Question 1

The issuance of a note is recorded,on the books of the borrower,by crediting Cash and debiting Notes Receivable.

Accepted Answer

A) True 
 B)False

Question 2

When bonds are retired at maturity,assuming the last interest payment has already been recorded,the journal entry includes a debit to the Bonds Payable account and a credit to the Cash account.

Accepted Answer

A) True 
 B)False

Question 3

The reason investors buy bonds is to ________.

Accepted Answer

A) earn interest 
B) own controlling interest in the company 
C) exercise voting rights in a company 
D) receive dividend payments 
A) earn interest 
B) own controlling interest in the company 
C) exercise voting rights in a company 
D) receive dividend payments

Question 4

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

Accepted Answer

A) issuing date 
B) interest date 
C) maturity date 
D) installment date 
A) issuing date 
B) interest date 
C) maturity date 
D) installment date

Question 5

The Employee Bonus Payable would normally be shown on the balance sheet under long-term liabilities.

Accepted Answer

A) True 
 B)False

Question 6

A note payable can either be classified as a long-term liability or a short-term liability,depending on the discretion of the accountant.

Accepted Answer

A) True 
 B)False

Question 7

The face value is $81,000,the stated rate is 10%,and the term of the bond is eight years.The bond pays interest semiannually.At the time of issue,the market rate is 8%.What is the present value of the bond at the market rate?
Present value of $1:
 
Present value of annuity of $1:

Accepted Answer

A) $90,445 
B) $47,191 
C) $43,141 
D) $83,754 
A) $90,445 
B) $47,191 
C) $43,141 
D) $83,754

Question 8

On January 1,2017,Citywide Sales issued $32,000 in bonds for $35,800.These are eight-year bonds with a stated rate of 11% and pay semiannual interest.Citywide Sales uses the straight-line method to amortize the bond premium.On June 30,2017,when Citywide makes the first payment to bondholders,what is the amount that will be reported as Interest Expense? (Round your intermediate answers to the nearest dollar. )

Accepted Answer

A) $1,522 
B) $1,760 
C) $2,278 
D) $1,062 
A) $1,522 
B) $1,760 
C) $2,278 
D) $1,062

Question 9

On March 21,2017,the bond accounts of Urban Sales showed the following balances.   
Urban Sales retires the bonds for $66,150.Prepare the journal entry to record the retirement of the bonds.

Accepted Answer

The answer of On March 21,2017,the bond accounts of Urban...

Question 10

A bond is issued at premium ________.

Accepted Answer

A) when a bond's stated interest rate is equal to the market interest rate 
B) when a bond's stated interest rate is less than the effective interest rate 
C) when a bond's stated interest rate is less than the market interest rate 
D) when a bond's stated interest rate is higher than the market interest rate 
A) when a bond's stated interest rate is equal to the market interest rate 
B) when a bond's stated interest rate is less than the effective interest rate 
C) when a bond's stated interest rate is less than the market interest rate 
D) when a bond's stated interest rate is higher than the market interest rate

Question 11

On January 1,2017,Damron Services issued $20,000 of 8% bonds that mature in five years.The bonds were issued for $19,000.Prepare the journal entry to issue bonds.

Accepted Answer

The answer of On January 1,2017,Damron Services issued $20,000 of...

Question 12

On December 31,2017,Clark Sales has 10-year Bonds Payable of $105,000 and Discount on Bonds Payable of $13,350.How will this be shown on the December 31,2016 Balance Sheet?

Accepted Answer

A) Bonds Payable $105,000 less Discount on Bonds Payable $13,350 for a carrying amount of $91,650 
B) Bonds Payable $105,000 plus Discount on Bonds Payable for a carrying amount of $118,350 
C) Bonds Payable $105,000 
D) Bonds Payable $105,000 less one-tenth of $13,350 for a carrying amount of $103,665 
A) Bonds Payable $105,000 less Discount on Bonds Payable $13,350 for a carrying amount of $91,650 
B) Bonds Payable $105,000 plus Discount on Bonds Payable for a carrying amount of $118,350 
C) Bonds Payable $105,000 
D) Bonds Payable $105,000 less one-tenth of $13,350 for a carrying amount of $103,665

Question 13

Refer to the following list of liability balances at December 31,2017.
 
