable [8]Bond payable [9]Bond interest expense payable [10]Premium on bonds payable [11]Discount on bonds payable [12]Common stock [13]Retained earnings [14]Sinking fund earned [15]Bond interest expense [16]Gain on retirement [17]Loss on retirement Indicate the account(s) to be debited and credited to record the following transactions. -Accrued interest on bonds which sold above face value. Debit ________ & ________ & ________ Credit ________ & ________ & ________

Plaza Corporation issued $350,000 of 8%,10-year bonds for 98.The entry to record the issuance of the bonds includes a:

Using the following accounts: [1]Cash [2]Sinking fund [3]Equipment [4]Building [5]Land [6]Accounts payable [7]Notes payable [8]Bond payable [9]Bond interest expense payable [10]Premium on bonds payable [11]Discount on bonds payable [12]Common stock [13]Retained earnings [14]Sinking fund earned [15]Bond interest expense [16]Gain on retirement [17]Loss on retirement Indicate the account(s) to be debited and credited to record the following transactions. -Accrued interest on bonds which sold beneath face value. Debit ________ & ________ & ________ Credit ________ & ________ & ________

All bonds have accrued interest adjustments on December 31.

What is the difference between a secured bond and a debenture bond?

Casey issued bonds for $20,000 at 8% on June 1.What is the adjusting on December 31?

When the total amount of a bond issue matures at a certain date at which time the bondholder can convert into shares of stock,the bonds are called convertible bonds.

Using the following accounts: [1]Cash [2]Sinking fund [3]Equipment [4]Building [5]Land [6]Accounts payable [7]Notes payable [8]Bond payable [9]Bond interest expense payable [10]Premium on bonds payable [11]Discount on bonds payable [12]Common stock [13]Retained earnings [14]Sinking fund earned [15]Bond interest expense [16]Gain on retirement [17]Loss on retirement 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 ________ & ________ & ________

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

Bonds payable issued with collateral are called:

Condi Corporation sells $100,000,12%,10-year bonds for 97 on January 1,2009.Interest is paid on January 1 and July 1.Straight-line amortization is used.The amount of interest paid on July 1,2009 is:

Describe bond refunding and explain why it might be advantageous for a company.

The interest rate specified in the bond indenture is called the:

On January 1,Preston Corporation issued 6%,20-year bonds at 108.The face value is $450,000 and interest is paid semiannually.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.