Exam 14: Long-Term Liabilities

The balance in the Bonds Payable account is a credit of $99,000.The balance in the Premium on Bonds Payable account is a credit of $1,690.The bond's carrying amount is $100,690.

Complete the following table:

On January 1,2017,Diagem Services issued $140,000 of four-year,9% bonds when the market rate was 8%.The bonds were issued at $144,713.Diagem uses the effective-interest method to amortize the bond premium.Semiannual interest payments are made on June 30 and December 31 of each year.Prepare the amortization table for the first four interest payments.(Round your answers to the nearest dollar number. )

Which of the following statements is true of a bond that is issued at a premium?

Present value is the amount a person would invest now to receive a greater amount in the future.

Earning more income on borrowed money than the related interest expense is called ________.

Federal Unemployment Taxes Payable is typically shown on the balance sheet under the long-term liabilities section.

The Current Portion of Long-Term Notes Payable would normally be shown on the balance sheet under current liabilities.

The amount of cash interest the borrower pays each year is based on the ________.

The market rate is the rate used to calculate the actual cash payments made to bondholders.

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

Hillsborough Glassware Company issues $1,061,000 of its 11%,10-year bonds at 96 on February 28,2017.The bonds pay interest on February 28 and August 31.Assume that Hillsborough uses the straight-line method for amortization.What net amount will be reported for the bonds on the August 31,2017 balance sheet?

When bonds are issued at face value,________.

On March 1,2016,Emerson Services issued a 9% long-term notes payable for $20,000.It is payable over a 5-year term in $4,000 annual principal payments on March 1 of each year plus interest,beginning March 1,2017.Each yearly installment will include both principal repayment of $4,000 and interest payment for the preceding one-year period.On March 1,2017,________.The accounting period ends on December 31.

Which of the following statements is true if a bond's stated interest rate is the same as the market rate?

Which of the following concepts represents time value of money?

The United Way Payable account would normally be shown on the balance sheet under current liabilities.

On January 1,2017,Carter Sales issued $36,000 in bonds for $18,700.These are six-year bonds with a stated interest rate of 12%,and pay semiannual interest.Carter Sales uses the straight-line method to amortize the Bond Discount.What amount is debited to Interest Expense on June 30,2017?

Generally accepted accounting principles require that interest expense be measured using the effective-interest amortization method,unless the straight-line amounts are similar.

On November 1,2017,Austin Services issued $304,000 of five-year bonds with a stated rate of 11%.The bonds were issued at par,and Austin makes semiannual payments on April 30 and October 31.On December 31,2017,Austin made an adjusting entry to accrue interest at year-end.No further entries were made until April 30,2018,when the first payment was made.What amount of interest expense was recorded for the period of January 1 to April 30,2018? (Do not round any intermediate calculations,and round your final answer to the nearest dollar. )