Question 1

Interest earned on the sinking fund will be subtracted from the Sinking Fund account.

Accepted Answer

A) True 
 B)False

Question 2

A bond issue of $500,000 sold at 107 has a bond premium of $35,000.

Accepted Answer

A) True 
 B)False

Question 3

Using the following accounts:
   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 ________ & ________ & ________

Accepted Answer

The answer of Using the following accounts:
   Indicate...

Question 4

The market rate of interest and the contract rate of interest will always be the same for a bond sold at face value.

Accepted Answer

A) True 
 B)False

Question 5

When making the adjustment for accrued interest the Bond Discount account was not taken into consideration. This error would cause:

Accepted Answer

A) the period end assets to be overstated. 
B) the period end liabilities to be understated. 
C) the period's net income to be overstated. 
D) Both B and C are correct. 
A) the period end assets to be overstated. 
B) the period end liabilities to be understated. 
C) the period's net income to be overstated. 
D) Both B and C are correct.

Question 6

The corporation will repay the principal amount of the bond on the maturity date.

Accepted Answer

A) True 
 B)False

Question 7

When a bond is sold at a discount, the person buying the bond receives less interest than if the bond had been purchased at face value.

Accepted Answer

A) True 
 B)False

Question 8

What is the purpose of a bond sinking fund?

Accepted Answer

The purpose of a bond sinking fund is to

Question 9

Interest expense will be greater than the interest payment when bonds are issued at:

Accepted Answer

A) a premium. 
B) face value. 
C) a discount. 
D) the contract rate. 
A) a premium. 
B) face value. 
C) a discount. 
D) the contract rate.

Question 10

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

Accepted Answer

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

Question 11

Bonds are issued for $10,000 at 8% on October 1. What is the adjusting entry on December 31?

Accepted Answer

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

Question 12

Miranda Corporation issued $200,000 of 12%, 10-year bonds for $220,000. The entry to record the issuance of the bonds includes a:

Accepted Answer

A) debit to Bonds Payable for $200,000. 
B) credit to Premium on Bonds Payable for $20,000. 
C) credit to Bonds Payable for $220,000. 
D) credit to Cash for $220,000. 
A) debit to Bonds Payable for $200,000. 
B) credit to Premium on Bonds Payable for $20,000. 
C) credit to Bonds Payable for $220,000. 
D) credit to Cash for $220,000.

Question 13

Bonds that may be redeemed at a certain price level are known as:

Accepted Answer

A) callable bonds. 
B) debenture bonds. 
C) serial bonds. 
D) convertible bonds. 
A) callable bonds. 
B) debenture bonds. 
C) serial bonds. 
D) convertible bonds.

Question 14

At the time a bond was sold at face value the entire amount of interest was recorded as an expense and a liability. This error would cause:

Accepted Answer

A) the period end assets to be overstated. 
B) the period end liabilities to be understated. 
C) the period's net income to be overstated. 
D) None of the above are correct. 
A) the period end assets to be overstated. 
B) the period end liabilities to be understated. 
C) the period's net income to be overstated. 
D) None of the above are correct.

Question 15

Discount on Bonds Payable is a:

Accepted Answer

A) contra-asset account. 
B) contra-liability account. 
C) contra-equity account. 
D) None of these answers are correct. 
A) contra-asset account. 
B) contra-liability account. 
C) contra-equity account. 
D) None of these answers are correct.

Question 16

Northern Union Pacific is planning to issue 10-year, 10% semiannual interest bonds with a par value of $200,000.
Required: Prepare the necessary journal entry under each of the following assumptions.
a. The bonds are sold on issuance date at par.
b. The bonds are sold on issuance date at 96.
c. The bonds are sold on issuance date at 103.

Accepted Answer

The answer of Northern Union Pacific is planning to issue...

Question 17

Bonds payable issued with collateral are called:

Accepted Answer

A) debenture bonds. 
B) serial bonds. 
C) callable bonds. 
D) secured bonds. 
A) debenture bonds. 
B) serial bonds. 
C) callable bonds. 
D) secured bonds.

Question 18

On October 1, Indiana Company issued $10,000, 8%, 5-year bonds at 98. What is the adjusting entry on December 31 using straight-line method?

Accepted Answer

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

Question 19

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

Accepted Answer

A secured bond is backed by specific ple

Question 20

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.

Accepted Answer

The answer of On January 1, Preston Corporation issued 6%,...

Exam 20: Corporations and Bonds Payable

Interest earned on the sinking fund will be subtracted from the Sinking Fund account.

A bond issue of $500,000 sold at 107 has a bond premium of $35,000.

Using the following accounts: 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 ________ & ________ & ________

The market rate of interest and the contract rate of interest will always be the same for a bond sold at face value.

When making the adjustment for accrued interest the Bond Discount account was not taken into consideration. This error would cause:

The corporation will repay the principal amount of the bond on the maturity date.

When a bond is sold at a discount, the person buying the bond receives less interest than if the bond had been purchased at face value.

What is the purpose of a bond sinking fund?

Interest expense will be greater than the interest payment when bonds are issued at:

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

Bonds are issued for $10,000 at 8% on October 1. What is the adjusting entry on December 31?

Miranda Corporation issued $200,000 of 12%, 10-year bonds for $220,000. The entry to record the issuance of the bonds includes a:

Bonds that may be redeemed at a certain price level are known as:

At the time a bond was sold at face value the entire amount of interest was recorded as an expense and a liability. This error would cause:

Discount on Bonds Payable is a:

Bonds payable issued with collateral are called:

On October 1, Indiana Company issued $10,000, 8%, 5-year bonds at 98. What is the adjusting entry on December 31 using straight-line method?

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

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.

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes: the Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks, and Retained Earnings

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

Using the following accounts: 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 & &