Question 1

The journal entry a company records for the interest payment and amortization of bond premium is

Accepted Answer

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

Question 2

How should any unamortized premium be reported on the balance sheet of the issuing corporation?

Accepted Answer

The unamortized premium would

Question 3

A $300,000 bond was redeemed at 104 when the carrying amount of the bond was $316,000. The entry to record the redemption would include a

Accepted Answer

A)  loss on bond redemption of $3,000 
B)  gain on bond redemption of $3,000 
C)  gain on bond redemption of $4,000 
D)  loss on bond redemption of $4,000 
A)  loss on bond redemption of $3,000 
B)  gain on bond redemption of $3,000 
C)  gain on bond redemption of $4,000 
D)  loss on bond redemption of $4,000

Question 4

The legal contract between issuer and bond holder

Accepted Answer

A) carrying amount 
B) face value 
C) callable bond 
D) indenture 
E) term bond
F)convertible bond
G)serial bond 
A) carrying amount 
B) face value 
C) callable bond 
D) indenture 
E) term bond
F)convertible bond
G)serial bond

Question 5

If $1,000,000 of 8% bonds are issued at 98 1/2, the amount of cash received from the sale is

Accepted Answer

A)  $1,080,000 
B)  $985,000 
C)  $1,000,000 
D)  $1,027,500 
A)  $1,080,000 
B)  $985,000 
C)  $1,000,000 
D)  $1,027,500

Question 6

A legal document that indicates the name of the issuer, the face value of the bond and such other data is called

Accepted Answer

A)  trading on the equity 
B)  convertible bond 
C)  a bond debenture 
D)  a bond indenture 
A)  trading on the equity 
B)  convertible bond 
C)  a bond debenture 
D)  a bond indenture

Question 7

There are two methods of amortizing a bond discount or premium: the straight-line method and the double-declining-balance method.

Accepted Answer

A) True 
 B)False

Question 8

Gains and losses on the redemption of bonds are reported as other income (loss) on the income statement.

Accepted Answer

A) True 
 B)False

Question 9

To determine the six-month interest payment amount on a bond, you would take one-half of the market rate times the face value of the bond.

Accepted Answer

A) True 
 B)False

Question 10

Bonds with a face amount of $1,000,000 are sold at 106. The journal entry to record the issuance is

Accepted Answer

A) 
  
B)  
  
C)  
  
D)  
  
A) 
  
B)  
  
C)  
  
D)

Question 11

A $375,000 bond issue on which there is an unamortized discount of $40,000 is redeemed for $320,000. Journalize the redemption of the bonds.

Accepted Answer

The answer of A $375,000 bond issue on which there...

Question 12

Callable bonds are redeemable by the issuing corporation within the period of time and at the price stated in the bond indenture.

Accepted Answer

A) True 
 B)False

Question 13

Bondholders are creditors of the issuing corporation.

Accepted Answer

A) True 
 B)False

Question 14

Selling the bonds at a premium has the effect of

Accepted Answer

A)  raising the effective interest rate above the stated interest rate 
B)  attracting investors that are willing to pay a lower rate of interest than on similar bonds 
C)  causing the interest expense to be higher than the bond interest paid 
D)  causing the interest expense to be lower than the bond interest paid 
A)  raising the effective interest rate above the stated interest rate 
B)  attracting investors that are willing to pay a lower rate of interest than on similar bonds 
C)  causing the interest expense to be higher than the bond interest paid 
D)  causing the interest expense to be lower than the bond interest paid

Question 15

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 103, what is the amount of gain or loss on redemption?

Accepted Answer

A)  $1,200 loss 
B)  $1,200 gain 
C)  $17,000 loss 
D)  $17,000 gain 
A)  $1,200 loss 
B)  $1,200 gain 
C)  $17,000 loss 
D)  $17,000 gain

Question 16

The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is to

Accepted Answer

A)  debit Bonds Payable, credit Cash 
B)  debit Cash and Discount on Bonds Payable, credit Bonds Payable 
C)  debit Cash, credit Premium on Bonds Payable and Bonds Payable 
D)  debit Cash, credit Bonds Payable 
A)  debit Bonds Payable, credit Cash 
B)  debit Cash and Discount on Bonds Payable, credit Bonds Payable 
C)  debit Cash, credit Premium on Bonds Payable and Bonds Payable 
D)  debit Cash, credit Bonds Payable

Question 17

The times interest earned ratio is calculated by dividing Bonds Payable by Interest Expense.

