Exam 11: Liabilities: Bonds Payable

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.

The market interest rate related to a bond is also called the

Callable bonds can be redeemed by the issuing corporation at the fair market price of the bonds.

On the first day of the fiscal year,Lisbon Co.issued $1,000,000 of 10-year,7% bonds for $1,050,000,with interest payable semiannually.Orange Inc.purchased the bonds on the issue date for the issue price.The journal entry to record the amortization of the premium (by the straight-line method)for the year by Lisbon Co.includes a debit to ​

The adjusting entry to record the amortization of a discount on bonds payable is

Any unamortized premium should be reported on the balance sheet of the issuing corporation as

Glover Corporation issued $2,000,000 of 7.5%,6-year bonds dated March 1,with semiannual interest payments on September 1 and March 1.The bonds were issued on March 1,at 97.Glover's year-end is December 31. ​ (a)Were the bonds issued at a premium,a discount,or at par? (b)Was the market rate of interest higher,lower,or the same as the contract rate of interest? (c)If the company uses the straight-line method of amortization,what is the amount of interest expense Glover Corporation will show for the year ended December 31? (d)What is the carrying value of the bonds on December 31?

Selling the bonds at a premium has the effect of

The Designer Company issued 10-year bonds on January 1.The 6% bonds have a face value of $800,000 and pay interest every January 1 and July 1.The bonds were sold for $690,960 based on the market interest rate of 8%.Designer uses the effective interest method to amortize bond discounts and premiums.On July 1 of the first year,Designer should record interest expense (round to the nearest dollar)of

Luke Corp.issued $2,000,000 of 20-year,9% callable bonds on July 1,Year 1,with interest payable on June 30 and December 31.The fiscal year of the company is the calendar year.Journalize the entries to record the following selected transactions:

On January 1,$2,000,000,5-year,10% bonds,were issued for $1,960,000.Interest is paid semiannually on January 1 and July 1.If the issuing corporation uses the straight-line method to amortize discount on bonds payable,the semiannual amortization amount is

Given the following data,prepare the journal entry to record interest expense and any related amortization on December 31 of the first year using the effective interest rate method.Assume interest is paid annually on January 1.The bonds were issued on January 1 for $7,411,233. ​ Bonds payable,maturing in 10 years = $8,000,000 Contract interest rate = 5% Market (effective)interest rate = 6% ​ Round answers to nearest dollar.

If $2,000,000 of 10% bonds are issued at 97,the amount of cash received from the sale is

When the maturities of a bond issue are spread over several dates,the bonds are called

Match each description below to the appropriate term (a-g). -The book value of bonds payable

Use the following tables to calculate the present value of a $25,000,7%,5-year bond that pays $1,750 ($25,000 × 7%)interest annually,if the market rate of interest is 7% Present Value of $1 at Compound Interest ​ Present Value of Annuity of $1 at Compound Interest

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

Match each description below to the appropriate term (a-g). -The entire principal of the bond is paid back on maturity date

Bonds payable should be reported on the balance sheet at face value plus or minus any unamortized premium or discount.

Dylan Corporation issues for cash $2,000,000 of 8%,15-year bonds,interest payable annually,at a time when the market rate of interest is 9%.The straight-line method is adopted for the amortization of bond discount or premium.Which of the following statements is true?