What is the total amount of current liabilities?

Accepted Answer

A) $39,180 
B) $26,680 
C) $25,880 
D) $24,380 
A) $39,180 
B) $26,680 
C) $25,880 
D) $24,380

Question 14

The interest rate that determines the amount of cash interest the borrower pays and the investor receives each year is called the ________.

Accepted Answer

A) amortization rate 
B) market interest rate 
C) stated interest rate 
D) discounting rate 
A) amortization rate 
B) market interest rate 
C) stated interest rate 
D) discounting rate

Question 15

On January 2,2017,Mahoney Sales issues $10,000 in bonds for $9,400.The bonds are five-year bonds with a stated rate of 4% and pay semiannual interest on June 30 and December 31.Mahoney Sales uses the straight-line method to amortize bond discount.Prepare the journal entry for the first interest payment on June 30,2017.

Accepted Answer

@#IMG-DLM&
Explanation:
Intere

Question 16

Money earns income over time,a fact called the time value of money.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following describes a serial bond?

Accepted Answer

A) a bond that matures in installments at regular intervals 
B) a bond that gives the bondholder a claim for specific assets 
C) a bond that matures at one specified time 
D) a bond that is not backed by specific assets 
A) a bond that matures in installments at regular intervals 
B) a bond that gives the bondholder a claim for specific assets 
C) a bond that matures at one specified time 
D) a bond that is not backed by specific assets

Question 18

On January 1,2017,NOLA Services issued $20,000 of 8% bonds that mature in five years.The bonds were issued for $20,750.Prepare the journal entry to issue bonds.

Accepted Answer

The answer of On January 1,2017,NOLA Services issued $20,000 of...

Question 19

When a bond is issued at a price higher than the face value,the difference is known as a ________.

Accepted Answer

A) premium 
B) discount 
C) maturity value 
D) face value 
A) premium 
B) discount 
C) maturity value 
D) face value

Question 20

FICA-OASDI Taxes Payable would normally be shown on the balance sheet under long-term liabilities.

Accepted Answer

A) True 
 B)False

Exam 14: Long-Term Liabilities

The issuance of a note is recorded,on the books of the borrower,by crediting Cash and debiting Notes Receivable.

When bonds are retired at maturity,assuming the last interest payment has already been recorded,the journal entry includes a debit to the Bonds Payable account and a credit to the Cash account.

The reason investors buy bonds is to ________.

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

The Employee Bonus Payable would normally be shown on the balance sheet under long-term liabilities.

A note payable can either be classified as a long-term liability or a short-term liability,depending on the discretion of the accountant.

The face value is $81,000,the stated rate is 10%,and the term of the bond is eight years.The bond pays interest semiannually.At the time of issue,the market rate is 8%.What is the present value of the bond at the market rate? Present value of $1: Present value of annuity of $1:

On March 21,2017,the bond accounts of Urban Sales showed the following balances. Urban Sales retires the bonds for $66,150.Prepare the journal entry to record the retirement of the bonds.

A bond is issued at premium ________.

On January 1,2017,Damron Services issued $20,000 of 8% bonds that mature in five years.The bonds were issued for $19,000.Prepare the journal entry to issue bonds.

On December 31,2017,Clark Sales has 10-year Bonds Payable of $105,000 and Discount on Bonds Payable of $13,350.How will this be shown on the December 31,2016 Balance Sheet?

Refer to the following list of liability balances at December 31,2017. What is the total amount of current liabilities?

The interest rate that determines the amount of cash interest the borrower pays and the investor receives each year is called the ________.

Money earns income over time,a fact called the time value of money.

Which of the following describes a serial bond?

On January 1,2017,NOLA Services issued $20,000 of 8% bonds that mature in five years.The bonds were issued for $20,750.Prepare the journal entry to issue bonds.

When a bond is issued at a price higher than the face value,the difference is known as a ________.

FICA-OASDI Taxes Payable would normally be shown on the balance sheet under long-term liabilities.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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