Accepted Answer

A) True 
 B)False

Question 18

On the first day of the current fiscal year, $2,000,000 of 10-year, 7% bonds, with interest payable annually, were sold for $2,125,000. Present entries to record the following transactions for the current fiscal year. (a) Issuance of the bonds.
(b) First annual interest payment (record as separate entry from premium amortization).
(c) Amortization of bond premium for the year, using the straight-line method of amortization.

Accepted Answer

(a) @#IMG-DLM&_TB228

Question 19

A bond indenture is

Accepted Answer

A)  a contract between the corporation issuing the bonds and the underwriters selling the bonds 
B)  the amount due at the maturity date of the bonds 
C)  a contract between the corporation issuing the bonds and the bondholders 
D)  the amount for which the corporation can buy back the bonds prior to the maturity date 
A)  a contract between the corporation issuing the bonds and the underwriters selling the bonds 
B)  the amount due at the maturity date of the bonds 
C)  a contract between the corporation issuing the bonds and the bondholders 
D)  the amount for which the corporation can buy back the bonds prior to the maturity date

Question 20

Match each description below to the appropriate term (a-g).
-The rate printed on the bond certificate

Accepted Answer

A) contract rate 
B) effective rate 
C) bond discount 
D) bond premium 
E) bond
F)bond indenture
G)principal 
A) contract rate 
B) effective rate 
C) bond discount 
D) bond premium 
E) bond
F)bond indenture
G)principal

The journal entry a company records for the interest payment and amortization of bond premium is

How should any unamortized premium be reported on the balance sheet of the issuing corporation?

A $300,000 bond was redeemed at 104 when the carrying amount of the bond was $316,000. The entry to record the redemption would include a

The legal contract between issuer and bond holder

If $1,000,000 of 8% bonds are issued at 98 1/2, the amount of cash received from the sale is

A legal document that indicates the name of the issuer, the face value of the bond and such other data is called

There are two methods of amortizing a bond discount or premium: the straight-line method and the double-declining-balance method.

Gains and losses on the redemption of bonds are reported as other income (loss) on the income statement.

To determine the six-month interest payment amount on a bond, you would take one-half of the market rate times the face value of the bond.

Bonds with a face amount of $1,000,000 are sold at 106. The journal entry to record the issuance is

A $375,000 bond issue on which there is an unamortized discount of $40,000 is redeemed for $320,000. Journalize the redemption of the bonds.

Callable bonds are redeemable by the issuing corporation within the period of time and at the price stated in the bond indenture.

Bondholders are creditors of the issuing corporation.

Selling the bonds at a premium has the effect of

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 103, what is the amount of gain or loss on redemption?

The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is to

The times interest earned ratio is calculated by dividing Bonds Payable by Interest Expense.

A bond indenture is

Match each description below to the appropriate term (a-g). -The rate printed on the bond certificate

Accounting and Business

Double-Entry Accounting

Adjustments: Accruals and Deferrals

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

Investments

Filters

Exam 11: Liabilities: Bonds Payable

The journal entry a company records for the interest payment and amortization of bond premium is

How should any unamortized premium be reported on the balance sheet of the issuing corporation?

A $300,000 bond was redeemed at 104 when the carrying amount of the bond was $316,000. The entry to record the redemption would include a

The legal contract between issuer and bond holder

If $1,000,000 of 8% bonds are issued at 98 1/2, the amount of cash received from the sale is

A legal document that indicates the name of the issuer, the face value of the bond and such other data is called

There are two methods of amortizing a bond discount or premium: the straight-line method and the double-declining-balance method.

Gains and losses on the redemption of bonds are reported as other income (loss) on the income statement.

To determine the six-month interest payment amount on a bond, you would take one-half of the market rate times the face value of the bond.

Bonds with a face amount of $1,000,000 are sold at 106. The journal entry to record the issuance is

A $375,000 bond issue on which there is an unamortized discount of $40,000 is redeemed for $320,000. Journalize the redemption of the bonds.

Callable bonds are redeemable by the issuing corporation within the period of time and at the price stated in the bond indenture.

Bondholders are creditors of the issuing corporation.

Selling the bonds at a premium has the effect of

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 103, what is the amount of gain or loss on redemption?

The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is to

The times interest earned ratio is calculated by dividing Bonds Payable by Interest Expense.

A bond indenture is

Match each description below to the appropriate term (a-g). -The rate printed on the bond certificate

Accounting and Business

Double-Entry Accounting

Adjustments: Accruals and Deferrals

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

Investments

Filters